A valuable incentive that
home buyers can take advantage of is the Government’s Home Buyers’ Plan (HBP). In my experience, however, there is some confusion surrounding this
program, and so I’d like to take this opportunity to provide you with a clear,
The HBP allows would-be home buyers the opportunity to withdraw up to $25,000
from their RRSP without incurring any withholding or income tax, and use it
towards a home. The amount withdrawn then needs to be paid back into an RRSP
over a 15 year period, with equal amounts due each year (i.e. 1/15th).
However, not all homes
qualify for the HCP program. The home must be in Canada, it must be a principal place of residence, and it
must be purchased or built by October 1st of the year
In my experience helping numerous home buyers –
especially first timers – knowing the difference between a pre-qualified mortgage and pre-appoved mortgage is a VERY important. Unfortunately, there is a lot of confusion surrounding the two (probably because they "seem" to be the same thing if you just go by what they're called).
To help you avoid any unpleasant surprises or
needless stress, let me
explain the difference between the two in a simple and jargon-free way.
A pre-qualified mortgage is a fairly simple process,
and it can usually be done over the phone or over the Internet. You provide a
lender (e.g. a bank or other financial-type institution) with a snapshot of
your financial picture. This includes your income,
blogged about how to sell
your home in a winter, so now it makes sense to look at things from the
other side: buying a home in the winter.
speaking (and this winter is no exception so far), buyers tend to hibernate a
bit and wait for the spring before they shift their house hunting into a higher
gear. Everything from weather to taking care of those holiday season credit
card bills (ouch) contribute to this trend.
if you’re in the market for a new or next home, then this doesn’t mean that you
should necessarily follow suit. On the contrary, because there are fewer buyers
out there for you to compete with -- especially when it comes down to making an
offer -- you stand a very good chance of getting an incredible deal.
January 5th, I wrote about the Minister
of Finance’s concern over Canadians’ household mortgage debt, and how some
changes to borrowing rules were probably in the works. Those changes were
clarified and confirmed this morning.
the Department of Finance’s
website, here are the changes to mortgage rules that people in Edmonton and across Canada will face in the coming year:
Effective March 18, 2011, the maximum amortization period will be reduced
from 35 years to 30 years for new government-backed insured mortgages that have
a loan-to-value ratio of more than 80%. According to the government,
this will reduce the overall interest payments that Canadians must make on
their mortgage, which will free up more money to go towards principal.
a few times about Edmonton (and Alberta’s) growing housing market, so this
latest news may seem as a shock – but really, it’s nothing to worry about and,
on the contrary, quite predictable.
what’s this latest news? Well, it’s the one that points out that in December, Edmonton’s housing market dipped in a couple of ways. First,
average home prices fell to $308,496, or about $10,000 vs. November. Second,
the total number of homes sold also fell from 1,120 in November to 784.
at first glance this news may seem shocking and scary. But when you recall that
we’re talking December in Edmonton here,
you can see that the dip is normal for this time of year. Not only were many
folks preoccupied with holiday tasks, but there were fewer
most folks in Canada talk about “harsh winter weather,” we Edmontonians – as polite as we
are – tend to roll our eyes a bit. That’s because, as we all know, winter in Edmonton isn’t like
winter in, say, Vancouver or Toronto (have they called the army in to dig them out, yet?).
what does the weather have to do with Edmonton real estate?
If you’re selling your home, it has a
lot to do with it – because, frankly, selling a home in winter can be a
relatively tougher sell. It’s more of an effort for folks to get around, they
spend less time milling about the outside of a property (not fun to do when
there’s a wind chill of -15), and it can be hard to envision what a house will
really look like when it’s covered under 30 cm of snow.
While the nationwide economic picture still looks pretty grim, Alberta’s economy experienced relatively strong
growth of about 4% in 2010, and is expected to enjoy modest growth through
2011, according to Troy
Recovering crude oil prices seem to be driving most of this
growth, which would be even higher were it not for sluggish natural gas prices.
Still, in the shadow of the Great Recession and the biggest economic freefall
since the 1920s, 4% growth – heck, 1%
growth – is a good news story; especially when we note that other parts of
the country are still struggling mightily to right their local and regional
How the “Modestly Growing” Alberta Economy Impacts Home
Buyers and Sellers
As reported by the Edmonton
Journal, most Edmonton home owners are in for a jolt when they receive their 2011
tax assessments from the City of Edmonton. That’s because after two years of
declining prices, Edmonton’s 2010 property value assessments jumped an average of 9%.
Overall, the City of Edmonton assessed 319,608 properties worth $134
billion. The average home price in 2010 was $363,000.
Property value assessments are made up of a number of factors,
including location, features, current selling prices for comparable properties,
and more. In addition, neighbourhoods play a significant factor in overall
value increases (or decreases). For example, Mactaggart and North Glenora are seeing average 20% price increases,
while Windermere and Oliver are
a recent interview with QMI
Agency, Federal Finance Minister Jim Flaherty expressed concern that
Canadians are being weighed down by a mountain of debt – particularly mortgage
debt and home equity loans.
of it is rational in the sense that people can carry more debt when interest
rates are very low,” Flaherty commented. “And no doubt people have bought more
expensive houses than they need to have because they could afford to, because
interest rates are low…Our concern is at the moment is as interest rates go up,
which they inevitably will, we want people to be able to afford their
an Edmonton Realtor, I certainly understand the Minister’s point and agree that
some Canadians have over-extended themselves in terms of debt.