New Mortage Rule Changes

By Sev TozcuTue, 2011-02-01 14:27

The below blog post was written by Manzil Bacchus, who has been an AMP at Scotiabank for over 30 years. I recently heard him speak at a Century 21 Seminar for REALTORS and asked him if he could provide LiveDowntown.ca with an occasional blog post with his market insight.

For all those prospective buyers - especially if you are a first time home
buyer,- who are considering purchasing a home in the near future - between
now and March 18th, 2011 is probably the best time.
WHY!

1. If you are a first-time buyer and do not have an RRSP, then March 1st,
2011 is the deadline to contribute to an RRSP. This program will allows you
to put up to $25,000.00 into an RRSP and withdraw it 90 days after when you
enter into an agreement to purchase a home. If the funds you are planning
to use as a downpayment is not in a RRSP - put it now (up to $25,000.00).
It will generate a tax receipt for you that will reduce the amount of
income tax you have to pay in 2010. You will get a nice refund when you
file your 2010 tax return. Remember , you have only one chance to take
advantage of the first-time home buyer programs.

2. A regulation eliminating the 35 year amortization takes effect on March
18th, 2011. Now, no one wants to take 35 years to pay off a mortgage -
however with the elimination of the 35 years amortization not only will you
have to pay more monthly but you will also qualify for less mortgage when
the banks use a 30 year amortization on March 18th, 2011.
eg. An applicant who was able to qualify for a mortgage of $250,000.00
based upon a 35 year amortization would only qualify for a $235,000.00
based upon a 30 year amortization if the debt servicing ratios were at the
limits.
The deadline of March 18th, 2011 is applicable to the date one enters into
an agreement to purchase a home and not the actual closing date , i.e one
can enter into an agreement to purchase a home on March 17th, 2011, with a
closing date of July 15th, 2011, and can still be approved for a 35 year
amortized mortgage.

3. All indications are the Real Estate market will be strong this year -
which would mean that prices will not decrease in 2011.

4. The tax credit offered by the Government of Ontario is still in effect
for first time homebuyers. Not sure when or if this program will end.

All the best

Manzil Bacchus AMP
Mortgage Development Manager -Scotiabank
Direct line: 416-230-2938