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Investment (Rental) Properties
Posted by: Garth Chapman
A timely post by Real Estate Lawyer and Educator, Barry McGuire, who I have had the pleasure of learning many ins and outs of real estate investing from since 2013.
With over 40 years of legal experience and the highest personal and integrity, who else would you want to learn from, or to have represent you?
Barry’s next Focus Workshop will be May 4-5 in Edmonton.
Posted by: Garth Chapman
First, some little-known good news: you don’t actually have to be a first-time homebuyer to qualify. A first-time home buyer you must not have lived in another home owned by you or your spouse or common-law partner in the year of acquisition or any of the four preceding years.
The Home Buyers’ Plan (HBP) is a program that allows you to withdraw funds from your registered retirement savings plan (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability. You can withdraw up to $25,000 in a calendar year. You must qualify as a first-time home buyer, which generally means you and/or your spouse must not have owned a home in Canada for 4 years.
Your RRSP contributions must remain in the RRSP for at least 90 days before you can withdraw them under the HBP, or they may not be deductible for any year – see here http://www.cra-arc.gc.ca/E/pub/tg/rc4135/rc4135-e.html#P233_15310
Generally, you have to repay all withdrawals to your RRSPs within a period of no more than 15 years. You will have to repay an amount to your RRSPs each year until your HBP balance is zero. If you do not repay the amount due for a year, it will have to be included in your income for that year.
All the info here http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html
And here is some info on how long the money must be in your RRSP before you withdraw it for the HBP. Let’s say a qualified first-time home-buyer contributed to his RRSP near the end of February. The buyer then finds a home with a willing seller, but is unable to get a possession date late enough to meet the following requirement: “Your RRSP contributions must remain in the RRSP for at least 90 days before you can withdraw them under the HBP, or they may not be deductible for any year.”
It turns out that the client actually has 30 days after possession to still take out his money from his/her RRSP and use it for the Home Buyer’s Plan.
Surprisingly, CRA does not care if the buyer uses that money to buy a car, go on vacation or spend it on anything else, as long as he/she buys a qualified home and is a first-time buyer.
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/cndtns/wn-eng.html
Posted by: Garth Chapman
We have found that crafting and sticking to a realistic budget has been a key in our own financial health. In our early years together, after our expenses started to get ahead of our income, we started with a hand-written budget and an envelope for each expense item. These days we have computers and smart phones, so it is so much easier now to create a budget and manage. Here is a good breakdown of what is available in 2019. Each of these Apps has a different approach, so you might just find the one that fits you from this selection of Apps.
From the article “Whether we like to admit it or not, money has a powerful influence on our lives. Your bank account balance affects whether you can pursue higher education, own a home and have a secure retirement. Having a good income is nice, but the health of your finances can often depend on how you manage the money you make, rather than on how much you make.
While it would be great if we could all afford to have our own personal financial manager, budgeting is something most of us must do on our own. Luckily, thanks to the popularity of smartphones and an ever-growing array of finance apps, it’s possible to have your own mobile money manager in the palm of your hand.
The best budgeting apps work by making it as easy and automatic as possible to see where your money goes. Many apps link directly to your financial accounts and instantly tabulate your savings and expenses. Others highlight key areas of concern like debt repayment or can show you where you’re overspending.”
Posted by: Garth Chapman
First, some little-known good news: you don’t actually have to be a first-time homebuyer to qualify. A first-time home buyer you must not have lived in another home owned by you or your spouse or common-law partner in the year of acquisition or any of the four preceding years.
So now let’s unpack the First-Time Home Buyer’s Tax Credit (HBTC).
The First-time Home Buyers’ Tax Credit was introduced to assist Canadians in purchasing their first home. It is designed to help recover closing costs, such as legal expenses, inspections, and land transfer taxes, so you can save more for money for a down payment.
The Home Buyers’ Tax Credit, at current taxation rates, works out to a rebate of $750 for all first-time buyers. After you buy your first home, the credit must be claimed within the year of purchase and it is non-refundable. In addition, the home you purchase must be a ‘qualified’ home, described in more detail below. If you are purchasing a home with a spouse, partner or friend, the combined claim cannot exceed $750.
You will qualify for the HBTC if:
Posted by: Garth Chapman
On March 6th The Bank of Canada (BoC) held the line on the Overnight Rate which drives the Banks’ Prime Rates. The direction the BoC decides to take with rates is a direct reflection of today’s economic state; a threat of a recession or other industry-related downturn will prompt it to cut its rate in efforts to encourage liquid borrowing and stimulate the economy. Read more here
I believe it is quite possible we will see that happen later in 2019, as the Canadian economy continues its slide, suffering from softer consumer spending, an under-performing housing market, and lower-than-expected exports and business investment.
Capital Economics, a London-based research consultancy notes the recent tone from senior officials signals the bank is set to sideline plans to raise the trend-setting rate to its neutral range, between 2.5 and 3.5 per cent. ““It’s not hard to see why officials are concerned,” Brown wrote in a research note. “The available data suggest that GDP fell for the second month running in December, by 0.1 per cent. Worse still, that weakness appears to have been broad-based.”
More from Capital Economics here.
This is good news for borrowers.
Posted by: Garth Chapman
Alberta’s real estate markets are stressed. Prices are flat or down. So this is a Buyer’s Market, and yet so many Buyers are finding it difficult to qualify for the mortgage they need, largely due to the new mortgage Stress Test. Here are a few smart ways that you can use to achieve the mortgage you need to buy the property that suits your family’s needs.
Use the flex down or borrowed down payment programs offered though one of our mortgage lenders.
You must qualify, the payment for the loan must fit in your total debt service ratio.
You must have good credit, meeting minimum beacon score requirements.
The CMHC default insurance premium is higher, but by using this option you can borrow the down-payment.
First time home buyers can obtain a new RRSP loan and 90 days later use the First Time Home Buyers Plan and withdraw up to $25,000 for a home down-payment. Pro Tip– you are considered a First Time Home Buyer if you have not owned a home in the previous 4 years.
Call your favourite Jencor Mortgage Broker, and we will arrange an RRSP loan and a mortgage pre-approval as per your financial qualifications. Couples can both do this.
90 days later, you withdraw up to $25,000 (per person) from your RRSP plan(s) for down payment.
Then you can get to work with your favourite Realtor to buy a home.
IMPORTANT – The key element of this is that our best mortgage lender for this program does not require the loan to be repaid when funds are withdrawn for the down-payment, whereas most lenders do.
Is a Large Vehicle Loan Payment Reducing the Mortgage You Qualify for?
Whether you are refinancing, buying a new home, or just wanting to improve your cash flow, is a large vehicle loan payment reducing your options!
We have a vehicle finance company that will aggressively extend out an amortization, reducing the vehicle payment. The result, all other things being equal, a bigger mortgage. We had one couple rewrite their vehicle loans, and they got a $70,000 bigger mortgage. Their realtor was able to write an offer in the neighborhood they have always wanted to live in. Got a great deal on the house as well.
Call me today if a lower vehicle loan payment could help you.
Special Programs for Self Employed Buyers
Some combination of these ideas may just help you, your friends or relatives get the mortgage you need for the home you want.