Details of the FTHBI – First Time Home Buyer Incentive
The First-Time Home Buyer Incentive (FTHBI) officially starts on September 2, 2019. Introduced help first-time home buyers, the FTHBI will provide shared equity loans of 5% toward the down payment of a resale home, and 5% or 10% for newly-built homes.
The idea is that by boosting the size of buyers’ down payments, the FTHBI lowers the monthly mortgage payment and is some relief on the costs of home ownership.
Details of Qualification
To qualify for the FTHBI, home buyers must satisfy the following:
- At least one person in the household must be a first-time home buyer, meaning they have not owned a home, or dwelled in a home owned by their spouse, over the last four years. (An exception is made for buyers who’ve had a breakdown of marriage or common-law relationship.)
- Buyers must have a minimum of 5% down payment from “own resources” to qualify for a CMHC insured mortgage.
- Buyers’ combined household income cannot exceed $120,000. This includes the income of any guarantors co-signing on the mortgage, as well as any rental income generated if part of the home is tenanted out.
- The buyers’ Mortgage-to-Income Ratio (MTI) cannot exceed 4x their income, including the portion that’s provided by the FTHBI. This means the maximum down payment for a resale home cannot exceed 14.99%, and 9.99% for a new build.
Details of How It Works
The funds provided are registered as a second mortgage on title, and don’t incur interest.
This second mortgage must be paid back in full when the first insured mortgage matures at 25 years or when the home is sold, whichever comes first. Homeowners may pay it back as a lump sum early without penalty. (Details of how the value at the time of payout are yet to be released.)
Because it is a shared equity mortgage, the amount to be paid back fluctuates along with the value of the home over time: if the home’s assessed value rises, the loan repayment will increase by the same percent. However, the same will occur if the home has lost value by the time it is sold or the mortgage matures.
There are more details on the last post on savings including this chart below: http://markherman.ca/updates-to-cmhc-first-time-buyer-incentive-program/
Savings Over Time
This is a handy chart to see the savings on the monthly payment when using the program.
OVERALL
The program looks to be a helper for saving on payments and that is a great thing.
Mark Herman, Top& Best Calgary Mortgage Broker
Calgary Housing Affordabilty IMPROVES!
This short version of the article should provide some confidence that the sky is not falling in Calgary and we will recover.
Mortgage Mark Herman, Best Calgary mortgage broker for home purchases and mortgage renewals
Housing affordability continues to improve in Calgary market
Owning a home in Calgary at market price remains more affordable than it has been on average since the middle of the 1980s, says a new report released Monday by RBC Economics Research.
But the latest Housing Trends and Affordability Report said movements in oil prices are likely to exert a stronger influence on the market direction in the short term.
“Alberta’s housing market is still feeling the impact from the oil price shock,” said Craig Wright, senior vice-president and chief economist, RBC. “That said, the dust began to settle this spring, and we saw a gradual recovery in confidence, which helped rebalance demand-supply conditions. Home re-sales started to turn around, and sellers no longer rushed to list their properties.”
The RBC Housing Affordability measures, which capture the proportion of pre-tax household income needed to service the costs of owning a home at market values, fell slightly in Calgary for both two-storey homes, to 31.9 per cent, and bungalows to 32.4 per cent. The measure for condos stayed relatively the same 19.5 per cent.
RBC’s Housing Affordability measure for the benchmark detached bungalow in Canada’s largest cities was: Vancouver 88.6 (up 3.0 percentage points); Toronto 59.4 (up 2.1 percentage points); Montreal 36.0 (down 1.2 percentage points); Ottawa 35.4 (unchanged); Calgary 32.4 (down 0.4 percentage points); Edmonton 32.5 (down 0.4 percentage points).
“With home resales beginning to turn around and sellers no longer rushing to list their properties in the spring, there was evidence that confidence slowly returned to the Alberta market in the second quarter following the hard blow delivered by the oil price plunge in the previous two quarters,” said the report.
Payout penalties – how the Big-5 banks get you
Below is a great example of how the Big-5 banks get you on a mortgage payout.
Always talk to a broker about your mortgage because Grandma used to say, “the rate is the rate, but the details are the details!”
Mark Herman
Top Alberta mortgage broker for home purchases and mortgage renewals
As you can see from the example below, the banks “discount rate recapture policy” can result in some pretty hefty added costs —$6,048 in the scenario here!
Example:
On July 31, 2011, you buy your first home and sign a five-year, fixed-term mortgage. As your family grows, you start looking at a bigger home, and after a few months of searching, you find the perfect one—on August 1, 2013.
Because of this unexpected upgrade, you now have to break your mortgage three years before it matures (you have $320,000 left on your mortgage). When you signed your current mortgage, you weren’t concerned about prepayment penalties, but as you can see below, prepayment penalties can have a significant financial impact on your bottom line.
| Your situation | |
|---|---|
| Mortgage date | July 21, 2011 |
| Date you break your mortgage | August 1, 2013 |
| How much you have left owing on your mortgage | $320, 000 |
| Your original mortgage term | 5 years |
| How many years left you have on your term | 3 years |
| Comparison | ||
|---|---|---|
| Mortgage breakage fee at the Big-5 banks | Mortgage breakage fee with Broker Banks |
|
| 5-year posted rate when you got your mortgage | 5.39% | Not applicable for the IRD calculation |
| Your actual contract rate | 4.00% | 4.00% |
| Discount | 1.39% | N/A |
| 3-year posted rate on August 1, 2013 (the day you break your mortgage) | 3.75% | 2.99% |
| IRD formula | (Contract rate – [Posted rate for remaining term – Discount from original mortgage]) x Principal outstanding x Remaining term | (Contract rate – Posted rate for remaining term) x Principal outstanding x Remaining term |
| IRD payment | $15,744 | $9,696 |
| Difference in fees | $6,048 | |
For a free mortgage check-up, or pre-approval, or compare what we can do vs. your bank, call Mark at 403-681-4376
• There is no cost to you for our services as the banks pay us for doing their work,
• You get our professional, un-biased advice & expertise on your mortgage,
• We answer our phones and emails, 7 days a week, from 9 – 9, including holidays,
• Your rate will be lower with us as we deal through “broker services” at the banks.
Calgary Housing Market Still Strong
Below is an article that notes Calgary’s home prices are still supported.
Mark Herman, top Calgary mortgage broker for purchases and mortgage renewals
Calgary’s housing market is not under threat of a correction despite a downturn in the local economy, Canada Mortgage and Housing Corp. said in an analysis Thursday.
Its assessment of 15 metro markets lists Calgary as “low risk” while Toronto, Regina and Winnipeg were rated “high risk.” The review considered four factors — overheating; acceleration in house prices; overvaluation; and overbuilding — as of the end of March.
“The low price of oil has affected many different sectors of the economy, affecting employment and income growth, and increasing the unemployment rate. Weaker labour market conditions have also slowed migration to the region,” CMHC said of the Calgary-area market.
…
Meanwhile, Vancouver — one of the country’s priciest real estate markets — was deemed low risk, even as home prices there continue to soar. The benchmark price of a detached home in metropolitan Vancouver hit $1.1 million in July, up 16.2 per cent from a year ago, the Real Estate Board of Greater Vancouver said last week.
… Statistics Canada said Thursday that new home prices in the Calgary area rose 0.1 per cent in June.
“Higher land prices were largely offset by builders reducing prices because of market conditions,” the federal agency said. Prices were up 0.7 per cent year-over-year.
In its latest report, the Calgary Real Estate Board said the average MLS sale price for July was $476,446, down about 1 per cent from a year ago while the median price of $435.000 grew by 2.35 per cent. The benchmark price, which CREB identifies as a typical property sold in the market, was largely unchanged at $455,400.
With files from The Canadian Press
Medical Doctor Mortgage Program – mortgage financing on your projected income!!
UPDATED!
ATTENTION soon-to-be-Doctors – FINALLY a program that acknowledges that you will be earing lots of money – soon, but not just yet.
Medical Doctors still in school or residency can qualify for financing with 20% down payment (up to 80% LTV) using projected income.
More details:
- “Projected income” is based on what a medical doctor is expected to earn in their specialization of practice.
- existing student loans, or student line of credit are fine
- the 20% down CAN BE borrowed funds from a Line of Credit, or other source
- part or all of the 20% down CAN BE gifted from a family member
- there is NO sliding scale – which means if you want a 1,200,000 home and you have the 20% down ($240,000) then it can still work!
Call for details and a quick chat on the phone: 403- 681-4376
Mark Herman, Top Calgary, Alberta Mortgage broker for doctors and renewals.
My bank REALLY REALLY REALLY wants my mortgage! Really?
Does your bank really, really, really want your mortgage that badly?
Do you know why?
NOT because they make lots of money on mortgages.
NOT because the bank rep needs to fill their mortgage quota this month (this happens too.)
BECAUSE the banks have studies that if they can get you to have 3 or more products with them, your odds of leaving to go to another bank fall by 75%.
This means 2 things:
- If they can get you to have the mortgage in addition to your existing checking and savings accounts and or credit card then you will probably not leave for another bank and their cost of customer acquisition is very high.
- Then they can cross-sell you the products they really, really make money on:
- LOCs – line of credits – and more credit cards both with overdraft protection and insurance for the minimum payments if you are injured or laid-off.
- mortgage insurance – a huge profit for them as they try very hard later not to pay claims in their post-claim underwriting process
- mutual funds
- long distance phone plans
- travel insurance
- all the rest.
And 1 more VERY important thing:
Banks know that 86% of people will stay with their existing bank at mortgage renewal time. AND if you have the magic 3 products will you move your mortgage somewhere else then?
Banks expect you to chisel them down now, and when you renew they renew you at rates that are typically .25% to .75% higher than they should be. And 86% of people just sign the renewal docs and send them back. (More data from studies.)
This does NOT happen with mortgages via mortgage brokers as the banks know they have to renew you at the best possible rates or the very same broker that took the customer to that bank will be the very same broker that moves the customer to a new bank if for a better rate on renewal.
Do you want to play this game with the banks or just skip it all together?
All this advice from the top mortgage broker in Calgary Alberta, Mark Herman.
Alternative Canadian Mortgage Lenders
THE ALTERNATIVE LENDING MARKET IS GROWING!
According to data compiled by CIBC World Markets (based on Statistics Canada figures), the value of loans from alternative lenders has increased by 25% this past year. In comparison, the overall growth in the mortgage market for 2014 was 4%.
As the number of alternative borrowers grows, it’s important to find a top Calgary Alberta mortgage broker that can provide customized solutions and deals with common sense lenders. We specialize in alternative lenders that have financial solutions to meet:
- Clients who don’t fit the traditional ‘A’ lending / or bank guidelines.
- Self-employed or commissioned clients with stated income.
- Salaried clients with a GDS/TDS that doesn’t meet traditional bank requirements.
- Clients with bruised credit due to extenuating circumstances.
- Clients with outstanding Canada Revenue Agency debts.
- New immigrants to Canada.
- Sophisticated residential real estate investors.
- Clients who can demonstrate a reasonable ability to make future mortgage payments.
All of our solutions are customized to fit the specific needs of the borrower—bringing them closer to their financial goals.
Call me, Mark Herman, Top Calgary Alberta mortgage broker, to talk about any of these products for your specific situation.
403-6891-4376
Oil Price & Mortgage Interest Rates
This is an easy way to see the relationship between oil prices and mortgage interest rates.
Mark Herman, Top Calgary Alberta mortgage broker.
The path between the price of oil and the cost of your mortgage may seem long and winding and hard to follow, but it does exist.
Oil is a major component of Canada’s economy. Energy accounts for about 25% of Canadian exports and oil is a significant part of that. Oil is now selling for about half what it was just a few months ago.
Lower oil prices mean less royalty money for governments. Low oil also means the main driver of employment in Canada – the Alberta oil patch – is likely to slow as well as energy firms cut back operations. Employment is one of the key indicators the Bank of Canada watches when determining interest rate policy.
Falling oil prices are likely to have an, overall, negative effect on Canada?s economy, exerting downward pressure on the Bank of Canada rate, and therefore variable mortgage rates. The impact on GDP and employment will likely hold down government bond yields and, in turn, fixed mortgage costs.
Payout Penalties and the Bank’s new(er) trick
PAYOUT PENALTIES:
Short Version:
Broker only lenders – the top 3 broker-only lenders are bigger than any of the banks in Canada – do not have POSTED rates like the banks do. They do not then give discounts off of posted to keep you happy. They have 1 rate and that is the rate you get which is usually always lower than the bank rates.
Banks give you the discount off of posted “becuase they love you” now BUT if you ever have to payout your mortgage the banks then “recapture” that discount on the payout penalty. We see many instances when it used to be about $2000 it is now more like $9000! OR more!
This makes a big differance to your final payout and another reason to use a professional, full-time, top mortgage broker for your mortgage. (The rate is the rate, BUT the details make all the differance!)
Long Version:
Many of the banks are using the value of the discount given today as the basis of comparing the remaining term IRD (interest rate differential) payout calculation. This means if rates today stay the same as when you got your mortgage before, a client paying off his mortgage (becuase you are moving or we lucky enough to run into a windfall of funds), the bank penalty is now $10,000 MORE than if you were at at a broker lender – as in, a lender that bases IRD on the Best Broker Rate for the exact same IRD calculation.
So, if you are at RBC, TD, CIBC, BMO or Scotia that “discount” you get off the posted rate can really come back to haunt you later!
Another reason to use a professional, full-time, mortgage broker!
Mark Herman, Top Calgary, Alberta mortgage broker, mortgage renewal
Retail Sales: Alberta spends the most
“More support of Calgary and Alberta home prices; the high-value jobs in Calgary pay more and the 40,000 people a year that move to Alberta are spending that money. The numbers are mind blowing.”
Mark Herman; Calgary, Alberta mortgage broker
Jonathan Muma Nov 25, 2014 10:25:24 AM
Albertans love to shop.
That’s according to the latest report from Statistics Canada which shows retail sales are up $6.7-billion, or 7.4 % from a year ago through the first nine months of this year.
That’s the highest annual growth rate in the country.
The next closest province is British Columbia at 5.3 %, and Canada overall, retail sales grew to $42.8-billion, up 4.5% from a year ago.
http://www.660news.com/2014/11/25/alberta-leads-the-way-as-canadian-retail-sales-soar/