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RRSP, HBP and Mortgages: 7 things you need to know. Numbers 4 and 5 will be very useful.

RRSP, HBP and Mortgages: 7 things you need to know. Numbers 4 and 5 will be very useful.

You’ve heard about the Home Buyers’ Plan (HBP) for a house purchase and you are wondering whether or not it’s worth it.  You don’t even have RRSPs, but your brother-in-law keeps telling you that it’s worth it.  You want to believe him, but you aren’t sure that it would be good for you.  Here is everything you need to know about the Home Buyers’ Plan, also known as HBP.


1. Who benefits from the HBP?

Is the HBP beneficial to everyone? No, but almost.  The HBP helps people who pay taxes.  So, if your salary is high enough that taxes are taken off every paycheck, it may be useful for you.  If that’s your case, you should keep reading.


2. What is the HBP for buying a house?

It’s a program that helps Canadians become homeowners.  It is the right to use your RRSPs as a down payment when buying a property.  By the way, even if you don’t currently have RRSPs this program can be very interesting for you.  I will explain why a little later but for now, here are the advantages of the HBP.


3. The benefits of using the HBP as a down payment

There are several advantages to using the Home Buyers’ Plan (HBP). … LIRE LA SUITE

2020 Government down payment subsidy

2020 Government down payment subsidy

Dernière mise à jour le November 13th, 2020

If you are planning on buying your first property, the federal budget tabled last April comes with a nice gift for you! As of November 1, 2019, you could get a loan from Canada Mortgage and Housing Corporation (CMHC) equivalent to 5% or 10% of the value of the home, without any interest or a monthly refund. Let’s take a closer look at this new advantageous measure.

Please note that this article was written prior to CMHC’s actual implementation of the subsidy. So, for writing purposes, I read various articles on the subject, went to CMHC’s website and called CMHC a few times. There have been times where I have received conflicting answers, so it is therefore possible that some information is incorrect. Once the measure is officially implemented, it will be easier to explain the details with certainty.


How does CMHC’s subsidy work?

The first-time homebuyers’ incentive is a type of loan offered by CMHC. The federal agency will lend eligible buyers a percentage of the value of the property: 5% for an existing building or a prefabricated home and 10% for a new build.

The loan does not have to be repaid every month and will therefore reduce the monthly mortgage payment of those who can benefit from it.… LIRE LA SUITE

Down Payment on the purchase of a home

Down Payment on the purchase of a home

Dernière mise à jour le November 12th, 2020

There are five very important elements when applying for mortgage financing:

  1. Credit score
  2. Down payment
  3. Income
  4. Debts
  5. Property

In this article, we will discuss the important elements of the down payment.

What is the minimum down payment when buying a house?

The minimum down payment to buy a home as an owner occupant is 5%.  However, if you only put a 5% down payment you will need to insure your loan with a mortgage insurer.  The most popular one is CMHC but there are also two others, Genworth and Canada Guaranty.

There is a cost for securing the loan.  This cost is added to the mortgage balance and is paid off over 25 years.  There is also a 9% tax to be paid on this premium.  The tax is payable directly at the notary.

It is also interesting to note that the percentage of the premium cost decreases with every 5% of additional down payment.  The table below shows the cost of the premium.

Here is an example to illustrate the cost of the insurance premium at 5%, 10% and 15% for a purchase of $200,000.


Cost of the insurance premium according to the percentage of down payment

Downpayment home

As you can see from the table, there is an advantage to accumulating a little more money than the minimum to save on the cost of the premium.… LIRE LA SUITE

Mortgage and renovation loan

Mortgage and renovation loan

Dernière mise à jour le January 7th, 2021

You have been a homeowner for a few years and would like to make some renovations to your home, but like many others, you do not necessarily have the money to renovate.  You have contemplated adding renovations to your mortgage loan, but is that possible?

Yes, it is possible but it will depend on your situation! Here are the different possible scenarios.

If you would like to buy a house but there are renovations to be done, click here to consult the correct article!


The renovation line of credit

If you have owned your home for several years or if you had put a large down payment when you purchased it, you may have enough equity available.  In that case, opening a mortgage line of credit could be an interesting option.  If the term of your loan is not expiring soon I would recommend you contact the bank with which you currently have your mortgage.  It may be possible that they could quickly open a line of credit.


Warning: The home equity loan

It is also possible that your bank offers to open a home equity loan.  The rate will probably be better than on a line of credit but we must be careful with the equity loan. … LIRE LA SUITE

Home Purchase with Renovation Loan

Home Purchase with Renovation Loan

You come across a house and it’s love at first sight.  Everything is perfect, the location is good, the yard is big, there is just the right amount of bedrooms BUT there is one small issue.  The kitchen needs to be updated, the floors are scratched because of the current owner’s dogs and the bathroom is old…You also know that once you put a down payment there won’t be much left over for renovations…

There just might be a solution for you. It is possible to purchase a home and undertake renovations!

If you already own a home and would like to renovate it, click here to consult the right article!

Home Purchase plus improvements: how does it work?


Let’s say you want a $300,000 house and you have $22,000 in cash for the down payment.  You estimate that the cost to renovate your kitchen to your liking would be $25,000…

Great news! You have enough money for the down payment and for the renovation loan! The biggest advantage of the renovation loan is that it is added to your mortgage under the same terms as the mortgage, same great rate, same amortization and a single monthly payment.

Example of a home purchase plus renovations

I previously mentioned buying a house for $300,000 and putting $25,000 in renovations. … LIRE LA SUITE

Mortgages for self-employed: What you need to know

Mortgages for self-employed: What you need to know

As a self-employed individual, you may feel that it will be more difficult to get a mortgage. Perhaps you have already met with your banker and they have refused to grant you the loan for one of the following reasons:

  • You haven’t been self-employed for long enough
  • You are not declaring enough income
  • You have a car loan under your business name and it is blocking you
  • Expenses on your tax return have lowered your salary too much

Therefore, when you are self-employed, several reasons can stand in the way of your financial request.

Don’t be discouraged, as a mortgage broker we have access to several lenders with different standards. In some cases, it can even be advantageous to be self-employed. Later, we will see in more detail the advantages of being self-employed when you are looking for a mortgage to purchase a house. For now, I’ll walk you through what you should know before you meet with your banker or mortgage broker.

If you think your net income reported on line 150 of your tax return misrepresents your income, click here. There is a program for you!

Obtain a mortgage loan as a self-employed

The major difference between a self-employed individual and a traditional employee is stability.… LIRE LA SUITE