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Taking the leap – with some help

Right now, I’m sure there are many people in this city whose nightly debate over dinner with their spouse, family or friends revolves around whether or not to buy a home this year. As a REALTOR®  who has weathered periods of economic uncertainty, I’m here to tell you that if you’re financially prepared and have done your homework, it’s a perfectly good time to purchase your first home, particularly if you plan to live in it for the medium-to-long term. If history is any predictor of the future, real estate increases in value. For example, in the Ottawa area since 1956, the average price year over year decreased only five times.

No matter when you purchase your first home, it may be a daunting and even overwhelming experience. But there are many things that can make the process easier for you. First, it helps to work with an experienced REALTOR® who can help you navigate the complicated process of home buying. Your REALTOR® is your advocate during the transaction, as well as a great source of information and support. Also, low mortgage interest rates are still available to qualified buyers. A good interest rate can make the first few years of your homeownership easier to handle.

When seeking that mortgage, something that can be a huge help to the first-time home buyer is the federal Home Buyer’s Plan (HBP). This is a government program that permits first-time home buyers to withdraw up to $20,000 from a registered retirement savings plan (RRSP) to put towards a down payment. If you and your spouse are purchasing the home together, you can each withdraw up to $20,000 from your respective RRSPs. That can go a long way towards making up a 20 per cent down payment, which allows you to take out a conventional mortgage and save the insurance costs associated with a high-ratio mortgage. If you’re in a position to take advantage of this Plan, it can save you a lot of money over the amortization period of your mortgage. Remember that you can only participate in the HBP once, and the funds you withdraw from your RRSPs must be repaid within 15 years of withdrawal on a schedule mandated by the Canada Revenue Agency or else they become subject to taxation. The HBP is only open to residents of Canada, and the home you are purchasing must be intended as your principal place of residence (so vacation homes and cottages would not qualify). For more information about the HBP, you can visit the Canada Revenue Agency’s web site at http://www.cra-arc.gc.ca. Your REALTOR® and your mortgage lender are also excellent sources of information about this opportunity.

You should also remember to take advantage of the Ontario government’s land-transfer tax rebate, now available to all qualified first-time home buyers, whether you purchase a newly built home or a resale home. Ask your REALTOR® about obtaining the forms needed to apply for the rebate, which can save you up to $2,000 upon closing. Since closing costs can add up quickly, the rebate is a big help.

So if you’re ready to become a homeowner, remember that you don’t have to do it alone. There are many places to turn for assistance. Make your buying experience a great one!

Published Thursday, January 29, 2009 8:18 AM by DUPLESSIS Real Estate Group


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