Finally, a tax break on Lander transfer tax.

ontario-govt

Did you get a larger Land Transfer Tax rebate?

If you bought a home this year, and you’re a first time home buyer, then you’ll pay less tax..   The Ontario provincial govt has doubled the rebate from $2,000 to $4,000.   The rebate is for qualified first time home buyers only.

They also eliminated Land Transfer tax on the first $368,000 of the purchase price for first time home buyers.    Hey, this is good news.  And I applaud the govt for giving for giving first time buyers a break.

They also increased the Land Transfer Tax for homes over $2million.  Here’s the old and new tax tables.

“Old” Ontario Land Transfer Tax Rates
Home Purchase Price             Tax Rate
Up to $55,000                                 0.5%
$55,000 to $250,000                    1.0%
$250,000 to $400,000                 1.5%
Above $400,000                             2.0%

And here’s the new formula…

“New” Ontario Land Transfer Tax Rates
Home Purchase Price             Tax Rate
Up to $55,000                                 0.5%
$55,000 to $250,000                    1.0%
$250,000 to $400,000                 1.5%
$400,000 to $2-million                2.0%
$2-million and over                       2.5%

Enjoy the savings..

Kinda strange..  Remember when the Kathleen Wynne govt was considering allowing other municipalities, other than Toronto, to introduce a new land transfer tax?   NO?  Well, I do.. and you shouldn’t forget it either.. click here to remember..  Keep this in the back of your mind .. Let’s hope this isn’t some sort of strategy to catch us with our guard down..

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Coming soon…Higher CMHC premiums March 17, 2017

CMHCThis is not a recording.  CMHC is increasing their premiums for the 3rd time in 4 years.  Here’s what it will look like.

Loan-to-Value Ratio Standard Premium (Current) Standard Premium (Effective March 17, 2017)
Up to and including 65% 0.60% 0.60%
Up to and including 75% 0.75% 1.70%
Up to and including 80% 1.25% 2.40%
Up to and including 85% 1.80% 2.80%
Up to and including 90% 2.40% 3.10%
Up to and including 95% 3.60% 4.00%
90.01% to 95% – Non-Traditional Down Payment 3.85% 4.50%

 

Wondering why they need to increase the premiums?  It’s not about trying to discourage homebuyers.  It’s to “preserve the returns on capital”, according to Steven Mennill, SVP CMHC.  Yup, the Crown corporation wants to focus on profit.  (show me the money).  At least they’re being honest about it. The overall amount of mortgages insured by CMHC has dropped in the past 4 years.  Down from $576billion to around $512billion.   So, it’s about maintaining profits while their book of business is shrinking.

Having said that, CMHC has lowered, increased and lowered their insurance premiums before.  We can expect them to change and adjust again.

In case you are wondering why the overall volume is going down when house prices are going up, it’s because the Fed govt has changed the mortgage rules so that it becomes more difficult to qualify for a mortgage.  Therefore, the amount of mortgages CMHC can insure is going down.

Now for some good news..

The overall cost to your mortgage is minimal.  Oh yeah, one more thing…without CMHC, we would all be digging deeper into our pockets to come up with 20% or 25% down, like the old days.   And while some may think that is how it should be, those days are long gone.  First time homebuyers don’t have $100k, or $200k sitting around to buy a home.   They need help.. And what’s wrong with helping our youth that are ambitious enough to want to own a home?

CMHC is a necessary evil.

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Debt diversification vs Debt consolidation…who wins?

debt

ONLY IN CANADA

Attention:  Bankers, close your ears.. we don’t want you to hear this.  Credit card balances, lines of credit, car loan, student loan, home reno loan, personal loan..   If you have one or more of these and you own a home, you’re probably losing money by paying a higher interest rate.  In many cases, $thousands are lost and overpaid each year.   And your Banker is laughing and recording Record profits!!

It’s surprising how many of us have some, or all of these debts… and ALSO a house with lots of equity.  Yet, as Canadians, we somehow think it’s better to separate our mortgage from other debts.  We somehow think it’s good to pay down our mortgage but then rack up other debts.  This attitude has puzzled me for years.

check out this chart for one client.. tell me if this looks familiar: Read the rest of this entry »

Mortgage rate outlook 2017.. Expect Fixed mortgage rates to go up…Expect Variable rate pricing to drop.

trudeau-trumpFixed mortgage rates have increased by about 0.40% in the last 6 weeks.   Today’s 5 year fixed rates are at around 2.89% and will could continue to go up in 2017.   There are political and fundamental reasons why rates have gone up. (oh, by the way..  it’s not panic time.. who ever said that 5 yr fixed rates were the best product to choose anyways? more on this later.)

FUNDAMENTAL REASONS

Govt of Cda bond yields have gone up around 0.55% since October (fixed rates are priced from govt of Cda bond yields).  It’s more expensive for Lenders to fund mortgages due to stricter government regulation and higher Capital holding requirements.  These increased costs are being passed down to the consumer.

Okay, this is the “how” the rates are higher.. but what’s prompted these fundamentals?  Why are rates higher?

POLITICAL REASONS.. IT’S ALL POLITICS Read the rest of this entry »

Mortgage Brief.. Mortgages rules explained… and why didn’t the govt consult experts?

Bill Morneautrudeau

They say we don’t read emails or articles anymore.. we just skim through them.   But some things can’t be understood with a quick glance.  The new mortgage rules will impact EVERYONE!

If you want to understand how they impact you, continue reading… If you don’t care or want to be oblivious, take the blue pill and move on.

I’ve put together a list of the mortgage rules so that you can understand what they mean and how they will impact you.   Hey, let’s give The Federal govt some credit… they’ve been transparent about a few things, right?:

  • They want house prices to drop.
  • They don’t want anyone to have a mortgage if their home is worth more than $1,000,000.
  • They don’t want you to ever refinance your mortgage.  You should only require a mortgage when you buy a house.
  • They don’t want you to buy a house and rent it out.  You should only buy a rental property if it has 2 or more units.
  • Mortgages should not be amortized for longer than 25 years.
  • They want rates to go way up.

Here we go.. Forget the data and stats being reported today.  Those stats don’t matter!  We want to see the stats after March 30th, 2017.

Remember the mortgage rule changes of October 17th?  How about the ones on November 30th?  Get ready, we won’t see the full effect of these changes until after March 30th 2017.

That’s when the last of the mortgage approvals will have closed, that were done under the old rules. And all the new mortgage closings beyond this date, will have had to been qualified with the new rules.  This is when we’ll begin to see the impact of these rules… And we’ll begin to see just how many Canadians will be have been impacted.

If you think I’m wrong, read the rule changes below and tell me what other conclusions you can come up with. Read the rest of this entry »

Bi-weekly payment myth… it doesn’t pay your mortgage off faster.

RRSP home buyers planFor years, we’ve been told to pay our mortgage bi-weekly. Magically, it will  pay your mortgage off faster.  Hmm, let’s put that to the test.

(SPOILER ALERT!)  Around 6 yrs ago, I wrote an article showing some simple but effective math to explain this.   I’m constantly getting emails from my readers asking me what they should do..obviously, a popular topic.

Let me also say, there is merit to paying bi-weekly…I’ll explain further on.

HISTORY OF BI-WEEKLY PAYMENTS

Back in the mid 90’s, there was a huge marketing blitz by the Big Banks that promoted making bi-weekly payments instead of the traditional monthly payments.   The sales pitch was that you could save huge amounts of money and pay your mortgage off much faster….save 4 or 5 years off your amortization…. Sound familiar?   Well, BI-WEEKLY PAYMENTS DON’T REALLY SAVE YOU ANYTHING!

And I’ll prove it…. here’s the straight facts! Read the rest of this entry »

Bridge loans explained… your bank hates them but they are extremely useful

bridge-loansBridge loans are short-term loans that bridge the gap between two different closing dates.  More commonly used when an existing homeowner sells their home, and buys another home, with two different closing dates.   But bridge loans have become a very popular way to take possession of that new home while it’s empty for 2 or 3 weeks to allow for renos.   Best of all, it’s really inexpensive!

THE OLD WAY

In the past, most homebuyers would have their selling and buying dates match.   It’s always been a bit of a juggling act as you have to pack your moving truck and unpack it, all in less than a day.   Somehow, everyone manages to get it done… but you talk about one of the most stressful days in your life….moving ranks right up there!   Throw in some kids, maybe a dog, and a house full of stuff and you have a real chore on your hands….

THE NEW WAY… Read the rest of this entry »

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