Published April 8, 2019
Is it better to buy now or wait?
It’s big news: Prime Minister Justin Trudeau announced a program aimed at helping Canadian families buy their first home.
But what does this mean for you?
We’ve talked to experts to decode the rules of this new first time home buyer program. And why buying a home before September 2019 might be a good choice.
If you’re a first time home buyer, read on to learn more.
Facts About the Incentive
- It’s called the First-Time Home Buyer Incentive.
- Households must have income under $120,000 to qualify.
- Applicants must be a first time home buyer.
- CMHC will loan you 5% of the house value for your down payment.
- If the house is brand new, you can borrow up to 10% for your down payment.
- Interest-free first time home buyer loan.
- Scheduled to start in September 2019 (but not confirmed).
Let’s Hear the Opinions of 3 Edmonton Experts:
Finance Expert: Lorne Rackel
General Manager Jayman Financial and a Broker of Record.
Lorne isn’t convinced the program will really help buyers. He explains that even though it’s expected to launch in September, the details are still very unclear.
A few things worry him:
- The specific rules keep changing.
- The government hasn’t shared all the details.
- Household income must be less than $120,000.
- Total mortgage amount can’t exceed 4x income.
“This incentive will help some customers,” says Rackel, “because it reduces monthly costs. But it also reduces your borrowing power.”
If you wait until fall, you could qualify for less.Lorne Rackel General Manager and Broker, Jayman Financial
Overall, Rackel believes the incentive is genuinely meant to help, but that the rules are too unclear for consumers to fully benefit by Fall.
Realtor Expert: Wally Karout
Royal LePage ArTeam Realty
Wally has been a Realtor in Edmonton for 17 years. He thinks that while the government program is a step in the right direction, the incentive isn’t going to help new home buyers qualify in the short term.
If the Liberal Government is elected, and the program goes forward, even then, this incentive only helps with the down payment.
It doesn’t help with qualifying for a mortgage.
Do your research.
Wally says that most people he talks to these days are smart enough to do their research. When they do, they quickly realize that they’d rather take advantage of today’s low interest rates rather than wait for a program that depends on politics and the government.
There are concrete reasons to shop now: builders are offering low prices and interest rates are low.Wally Karout, Royal LePage ArTeam Realty
Award-Winning Sales Expert: Muriel McKay
Area Sales Manager, Crimson Cove Homes
Muriel won the Platinum Sales Volume Award at this year’s CHBA Awards of Excellence in Housing Awards and has been selling new homes in Edmonton for 20 years. Many of her clients are first time home buyers.
Muriel is hopeful about the program may be in a year or two, but for now, she thinks consumers should focus on the fact that Edmonton is currently a buyers market.
“Shop for deals locally,” says Muriel, “they’re out there and they are more reliable than potential future savings.”
Muriel also understands that for some new home buyers, the savings advantage may be clear cut. For anyone who does decide to wait, she offers important advice: do your homework to understand the potential tax implications.
“Everyone’s dream is to be a homeowner,” says McKay.
“If you can save your own money and buy now, prices and interest rates are low.”
McKay counsels new home buyers to save money for a down payment, rather than more borrowing, and more debt. Her advice:
- Pay off your credit cards
- Pay off your debt
- Save for your own down payment
This way, you aren’t relying on the government. “The rules can change with the stroke of a pen,” says McKay.
Crimson Cove Homes offer clients to build over a longer time, giving you a chance to save more money for your downpayment. They are many options and incentives for First Time Home Buyers, make sure to ask your Builder and Mortgage Broker so you have all the purchasing advantages.
Builders are offering so many incentives, but the minute this economy turns, prices will rise. Buy now, while house prices are competitive.Muriel Mckay, Award-Winning Area Sales Manager, Crimson Cove Homes
- Ask builders about incentives.
- If you do decide to put off your new home purchase until the fall, make sure you fully understand how it might affect your income tax bill. First time home buyers have specific tax advantages, but the last thing you want is surprises on your income tax next April.
- Everyone’s financial situation is different: do your own homework.
This post is not intended to provide tax, legal or financial advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or financial advice. You should consult your own tax, legal and financial advisors before engaging in any transaction.