First Time Home Buyer Incentive(FTHBI)
A PRIMER ON THE FIRST-TIME HOME BUYER CREDIT, AND SOME THINGS TO CONSIDER(2019.09.05)
Our oldest son, Win, is already thinking about real estate investing. “Dad, I want to buy a house near the university rather than paying rent to someone else,” he said a few weeks back. So, I made the trip to Waterloo to check out a place he was looking at. “What do you think?” he asked me. “Well, if the seller is willing to replace the roof and furnace, repave the driveway, build a deck, extend the family room out by 15 feet, and move the place to the other side of town, then I think the asking price is fair,” I replied.
It’s tough for young people to buy a home these days. The government is trying to make it more affordable by introducing the First-Time Home Buyer Incentive (FTHBI), which can reduce the monthly payments required when buying a home. The FTHBI was officially launched this week, on Sept. 2, so here’s a primer on how the plan works, and some things to consider before you apply for help under the program.
THE DETAILSUnder the FTHBI, the government will help you buy a home by providing up to 10 per cent of the purchase price. Basically, the amount provided is a mortgage on the property with no interest or ongoing payments required. The government will offer 5 per cent if you’re buying a resale home, and for newly constructed homes you can apply for either 5 per cent or 10 per cent. You’ll have to make repayment under the program when you sell the home, or after 25 years, whichever comes first – but you can choose to make repayment sooner.
This funding is called a “shared equity mortgage” so that the government will participate in any appreciation in value of your home, or declines in value. How does this work? Suppose you buy a home for, say, $400,000 and you receive a 10-per-cent incentive ($40,000) under the FTHBI program. If you later sell the home for, say, $500,000, you’ll have to repay 10 per cent of your selling price to the government – or $50,000 in this case.
To qualify, you have to be a first-time buyer, which means you have to meet one of the following tests: 1) You’ve never purchased a home before; 2) you’ve gone through a breakdown of a marriage or common-law partnership; or 3) in the past four years, you haven’t occupied a home that you or your current spouse or common-law partner owned. So, you might qualify for the incentive if you’re separated or divorced and don’t otherwise meet the first-time home buyer criteria.
But there are more tests you’ve got to meet: Your qualifying income must be $120,000 annually or less, your total borrowing (your mortgage plus the incentive) is limited to four times your qualifying income, your minimum down payment must be 5 per cent (on the first $500,000 of property value; 10 per cent on the value above $500,000), and your total down payment must be under 20 per cent (so that the mortgage will be insured through either Canada Guaranty Mortgage Insurance Corp., Canada Mortgage and Housing Corp. or Genworth Canada).
THE EXAMPLELet’s suppose you earn $100,000 annually, you want to buy a resale home, and you qualify as a first-time home buyer. The most expensive home you could afford under this program is about $420,000. If you make a down payment of 5 per cent ($21,000) and receive another 5 per cent FTHBI, then your mortgage would be $378,000 ($420,000 less $21,000 x 2). Your monthly mortgage payment would be $1,824 (assuming a 2.9-per-cent five-year fixed rate mortgage today – an average across institutions; check out ratehub.ca). Without the FTHBI, the mortgage would be $399,000 and your monthly payment would be $1,943 – higher by $119. The amounts factor in the mortgage insurance required.
THE BOTTOM LINEDoes the FTHBI make sense? There’s a cost to the program, for sure. It all comes down to your expectation for real estate growth in the future. If your home appreciates by, say, 6 per cent compounded annually while you own it, that amount you receive from the government will cost you 6 per cent after taxes (that’s what you’ll be giving up). If prices don’t rise much during your period of ownership, the cost to you for the FTHBI won’t be as great.
Keep in mind, too, that if you make renovations that increase the value of your property, you’ll be handing a portion of that increased value to the government later when you repay the FTHBI. Borrowing from parents or family to help in buying a home is likely a better option if you can swing that since you won’t have to share the upside.(The Globe and Mail, Tim Cestnick)
It’s tough for young people to buy a home these days. The government is trying to make it more affordable by introducing the First-Time Home Buyer Incentive (FTHBI), which can reduce the monthly payments required when buying a home. The FTHBI was officially launched this week, on Sept. 2, so here’s a primer on how the plan works, and some things to consider before you apply for help under the program.
THE DETAILSUnder the FTHBI, the government will help you buy a home by providing up to 10 per cent of the purchase price. Basically, the amount provided is a mortgage on the property with no interest or ongoing payments required. The government will offer 5 per cent if you’re buying a resale home, and for newly constructed homes you can apply for either 5 per cent or 10 per cent. You’ll have to make repayment under the program when you sell the home, or after 25 years, whichever comes first – but you can choose to make repayment sooner.
This funding is called a “shared equity mortgage” so that the government will participate in any appreciation in value of your home, or declines in value. How does this work? Suppose you buy a home for, say, $400,000 and you receive a 10-per-cent incentive ($40,000) under the FTHBI program. If you later sell the home for, say, $500,000, you’ll have to repay 10 per cent of your selling price to the government – or $50,000 in this case.
To qualify, you have to be a first-time buyer, which means you have to meet one of the following tests: 1) You’ve never purchased a home before; 2) you’ve gone through a breakdown of a marriage or common-law partnership; or 3) in the past four years, you haven’t occupied a home that you or your current spouse or common-law partner owned. So, you might qualify for the incentive if you’re separated or divorced and don’t otherwise meet the first-time home buyer criteria.
But there are more tests you’ve got to meet: Your qualifying income must be $120,000 annually or less, your total borrowing (your mortgage plus the incentive) is limited to four times your qualifying income, your minimum down payment must be 5 per cent (on the first $500,000 of property value; 10 per cent on the value above $500,000), and your total down payment must be under 20 per cent (so that the mortgage will be insured through either Canada Guaranty Mortgage Insurance Corp., Canada Mortgage and Housing Corp. or Genworth Canada).
THE EXAMPLELet’s suppose you earn $100,000 annually, you want to buy a resale home, and you qualify as a first-time home buyer. The most expensive home you could afford under this program is about $420,000. If you make a down payment of 5 per cent ($21,000) and receive another 5 per cent FTHBI, then your mortgage would be $378,000 ($420,000 less $21,000 x 2). Your monthly mortgage payment would be $1,824 (assuming a 2.9-per-cent five-year fixed rate mortgage today – an average across institutions; check out ratehub.ca). Without the FTHBI, the mortgage would be $399,000 and your monthly payment would be $1,943 – higher by $119. The amounts factor in the mortgage insurance required.
THE BOTTOM LINEDoes the FTHBI make sense? There’s a cost to the program, for sure. It all comes down to your expectation for real estate growth in the future. If your home appreciates by, say, 6 per cent compounded annually while you own it, that amount you receive from the government will cost you 6 per cent after taxes (that’s what you’ll be giving up). If prices don’t rise much during your period of ownership, the cost to you for the FTHBI won’t be as great.
Keep in mind, too, that if you make renovations that increase the value of your property, you’ll be handing a portion of that increased value to the government later when you repay the FTHBI. Borrowing from parents or family to help in buying a home is likely a better option if you can swing that since you won’t have to share the upside.(The Globe and Mail, Tim Cestnick)
Entrepreneur creates calculator to help homebuyers considering the First-Time Home Buyer Incentive(2019.10.03)
As an entrepreneur, Alex Leduc says it would be tough for him to qualify for a mortgage. But even if he were buying a home under today’s conditions, the 28-year-old founder of an online mortgage platform says he wouldn’t necessarily use Canada’s First-Time Home Buyer Incentive (FTHBI) — a shared-equity program the federal Liberals have pledged to expand in expensive cities such as Toronto.
The program could help some buyers lower their monthly mortgage payments. But with property prices still rising in the Toronto area and interest rates remaining at historic lows, Leduc says buyers have to consider carefully whether they want to repay 5 or 10 per cent of their home’s increased value when it comes time to sell.
The same applies to renovations that might increase the property’s worth, he said.
“If you’re going to be repaying the incentive based on your property value — any money you put into your home to increase the value, you’re going to have to be paying back a piece of that. So that would be punitive,” Leduc said.
His startup, called Mortgauge, developed a calculator to help consumers assess the potential costs and benefits of the first-time buyers incentive — whether lower mortgage payments in the short-term are worth the payback in equity if your home’s value appreciates.
“We help somebody assess not just how much interest would you save, but how much property would you give up for those interest savings,” he said.
The buying incentive was announced by the Liberal government in its March budget to help millennials access the increasingly challenging road to home ownership. The program offers interest free loans on up to 5 per cent of the purchase price of a resale home or up to 10 per cent of a new construction property. It applies to buyers with a maximum household income of $120,000 and a minimum down payment for an insured mortgage on a home valued at no more than $560,000.
Homebuyers need a minimum down payment of at least 5 per cent on homes valued at up to $500,000 and no more than 20 per cent to qualify for mortgage insurance.(Toronto Star, Tess Kalinowski)
The program could help some buyers lower their monthly mortgage payments. But with property prices still rising in the Toronto area and interest rates remaining at historic lows, Leduc says buyers have to consider carefully whether they want to repay 5 or 10 per cent of their home’s increased value when it comes time to sell.
The same applies to renovations that might increase the property’s worth, he said.
“If you’re going to be repaying the incentive based on your property value — any money you put into your home to increase the value, you’re going to have to be paying back a piece of that. So that would be punitive,” Leduc said.
His startup, called Mortgauge, developed a calculator to help consumers assess the potential costs and benefits of the first-time buyers incentive — whether lower mortgage payments in the short-term are worth the payback in equity if your home’s value appreciates.
“We help somebody assess not just how much interest would you save, but how much property would you give up for those interest savings,” he said.
The buying incentive was announced by the Liberal government in its March budget to help millennials access the increasingly challenging road to home ownership. The program offers interest free loans on up to 5 per cent of the purchase price of a resale home or up to 10 per cent of a new construction property. It applies to buyers with a maximum household income of $120,000 and a minimum down payment for an insured mortgage on a home valued at no more than $560,000.
Homebuyers need a minimum down payment of at least 5 per cent on homes valued at up to $500,000 and no more than 20 per cent to qualify for mortgage insurance.(Toronto Star, Tess Kalinowski)
EXCLUSIVE: New details emerge about federal First-Time Home Buyer Incentive(2019.06.16)
Global News has learned the government’s First-Time Home Buyer Incentive will launch on September 2, days before an expected fall election call.
The new program was announced in the federal budget last March, but some of the key details about how the program would work were left out.
Under the plan, the government would help some first-time buyers by advancing an interest-free loan of up to five per cent of the purchase price of an existing home, and up to 10 per cent of the cost of a new home. This would allow the homebuyers to take out a smaller mortgage and keep their monthly payments lower.
READ MORE: Homebuyers to get new mortgage incentive, Home Buyer’s Plan boost under 2019 budget
Buyers must repay the incentive after 25 years or if the property is sold, and they can repay it at any time without any penalty.
Global has learned that if the house price goes up, the government will get a percentage of the price increase. And if the house price decreases, Ottawa will shoulder a percentage of the loss.
For example, a new house that is purchased for $100,000 could qualify for a 10 per cent interest-free loan worth $10,000. If the home was later sold for $110,000, the home buyer would need to repay $11,000.
The government says the incentive means that a home that is purchased for $485,000 would save $3,327 a year on mortgage payments.
There are a number of caveats to the program. Buyers must have a household income below $120,000 a year. The amount of the insured mortgage plus the CMHC incentive would be capped at four times the homebuyers’ annual incomes, or up to $480,000. That means the most expensive home you can hope to buy under the plan would be worth somewhere between $500,000 and $600,000, depending on the size of your down payment.
The government has allocated $1.25 billion over three years for the First-Time Home Buyer Incentive. Social Development Minister Jean-Yves Duclos will announce the new details Monday morning in Mississauga.
READ MORE: Federal budget 2019 -- What to know about the new CMHC mortgage incentive (March 22, 2019)
Critics say this program will not do much to help buyers in Vancouver and Toronto, where average home prices sit at $925,000 and $765,000, respectively. But the government is confident it will help homebuyers even in Canada’s biggest cities.
Having a sharp income cutoff also means that homebuyers with incomes just under $120,000 would have a significant advantage over those just above the threshold, who would not qualify for the CMHC incentive.
After the budget was announced, TD economists estimated the new mortgage incentive could actually help push up home sales and prices by between two and five per cent by 2020. But their calculation also included the expected effect of another budget measure that would allow first-time homebuyers to use up to $35,000 — rather than $25,000 — of their funds held in a registered retirement savings plan (RRSP) for a home purchase without tax consequences.
— With files from Erica Alini (Global New,BRYAN MULLAN AND MERCEDES STEPHENSON)
The new program was announced in the federal budget last March, but some of the key details about how the program would work were left out.
Under the plan, the government would help some first-time buyers by advancing an interest-free loan of up to five per cent of the purchase price of an existing home, and up to 10 per cent of the cost of a new home. This would allow the homebuyers to take out a smaller mortgage and keep their monthly payments lower.
READ MORE: Homebuyers to get new mortgage incentive, Home Buyer’s Plan boost under 2019 budget
Buyers must repay the incentive after 25 years or if the property is sold, and they can repay it at any time without any penalty.
Global has learned that if the house price goes up, the government will get a percentage of the price increase. And if the house price decreases, Ottawa will shoulder a percentage of the loss.
For example, a new house that is purchased for $100,000 could qualify for a 10 per cent interest-free loan worth $10,000. If the home was later sold for $110,000, the home buyer would need to repay $11,000.
The government says the incentive means that a home that is purchased for $485,000 would save $3,327 a year on mortgage payments.
There are a number of caveats to the program. Buyers must have a household income below $120,000 a year. The amount of the insured mortgage plus the CMHC incentive would be capped at four times the homebuyers’ annual incomes, or up to $480,000. That means the most expensive home you can hope to buy under the plan would be worth somewhere between $500,000 and $600,000, depending on the size of your down payment.
The government has allocated $1.25 billion over three years for the First-Time Home Buyer Incentive. Social Development Minister Jean-Yves Duclos will announce the new details Monday morning in Mississauga.
READ MORE: Federal budget 2019 -- What to know about the new CMHC mortgage incentive (March 22, 2019)
Critics say this program will not do much to help buyers in Vancouver and Toronto, where average home prices sit at $925,000 and $765,000, respectively. But the government is confident it will help homebuyers even in Canada’s biggest cities.
Having a sharp income cutoff also means that homebuyers with incomes just under $120,000 would have a significant advantage over those just above the threshold, who would not qualify for the CMHC incentive.
After the budget was announced, TD economists estimated the new mortgage incentive could actually help push up home sales and prices by between two and five per cent by 2020. But their calculation also included the expected effect of another budget measure that would allow first-time homebuyers to use up to $35,000 — rather than $25,000 — of their funds held in a registered retirement savings plan (RRSP) for a home purchase without tax consequences.
— With files from Erica Alini (Global New,BRYAN MULLAN AND MERCEDES STEPHENSON)
Incentives for first-time home buyers in the 2019 federal budget(2019.03.28)
With just a few months to go before the next federal election, the 2019 budget is the government’s last opportunity to table new programs and incentives before Canadians go to the polls. Finance Minister Bill Morneau used the budget to announce a host of updates the government hopes will be popular with voters. These include a change to employee stock options, additional new Canada training credits to help individuals upgrade their skills, and several enhancements to the Canada Pension Plan.
However, much of the early talk so far has been centred on two changes which specifically address the high cost to purchase a new home. These two items are clearly in response to the increasing frustration younger buyers are feeling, as they struggle to deal with property costs in Canada’s larger cities. While prices in Toronto and Vancouver may have eased slightly following earlier attempts by the government to slow rising prices in the Canadian housing market, the prevailing attitude is that young buyers today still face a much greater challenge than their parents when it comes to buying their first home.
To address these concerns, the first of these budget items consists of a change to the existing Home Buyer’s Plan (HBP) that will increase the amount first-time buyers can borrow from their RSP. The second item is the creation of an entirely new incentive program that the government claims will make home ownership more affordable.
Home Buyer’s Plan (HBP)Introduced in 1992, the HBP allows qualifying first-time buyers to borrow up to $25,000 from their RSP to put towards the down payment on the purchase of a new home. This program has been very popular, due largely to the fact that the money can be borrowed tax-free.
However, it must be noted that the money must be repaid to the RSP within 15 years. You’re permitted to repay the money sooner, but at a minimum, you must pay at least one-fifteenth of the outstanding amount each year, starting within two years after the funds were initially withdrawn. If you fail to pay the minimum each year, you must include that amount as additional income on the current year’s tax return.
Once the budget is passed into law, the existing HBP will be enhanced to allow individual first-time buyers to borrow an additional $10,000, up to a maximum of $35,000. Again, this money must be returned to your RSP within 15 years. But for those with sizeable RSP accounts to draw from, being able to significantly increase the down payment will reduce the overall mortgage amount, making monthly carrying costs more manageable.
First-Time Home Buyer IncentiveThe other big housing-related measure in the 2019 budget is the proposal to create the First-Time Home Buyer Incentive. Scheduled for implementation this coming September, the program will provide eligible first-time home buyers with the option to finance a portion of their mortgage with the Canadian Mortgage and Housing Corporation (CMHC).
The CMHC is a Crown corporation, and is Canada’s largest provider of mortgage insurance for buyers who have a down payment of less than 20%. In exchange for lending the funds, and to provide security to backstop the loan, the CMHC will receive a partial equity ownership in the property.
The intention with this approach is to reduce the overall mortgage amount for first-time buyers. In turn, this could result in lower monthly mortgage payments, which in theory at least, should make it possible for more people to afford a home.
With this new program, the CMHC will have an even bigger role in the Canadian housing market. And while we don’t have all the specific details just yet, the plan will essentially function as an interest-free loan for as long as the buyer owns the home.
Here’s what we do know about the proposed program:
There’s also some concern that the increased Home Buyer’s Plan, together with the new First-Time Home Buyer Incentive, could see a surge in demand which could further elevate property prices. The Finance Minister was quick to dispel these fears, suggesting that the supply of new homes will increase as a result of these measures, and this will help keep prices in check.
We’ll know more details for the new program in the coming weeks, as the government works towards an official roll out later this fall. Determining how effective these two measures will be in helping more first-time buyers enter the Canadian housing market, on the other hand, will take longer to determine. (Oaken Financial, Scott Boyd)
However, much of the early talk so far has been centred on two changes which specifically address the high cost to purchase a new home. These two items are clearly in response to the increasing frustration younger buyers are feeling, as they struggle to deal with property costs in Canada’s larger cities. While prices in Toronto and Vancouver may have eased slightly following earlier attempts by the government to slow rising prices in the Canadian housing market, the prevailing attitude is that young buyers today still face a much greater challenge than their parents when it comes to buying their first home.
To address these concerns, the first of these budget items consists of a change to the existing Home Buyer’s Plan (HBP) that will increase the amount first-time buyers can borrow from their RSP. The second item is the creation of an entirely new incentive program that the government claims will make home ownership more affordable.
Home Buyer’s Plan (HBP)Introduced in 1992, the HBP allows qualifying first-time buyers to borrow up to $25,000 from their RSP to put towards the down payment on the purchase of a new home. This program has been very popular, due largely to the fact that the money can be borrowed tax-free.
However, it must be noted that the money must be repaid to the RSP within 15 years. You’re permitted to repay the money sooner, but at a minimum, you must pay at least one-fifteenth of the outstanding amount each year, starting within two years after the funds were initially withdrawn. If you fail to pay the minimum each year, you must include that amount as additional income on the current year’s tax return.
Once the budget is passed into law, the existing HBP will be enhanced to allow individual first-time buyers to borrow an additional $10,000, up to a maximum of $35,000. Again, this money must be returned to your RSP within 15 years. But for those with sizeable RSP accounts to draw from, being able to significantly increase the down payment will reduce the overall mortgage amount, making monthly carrying costs more manageable.
First-Time Home Buyer IncentiveThe other big housing-related measure in the 2019 budget is the proposal to create the First-Time Home Buyer Incentive. Scheduled for implementation this coming September, the program will provide eligible first-time home buyers with the option to finance a portion of their mortgage with the Canadian Mortgage and Housing Corporation (CMHC).
The CMHC is a Crown corporation, and is Canada’s largest provider of mortgage insurance for buyers who have a down payment of less than 20%. In exchange for lending the funds, and to provide security to backstop the loan, the CMHC will receive a partial equity ownership in the property.
The intention with this approach is to reduce the overall mortgage amount for first-time buyers. In turn, this could result in lower monthly mortgage payments, which in theory at least, should make it possible for more people to afford a home.
With this new program, the CMHC will have an even bigger role in the Canadian housing market. And while we don’t have all the specific details just yet, the plan will essentially function as an interest-free loan for as long as the buyer owns the home.
Here’s what we do know about the proposed program:
- In order to qualify, total household income is capped at $120,000. Buyers earning more than a combined $120,000 won’t be eligible for the program.
- First-time buyers purchasing a newly-constructed home can borrow up to 10% of the home price.
- First-time buyers purchasing an existing home can only borrow up to 5%.
- The amount of the insured mortgage, including the CMHC loan, cannot exceed $480,000.
- Buyers must have at least 5% of their own money for the down payment, as this is the minimum down payment requirement to qualify for an insured mortgage with CMHC.
- The loan may be repaid at any time, but any outstanding amount must be fully repaid when the property is sold.
There’s also some concern that the increased Home Buyer’s Plan, together with the new First-Time Home Buyer Incentive, could see a surge in demand which could further elevate property prices. The Finance Minister was quick to dispel these fears, suggesting that the supply of new homes will increase as a result of these measures, and this will help keep prices in check.
We’ll know more details for the new program in the coming weeks, as the government works towards an official roll out later this fall. Determining how effective these two measures will be in helping more first-time buyers enter the Canadian housing market, on the other hand, will take longer to determine. (Oaken Financial, Scott Boyd)
Mortgage industry remains skeptical as Ottawa details new incentive for first-time home buyers(2019.06.17)
Mortgage-industry officials say the government’s First-Time Home Buyer program is likely to fall far short of its goal of making real estate more affordable to many new buyers.
The federal government released new details of the program on Monday, outlining how it offers to top up a first-time home buyer’s down payment with an interest-free payment as a way to make monthly payments lower. One hitch for buyers, though, is that Canada Mortgage and Housing Corp., which will run the program, will hold a piece of the home’s equity in return for providing the interest-free funds. When the home is sold, the owner must pay CMHC back a portion of the value if it has risen. The government would take a loss if the value falls.
The program, first announced in the March, 2019, budget, will launch Sept. 2 – more than a month before Canadians head to the polls.
Jean-Yves Duclos, Minister of Families, Children and Social Development, said the program “will keep the monthly costs down so that younger Canadians – younger middle-class Canadians – have more money for everyday expenses.” In an interview, Mr. Duclos said he is confident the government will hit the target of helping 100,000 Canadians over three years through the incentive.
Mortgage professionals, however, said the program’s limitations mean it will have little appeal for most prospective home buyers.
Mortgage broker Rob McLister, founder of Ratespy.com, said he is struggling to figure out who is the ideal user of the program, because it allows a lower maximum mortgage level than if a borrower were to simply apply for a standard mortgage.
The program limits the total amount of a mortgage to four times the buyer’s household income, while current mortgage rules for people who are not participating in the program allow mortgages of up to 4.7 times a buyer’s household income.
Mr. McLister said he has run many scenarios and cannot find one in which a home buyer would qualify for a bigger mortgage using this program. And given the need to share a portion of any gain in value with the government, he said there are major disincentives to using the program.
“Basically the government is building a bridge to nowhere for first-time buyers,” he said. “I don’t think anyone needs it and very few will want it. To me, this is vote candy. … Basically they are doing a little but trying to appear like they are doing a lot.”
James Laird, president of Toronto-based mortgage brokerage firm CanWise Financial, said people who are buying a home below their maximum financial capacity should be able to afford a mortgage without needing government assistance and without having to give up an ownership stake in their house.
“The only logical conclusion is that this program was designed to not be used, which is logical if their goal was to be able to tell the public they are taking some steps to help first-time home buyers, but they really were concerned about pouring any fuel on the housing market," he said.
The program continues to have the support of the Canadian Real Estate Association, chief executive Michael Bourque said. In an interview, he said his group appreciates the additional details about how the incentive will be paid back. He said those details suggest that homeowners would be wise to pay back the benefit before making major renovations that would significantly increase the value of the property.
“We think it will help and we think that it’s a good initiative because it’s going to help people get into a home where otherwise they wouldn’t be able to,” he said.
As announced in the budget, the new incentive will be available to first-time home buyers with household incomes of less than $120,000. The incentive is worth up to 5 per cent for the purchase of an existing home and up to 10 per cent for a new build.
The homeowner won’t have to pay interest on the incentive, but the money must be paid back after 25 years or when the property is sold, whichever occurs first.
The government will share in the upside or downside of any change in property value. Government officials explained in a technical briefing that when the time comes for a property owner to pay back the incentive, the value of the incentive will be increased or decreased by the same percentage that the overall value of the property has risen or fallen.
An example released on Monday provides an illustration of how the program could work. A $500,000 home could be purchased with a minimum 5-per-cent down payment of $25,000, which must be funded by the buyer. If it is a newly built home, the home buyer could qualify for an additional 10-per-cent down payment top-up from the government, worth $50,000, which would be registered as a mortgage on the property. Because the buyer still does not have a 20-per-cent down payment, the mortgage must also be insured, which adds a further $11,900 insurance premium to the mortgage amount, bringing the total mortgage to $436,900.
That would require a monthly mortgage payment of $2,187, which is a savings of $286 a month or $3,430 a year, compared with a mortgage without the $50,000 government loan. The only caveat is that the $50,000 incentive must eventually be paid back to the government, plus 10 per cent of any future increase in value of the property.
Paul Taylor, chief executive officer of Mortgage Professionals Canada, which represents people working in the mortgage-brokerage sector, said on Monday the mortgage industry is going to incur costs building the technology and documentation to offer this program, but many are not optimistic it will be widely used because the total mortgage size is so restricted.
“We think it’s definitely going to have very regional application,” he said. “In the two most expensive cities, where we would suggest first-time home buyers need the most support, this solution is not really going to do that."(The Globe and Mail, Bill Curry & Janet McFarland)
The federal government released new details of the program on Monday, outlining how it offers to top up a first-time home buyer’s down payment with an interest-free payment as a way to make monthly payments lower. One hitch for buyers, though, is that Canada Mortgage and Housing Corp., which will run the program, will hold a piece of the home’s equity in return for providing the interest-free funds. When the home is sold, the owner must pay CMHC back a portion of the value if it has risen. The government would take a loss if the value falls.
The program, first announced in the March, 2019, budget, will launch Sept. 2 – more than a month before Canadians head to the polls.
Jean-Yves Duclos, Minister of Families, Children and Social Development, said the program “will keep the monthly costs down so that younger Canadians – younger middle-class Canadians – have more money for everyday expenses.” In an interview, Mr. Duclos said he is confident the government will hit the target of helping 100,000 Canadians over three years through the incentive.
Mortgage professionals, however, said the program’s limitations mean it will have little appeal for most prospective home buyers.
Mortgage broker Rob McLister, founder of Ratespy.com, said he is struggling to figure out who is the ideal user of the program, because it allows a lower maximum mortgage level than if a borrower were to simply apply for a standard mortgage.
The program limits the total amount of a mortgage to four times the buyer’s household income, while current mortgage rules for people who are not participating in the program allow mortgages of up to 4.7 times a buyer’s household income.
Mr. McLister said he has run many scenarios and cannot find one in which a home buyer would qualify for a bigger mortgage using this program. And given the need to share a portion of any gain in value with the government, he said there are major disincentives to using the program.
“Basically the government is building a bridge to nowhere for first-time buyers,” he said. “I don’t think anyone needs it and very few will want it. To me, this is vote candy. … Basically they are doing a little but trying to appear like they are doing a lot.”
James Laird, president of Toronto-based mortgage brokerage firm CanWise Financial, said people who are buying a home below their maximum financial capacity should be able to afford a mortgage without needing government assistance and without having to give up an ownership stake in their house.
“The only logical conclusion is that this program was designed to not be used, which is logical if their goal was to be able to tell the public they are taking some steps to help first-time home buyers, but they really were concerned about pouring any fuel on the housing market," he said.
The program continues to have the support of the Canadian Real Estate Association, chief executive Michael Bourque said. In an interview, he said his group appreciates the additional details about how the incentive will be paid back. He said those details suggest that homeowners would be wise to pay back the benefit before making major renovations that would significantly increase the value of the property.
“We think it will help and we think that it’s a good initiative because it’s going to help people get into a home where otherwise they wouldn’t be able to,” he said.
As announced in the budget, the new incentive will be available to first-time home buyers with household incomes of less than $120,000. The incentive is worth up to 5 per cent for the purchase of an existing home and up to 10 per cent for a new build.
The homeowner won’t have to pay interest on the incentive, but the money must be paid back after 25 years or when the property is sold, whichever occurs first.
The government will share in the upside or downside of any change in property value. Government officials explained in a technical briefing that when the time comes for a property owner to pay back the incentive, the value of the incentive will be increased or decreased by the same percentage that the overall value of the property has risen or fallen.
An example released on Monday provides an illustration of how the program could work. A $500,000 home could be purchased with a minimum 5-per-cent down payment of $25,000, which must be funded by the buyer. If it is a newly built home, the home buyer could qualify for an additional 10-per-cent down payment top-up from the government, worth $50,000, which would be registered as a mortgage on the property. Because the buyer still does not have a 20-per-cent down payment, the mortgage must also be insured, which adds a further $11,900 insurance premium to the mortgage amount, bringing the total mortgage to $436,900.
That would require a monthly mortgage payment of $2,187, which is a savings of $286 a month or $3,430 a year, compared with a mortgage without the $50,000 government loan. The only caveat is that the $50,000 incentive must eventually be paid back to the government, plus 10 per cent of any future increase in value of the property.
Paul Taylor, chief executive officer of Mortgage Professionals Canada, which represents people working in the mortgage-brokerage sector, said on Monday the mortgage industry is going to incur costs building the technology and documentation to offer this program, but many are not optimistic it will be widely used because the total mortgage size is so restricted.
“We think it’s definitely going to have very regional application,” he said. “In the two most expensive cities, where we would suggest first-time home buyers need the most support, this solution is not really going to do that."(The Globe and Mail, Bill Curry & Janet McFarland)
房價上漲 生活開支劇增 首次購房人數年降9百分點 80%購房者指多溫兩市房屋難負擔（2019.11.16）
【明報專訊】加拿大按揭及房屋公司(Canada Mortgage and Housing Coropration﹐CMHC)最新一份市場調查顯示﹐由於房價上漲﹐首次購房者人數出現明顯下降。
CMHC調查在今年3月到5月間隨機訪談了主要來自安省和魁省的1400名首次購房者和換房者﹐結果發現﹐今年至今首次購房者佔購房總人數的比例為47%﹐而去年這個比例為56%﹐下降了9個百分點。
CMHC規劃專家兼新聞發言人Colette Kikongi說﹐「我對於首次購房者人數下降不感到驚訝﹐因為許多因素﹐特別是高昂房屋阻礙了他們的入市腳步。在我們的調查數據中﹐超過一半購房者認為當前的房價太高。更有80%購房者說﹐由於多倫多溫哥華地區的房價連年上漲﹐他們很難發現一處可負擔的房屋。」
根據CMHC上月的另一份報告﹐多倫多地區的房屋均價到2021年將達到94.9萬元﹐遠遠超出大部分購房者的負擔。
調查還發現﹐31%的首次購房者﹐由於無法發現可負擔住房﹐他們的租房年限都在10年以上﹐實際上推遲了買房計劃﹐而這個比例比去年調查結果(22%)提高了九個百分點。
銀行放貸數額限制 不少人置業受影響
Colette Kikongi繼續說道﹐「調查統計﹐能夠負擔起當前房價的購房者人數從2018年的佔比78%下降到今年的60%。由於房價連年上漲﹐越來越多人無法實現自己的購房夢想。」
對於影響人們購房的另一個重要因素「壓力測試」﹐調查顯示﹐雖然75%購房者表示對於他們做出購房決定沒有任何影響﹐但實際上由於受到銀行放貸數額限制﹐今年60%購房者所購房產比原計劃的面積更小或者總價較低﹐而去年受影響的購房者佔比為47%。
Colette Kikongi表示﹐「如果銀行房貸壓力測試繼續存在﹐將使得越來越多購房者無法獲得充足銀行貸款﹐從而影響到他們的買房計劃。」
Colette Kikongi還表示﹐「除了房價是影響人們購房置業的最主要因素外﹐生活的不確定性以及生活成本的增加也阻礙着人們的買房決定。 像多倫多溫哥華這樣的大都市﹐租房成本上漲厲害﹐人們根本攢不下購房的首付款。雖然聯邦政府最近推出首次購房者優惠政策﹐即幫助購房者支付購房價的5%資金用作首付款﹐但是對於不斷上漲的房價﹐這點支援實在是杯水車薪。」
根據全國租房交易網站Rentals.com統計﹐今年10月全國房屋平均租金1940元﹐比去年同期上漲5.5%﹐多倫多市中心2居室柏文單位平均租金已漲到2200元到2500元。（明报）
CMHC調查在今年3月到5月間隨機訪談了主要來自安省和魁省的1400名首次購房者和換房者﹐結果發現﹐今年至今首次購房者佔購房總人數的比例為47%﹐而去年這個比例為56%﹐下降了9個百分點。
CMHC規劃專家兼新聞發言人Colette Kikongi說﹐「我對於首次購房者人數下降不感到驚訝﹐因為許多因素﹐特別是高昂房屋阻礙了他們的入市腳步。在我們的調查數據中﹐超過一半購房者認為當前的房價太高。更有80%購房者說﹐由於多倫多溫哥華地區的房價連年上漲﹐他們很難發現一處可負擔的房屋。」
根據CMHC上月的另一份報告﹐多倫多地區的房屋均價到2021年將達到94.9萬元﹐遠遠超出大部分購房者的負擔。
調查還發現﹐31%的首次購房者﹐由於無法發現可負擔住房﹐他們的租房年限都在10年以上﹐實際上推遲了買房計劃﹐而這個比例比去年調查結果(22%)提高了九個百分點。
銀行放貸數額限制 不少人置業受影響
Colette Kikongi繼續說道﹐「調查統計﹐能夠負擔起當前房價的購房者人數從2018年的佔比78%下降到今年的60%。由於房價連年上漲﹐越來越多人無法實現自己的購房夢想。」
對於影響人們購房的另一個重要因素「壓力測試」﹐調查顯示﹐雖然75%購房者表示對於他們做出購房決定沒有任何影響﹐但實際上由於受到銀行放貸數額限制﹐今年60%購房者所購房產比原計劃的面積更小或者總價較低﹐而去年受影響的購房者佔比為47%。
Colette Kikongi表示﹐「如果銀行房貸壓力測試繼續存在﹐將使得越來越多購房者無法獲得充足銀行貸款﹐從而影響到他們的買房計劃。」
Colette Kikongi還表示﹐「除了房價是影響人們購房置業的最主要因素外﹐生活的不確定性以及生活成本的增加也阻礙着人們的買房決定。 像多倫多溫哥華這樣的大都市﹐租房成本上漲厲害﹐人們根本攢不下購房的首付款。雖然聯邦政府最近推出首次購房者優惠政策﹐即幫助購房者支付購房價的5%資金用作首付款﹐但是對於不斷上漲的房價﹐這點支援實在是杯水車薪。」
根據全國租房交易網站Rentals.com統計﹐今年10月全國房屋平均租金1940元﹐比去年同期上漲5.5%﹐多倫多市中心2居室柏文單位平均租金已漲到2200元到2500元。（明报）
加人延後購屋者年升9% 三成首置族租屋逾10年（2019.11.18）
【明報專訊】加拿大按揭及房屋公司(Canada Mortgage and Housing Corp，CMHC)一份新報告指出，對一些加拿大人而言，擁有一棟房屋的路途相當漫長。
CMHC訪問的首次購屋族中，31%表示他們曾經租屋超過10年。報告也指出，延後購屋的人數也在上升中，今年延後購屋的人數較去年上升9%。
CMHC的2019按揭消費者調查(2019 Mortgage Consumer Survey)主題為負擔能力。80%接受調查者表示，負擔能力或房價是他們購屋時必須考慮的兩項因素。73%表示房間數是首要考慮因素，67%表示公共交通的方便性是他們購屋首要考慮。CMHC商業計劃及報告專家Colette Kikongi表示，多年來，購屋族考慮的都是「地點，地點，地點」，但今年主題似乎轉移至購屋成本。他指出，今年調查中，60%購屋者都表示他們為新屋支付了能負擔得起的最高價。此一比率看起來甚高，但已較去年的78%下降。
Kikongi表示，此一結果顯示購屋者對負擔能力的顧慮。他說：「他們希望能控制自己的財務狀況並確保他們在適當時機進入市場。」對於為何超過三分之一的加拿大人要等10年或更長才購屋的問題，Kikongi表示，這有數種因素。
Kikongi表示，除了房價的普遍顧慮外，調查數據顯示，購屋及相關成本的不確定性亦在升高中。她說，延後購屋的背景是房價上漲，這種情形在多倫多及溫哥華市尤然。
全國平均租金1940元年升5.5%
根據Rentals.com最新的全國報告，加拿大10月份全國平均房屋租金為1,940元，較去年同期上升5.5%。對一些加拿大人而言，房租增高意味者他們可以用來付新房訂金的金錢減少。
與此同時，加拿大最大城市的房價也已升高，使得籌措5%最低訂金亦變得更為困難。
一份2016年報告發現，加拿大人平均籌措訂金的時間，較15年前增加了一倍。CHMC從事按揭消費者調查工作已有20年。
調查結果是經由網上1,385名全國各地參與者的意見蒐集而得出。這些網上參與者半數為老買家，剩下半數則為新買家。
CMHC訪問的首次購屋族中，31%表示他們曾經租屋超過10年。報告也指出，延後購屋的人數也在上升中，今年延後購屋的人數較去年上升9%。
CMHC的2019按揭消費者調查(2019 Mortgage Consumer Survey)主題為負擔能力。80%接受調查者表示，負擔能力或房價是他們購屋時必須考慮的兩項因素。73%表示房間數是首要考慮因素，67%表示公共交通的方便性是他們購屋首要考慮。CMHC商業計劃及報告專家Colette Kikongi表示，多年來，購屋族考慮的都是「地點，地點，地點」，但今年主題似乎轉移至購屋成本。他指出，今年調查中，60%購屋者都表示他們為新屋支付了能負擔得起的最高價。此一比率看起來甚高，但已較去年的78%下降。
Kikongi表示，此一結果顯示購屋者對負擔能力的顧慮。他說：「他們希望能控制自己的財務狀況並確保他們在適當時機進入市場。」對於為何超過三分之一的加拿大人要等10年或更長才購屋的問題，Kikongi表示，這有數種因素。
Kikongi表示，除了房價的普遍顧慮外，調查數據顯示，購屋及相關成本的不確定性亦在升高中。她說，延後購屋的背景是房價上漲，這種情形在多倫多及溫哥華市尤然。
全國平均租金1940元年升5.5%
根據Rentals.com最新的全國報告，加拿大10月份全國平均房屋租金為1,940元，較去年同期上升5.5%。對一些加拿大人而言，房租增高意味者他們可以用來付新房訂金的金錢減少。
與此同時，加拿大最大城市的房價也已升高，使得籌措5%最低訂金亦變得更為困難。
一份2016年報告發現，加拿大人平均籌措訂金的時間，較15年前增加了一倍。CHMC從事按揭消費者調查工作已有20年。
調查結果是經由網上1,385名全國各地參與者的意見蒐集而得出。這些網上參與者半數為老買家，剩下半數則為新買家。
聯邦雖放寬提取RRSP首置者歎仍追不上樓價
First Time homebuyers are getting older
首置族平均年齡持續提高至32歲
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