First Home? How about 10% Off
It Could be a Dream-Come-True for Some
The recent federal budget has some interesting news for those who dream of owning their own home. There's new help for first-time home buyers and some consider this the boldest proposal in the new 2019, budget. After a new ruling that came into effect in January, namely that mortgage applicants had to pass a stress test to ensure their ability to make payments, helping to cool the market, now a boost in homes sales is expected. The promise is that buying a home could be easier!
Government to Help with the Cost – Wow!
The help is coming from the Canada Mortgage and Housing Corporation (CMHC) If buyers have a household income of under $120,000 they will be eligible to receive a credit worth up to 10 per cent of their home price from the CMHC. This will reduce the overall cost of their mortgage. The plan will provide $1.25 billion over three years toward assisting new buyers in securing a mortgage. The assistance will come with CMHC holding an ownership stake in the property equal to the credit.
New Home or Older Home – There are Different Rules
There are different incentives depending on when the house was or will be built. The incentive would be 10 per cent for buyers purchasing a newly built home and 5 per cent for existing homes.
For example, say you’re hoping to buy a $400,000 home with the minimum required five per cent down payment, which works out to $20,000. With the new incentive, you could receive up to $40,000 through the CMHC. Now, instead of taking out a $380,000 mortgage, you’d need to borrow only $340,000. So the bottom line is that this would lower your monthly mortgage bill from over $1,970 to less than $1,750. It is now more important than ever to talk to a Realtor about buying a new home, BEFORE you step into the show home!
Some Details Not Clear – Stay Tuned
So what should you make of this information? If you’re looking to buy, this could be good news, especially if you’re in the Calgary area where homes listed are some of the country’s more affordable, especially compared to Vancouver or Toronto. If your budget is under the $480,000 cap it could be worth waiting to see how the new CMHC initiative shakes out.
This is a complicated proposal. Any new incentive has some unknowns. For example: How long will buyers have to repay and when will the initiative start? Will the equity stake adjust with the market value or will it be a fixed amount? Need help? Visit the CMCH website at: https://www.cmhc-schl.gc.ca/ or Call me 403-680-4479
