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Investment program for first-time homebuyers

Investment program for first-time homebuyers

How is that possible?

New co-ownerships acquired by foreign interests have experienced a remarkable increase in recent years in downtown Montreal, and this partly explains the current vitality of the real estate market! Moreover, housing sales in Montreal increased by 8% in August through compared to the same period last year!

Do you want to invest in your first home? Do you think about investing in real estate programming? It’s an excellent idea; it’s a profitable and winning project in the long run.

The beginnings are often tricky and offering you your first property can be an impossible mission, especially for families and young people who tried to establish themselves. But don’t worry, the Ministry of Finance has been thinking about you, and it will help you realize your projects in the real estate market!


It should be noted that buying a real estate property is an investment that will save you thousands of dollars over time!


A helping hand from Bill Morneau, the Minister of Finance!

Bill Morneau took the initiative to introduce a tax on empty Vancouver homes to discourage real estate investors and speculators from leaving their homes vacant. This will allow first-time homebuyers to reduce the amount they will have to borrow to buy their home without having to provide a large down payment!

First-time home buyers will, therefore, benefit from a new program this year (2019) that will allow them to significantly reduce the amount of their future mortgage while also benefiting from a $10,000 decrease in the maximum amount of the homeownership program!


What is the concept of this program?

This is a program to which Ottawa will contribute 1.25 billion dollars over three years and will allow at least 100,000 new homebuyers to transfer 5% or 10% of their interest-free mortgage to the Canada Mortgage and Housing Corporation (CMHC). The government will provide an incentive of 5% of a mortgage on an existing home, for households earning less than $120,000 per year and for a maximum mortgage of $480,000!

NB :

The incentive can be up to 10 per cent for the purchase of a new home and there is no interest on the federal incentive! However, the buyer will have to reimburse it if he sells his house or after 25 years of residence!

Practical, isn’t it?

This tip will allow buyers with family incomes under $120,000 per year to benefit from lower monthly mortgage payments and thus have more money each month for shopping, daycare, education, new furniture, small activity, or family outing!

Unfortunately, not everyone has the chance to live a stable and family life.

There are always significant changes after a separation, and this ordeal takes time to get a new start and find a stable life morally and financially!

This program also represents a second chance for separated couples, which is what we will see together:

As you may be aware, for separating couples, it is often challenging to keep the family home or buy another house because of the new financial situation and the associated obligations.

Aware of the hardships faced by couples going through this period, Bill Morneau will allow divorced or separated people to take advantage of the HBP in 2020 to acquire a new property, even if they are no longer considered first-time buyers!

NB :

The increase in the HBP withdrawal limit will be $35,000! According to calculations and statistics from the Department of Finance, expanding the program’s access to separated couples is expected to cost the government about $145 million over five years!

Unfortunately, in all areas there are frauds and misguided people. To combat real estate speculation and tax evasion, Ottawa will provide $50 million over five years to establish four teams of investigators to monitor residential and commercial real estate agreements in areas known to be high risk!

Through this initiative and these precautions, Ottawa hopes to recover at least $68 million over the next five years!


A city that has a very healthy real estate market and that help you find the property of your dreams at an affordable price despite the increases!


More details on this program?

So, here is a small example to help you better understand the concept of this program:

We will take the case of a family that wants to buy a new townhouse for $400,000 in Montreal and has a down payment of $20,000:

By taking advantage of this new incentive, the couple will be able to ask Canada Mortgage and Housing Corporation to take over $40,000, which represents 10% of the price of the house, in the form of a participating loan.

Once in the bank, the couple will only have to borrow $340,000, which will save them $228 per month or $2736 per year compared to the mortgage they would have had to take out without the CMHC incentive!

What about the rest then?

As for the $40,000 paid by Canada Mortgage and Housing Corporation, it will only be repaid when the family sells the house or reaches 25 years of residence!


Second exciting option

Minister of Finance Morneau reintroduces and updates the Home Buyers’ Plan by increasing the amount from $25,000 to $35,000 per person with respect to the maximum amount that can be withdrawn from an RRSP.

This program was introduced more than 20 years ago in Canada and will now allow first-time homebuyers to withdraw up to $35,000 from their RRSPs without paying tax on this withdrawal to improve their down payment to buy or build a home!

NB:

This increase in the limit to $35,000 will only apply to withdrawals made after March 19, 2019!

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Oxana Tokareva

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