Every first homeowner has that fear of stepping off the plank and making the plunge into a long-term financial investment, but that transition can be an exciting and pleasant experience.
That starts with seeking out the support of a real estate agent and mortgage specialist to help with the process of changing from renter to owner.
First-time home buyers may be overwhelmed with the initial cost of purchasing that first home, but there are ways to defer some of those financial burden fears.
There is a break the federal government has put in place for first time home buyers. It is called a First Time Home Buyers Tax Credit.
The cost associated with a purchase of a property can get quite expensive with legal fees, land transfer tax and disbursements, etc. To assist first-time home buyers with this cost, in 2009 the federal government put in place a $5,000 non-refundable income tax credit on a qualifying home acquired after January 2009. For an eligible individual, the credit will provide up to $750 in federal tax relief.
First-time home buyers have also been feeling the pinch after federal Finance Minister Jim Flaherty announced the tightening of lending rules last summer.
The maximum amortization period was adjusted from 25 years from 30, and the cut the maximum amount of equity homeowners can take out of their homes in a refinancing was reduced to 80 from 85 per cent. Also, the availability of government-backed mortgages has been limited to homes with a purchase price of less than $1-million, while the maximum gross debt service ratio was fixed at 39 per cent and the maximum total debt service ratio at 44 per cent.
But those changes still aren’t posing a major deterrence to first-time buyers. A Bank of Montreal survey, conducted by Pollara, found on the one year anniversary of the latest mortgage rule changes that 66 per cent of Canadians buying for the first-time will still do so as planned.
The survey also found that 14 per cent of Canadians will buy sooner, partially out of fear rules could get even tougher.