Renewing your mortgage in 2023?

A lot of my business is renewals. It is tempting to sign the renewal letter a lender sends but by doing so you may not be getting the best mortgage. The rate may be higher than market, it may not even be the lender's best offer or the terms/fine print could cost you significantly if you need to break the contract mid-term. Let me review your specific situation when your mortgage renews, the service is free and then you can be certain about the path you are on.

New Real Estate rules Ef. Jan 1, 2023

BC’s 3-day Rescission Period
This allows a “cooling off” period for buyers
*excludes the day of acceptance, weekends & holidays
*cannot be waived by any party
*contract can be rescinded with a .25% fee, it’s unclear if it will be payable “up front” at this point
*normal subjects/conditions still apply and the rescission cannot be used if you cannot fulfill one or more of your conditions
Federal Foreign Buyer Policy (2-year ban)
Foreign citizens will not be allowed to buy a residential property in Canada except in certain areas (Whistler for example) or if you are one of the following:
(a) a temporary resident within the meaning of the Immigration and Refugee Protection Act who satisfies prescribed conditions;
(b) a protected person within the meaning of subsection 95(2) of that Act;.
(c) an individual who is a non-Canadian and who purchases residential property in Canada with their spouse or common-law partner if the spouse or common law-partner is a Canadian citizen, person registered as an Indian under the Indian Act, permanent resident or person referred to in paragraph (a) or (b); or
(d) a person of a prescribed class of persons.

Bill C-23 Home Flipping Tax ef. Jan 1,2023

Anti-flipping and the Canada Revenue Agency

Essentially, under the new tax law, anyone who sells a property that they owned for less than 12 months (specifically, 365 consecutive days) will be considered to have “flipped” the house, and any profits from the deal will be taxed as business income.

Exemptions will apply to some changes in life circumstances;

Births of children

New Job

Divorce

Death

Disability; or other circumstances not yet known (the new legislation may or may not contain a detailed list).

Good new for Self Employed borrowers from CMHC.

Good new for Self Employed borrowers from CMHC.

Finally some good news for self employed borrowers.

BoC hike this month a dead certainty - observer

BoC hike this month a dead certainty - observer

If you have a variable rate mortgage, home equity line of credit, credit cards or personal loans, this affects you.

Understanding the Real Estate details in the B.C. Budget 2018

ADDITIONAL PROPERTY TAX FOR FOREIGN ENTITIES AND TAXABLE TRUSTEES
1.Has gone from 15% to 20%, effective today.
2.Contracts written before Feb. 20, 2018 with a closing on or before May, 2018 are exempted, but only for Capital Regional District, Fraser Valley Regional District, Regional District of Central Okanagan or Nanaimo Regional District. Note this exemption does not apply in Greater Vancouver.
3.Transfers pursuant to court order, order nisi of foreclosure, separation agreement, transfer from personal rep of deceased’s estate to beneficiary or transfer to surviving joint tenant are also exempt, provided the triggering event occurred before Feb. 20, 2018.
4.This tax applies to the Capital Regional District, Fraser Valley Regional District, Regional District of Central Okanagan, Nanaimo Regional District and Greater Vancouver. The areas for each region can be found at https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/understand/additional-property-transfer-tax/bc-areas
5.Only on residential property; if property is farmland or commercial with a residential component, tax applies on the residential component.
6.Exemption for BC Provincial Nominee Program still applies.

SPECULATION TAX

1.Tax is meant to target foreign and domestic homeowners who do not pay income tax in B.C.
2.Tax will apply to same areas as foreign buyers tax apart from Okanagan, where it only applies to Kelowna and West Kelowna.
3.Starts in 2018 at $5.00 per $1,000.00 of assessed value, goes up to $20 in 2019.
4.Not sure how this will affect vacation homes, nor when this tax is payable.

PROPERTY TRANSFER TAX

1.Tax rises from 3% to 5% on value of homes over $3,000,000.00.
2.Remains at 1% on first $200,000.00, 2% on amounts between $200,000.00 and $2,000,000; 3% on amounts between $2,000,000.00 and $3,000,000.00 and 5% on amounts over $3,000,000.00.

PRE-SALE CONDO ASSIGNMENTS

1.Developers will collect and report information about pre-sale condo purchases; nothing else in budget about pre-sale contracts or assignments that we have seen.

B.C. HOME OWNER SECOND MORTGAGES 

1.    This program is now cancelled.

 

Stay tuned as there will be more to come. 

IMG_5298.GIF

A helping hand to get a foot in the door 

It is no secret that it is getting tougher for younger generations to buy a home, especially in Vancouver where the cost of living can make it exceptionally difficult to save the minimum down payment. If used correctly, one program which may help struggling first timers get into the market is the B.C. Home Owner Mortgage and Equity Partnership Program a.k.a. BC Home Partnership.

 

This program is available to eligible first-time homebuyers by providing repayable down payment assistance loans.

 

Here is how it works:

 

The B.C. Home Partnership program will meet the buyer’s contribution up to 5% of the home’s

purchase price, to a maximum purchase price of $750,000.

 

·       Maximum loan amount is $37,500.

·       After five years, buyers can either repay their loan or enter into monthly payments at current interest rates.

·       Loans through the program are amortized over 25 years which is the same length as most mortgages.

·       The applicant needs to be a Canadian citizen or permanent resident for five years, live in BC, have a household income under $150,000 per year and be pre-approved for a high-ratio mortgage, among other requirements.

 

For a first-time home buyer that has good earning potential but has not had adequate time to save a down payment, this program allows entry into the market with as little as 2.5% down. It also provides an adequate amount of time to increase earning power to pay off the loan upon renewal or to afford the associated payments by renewing the loan.

 

There are important details to know before opting for this program:

 

·       The home being purchased must be used as the principal residence of all individuals on the title for the five years after purchasing. Any changes to the title will trigger the loan to become due and payable, except in the instance of divorce or new marriage and homeowner(s) qualifies to retain the loan.

·       Borrowers incur extra legal costs of approximately $560 for the second mortgage registration, these fees are deducted from the mortgage proceeds.

·       The minimum equity component from the borrower can be gifted from immediate family member.

·       Mortgage cannot be transferred to a new lender upon renewal if the B.C. Home Partnership loan remains outstanding. This can mean a higher renewal rate if the existing mortgage holder does not offer the lowest market rate.

 

Other programs are available to help first-time buyers save on property transfer tax (PTT). The First Time Home Buyers Program can save first-time buyers up to $7,500 when purchasing a home valued up to $475,000.

 

Or, first-time buyers can access the Newly Built Homes Exemption, which can save buyers up to $13,000 in PTT when purchasing a newly constructed or subdivided home worth up to $750,000.

 

The most effective way to buy a home remains to be with a 20% minimum down payment which avoids costly insurer fees. However, if the choice between renting and home ownership which is reliant on getting the down payment, the BC Home Partnership is a viable option.

 

For more details and to see if you qualify: https://www2.gov.bc.ca/gov/content/home/featured-services/services/bc-home-owner-mortgage-and-equity-partnership-program

OSFI rule changes may mean a spike in reverse mortgages

OSFI rule changes may mean a spike in reverse mortgages

Will this lead to an erosion of capital and under funding of retirement for seniors?

OSFI's rule changes will hurt small towns

OSFI's rule changes will hurt small towns

In such a diverse place, with unique local markets, is it wise to be painting with such a broad brush?

Is the government guilty of facilitating anti-competitive practice?

Is the government guilty of facilitating anti-competitive practice?

Some are wondering if the federal government is deliberately sabotaging some lenders to benefit large banks