industryupdates - chba - alberta
Valuable tips by Jim Rivait
jim rivait Jim Rivait is Executive Officer of CHBA Alberta. Starting his career working in government, Jim spent the last decade working in the private sector specializing in government relations, advocacy, strategic communications, policy development/ analysis and association management.
Doing something for the first time is always more of a challenge, whether it’s the first day of school or a first date. Buying your first home is no exception. Researching home prices, features and locations is exciting but can be time consuming. First-time buyers must also learn the rules for financing a purchase to understand how much they can borrow and the minimum down payment required. Fortunately, there are handy tools available to help guide you through the steps. Check the CHBA - Alberta website for useful guides. Canada Mortgage and Housing Corp. and most banks offer mortgage calculators that allow home buyers to check how choosing different periods to pay off a loan or varying the down payment will change monthly payments. More importantly, the long-established benefits of homeownership provide a powerful incentive to buy a home. Not only do you get to live in your investment and increase its value through home improvements, your mortgage payments build equity. Members of Generation Y – born between 1980 and 1994 – are the most likely to be renters, but as Royal LePage noted in a recent report, those 19 to 33 years of age would overwhelmingly like to wave goodbye to the landlord. More than 85 per cent of those surveyed disagreed with the statement that “I do not desire to own a property in my lifetime as renting is preferable to me.” In Alberta, first-time buyers were expecting to spend $406,000 on their first home, according to a survey by BMO Financial. Nationally, first-time buyers expect to pay off their mortgage in 20 years and are twice as likely to opt for a fixed-rate mortgage than a variable rate product. Of course, saving enough for a down payment remains a challenge. Many prospective buyers cut back on spending, with 63 per cent reporting they made lifestyle changes to sock more money away. Laura Parsons, a mortgage expert at BMO Bank of Montreal, suggests people test what it is like to live within budget after buying a house. “Determining what your mortgage payments and overall costs of homeownership will look like, and then living in that financial reality for a year before entering the market, can be an effective strategy.” A quarter of Generation Y lives rent-free because of arrangements
with family and friends – one strategy to help build savings for a down payment. Another source of funds is money tucked away in RRSPs. The federal government’s Home Buyers’ Plan (HBP) allows withdrawal of up to $25,000 to buy a home. Annual payments are required to put the money back into the RRSP within 15 years. A lucky few – 27 per cent, according to BMO – will get help from their parents or other family members to buy their first home. When it comes time to close the deal, the federal government also has a program to help. The First-Time Home Buyers’ Tax Credit (HBTC) assists with the costs associated with the purchase of a home, such as legal fees, disbursements and land transfer taxes. The credit provides up to $750 in federal tax relief. The reality is buying a first home is more challenging than just writing another cheque to your landlord. It requires research, planning and the courage to take a bold step forward on the path to prosperity. And it’s a move that many young people regret delaying. BMO’s survey revealed that 59 per cent of first-time buyers wish they’d bought a home five years ago. The Canadian Home Builders’ Association - Alberta represents more than 1,500 business members, including new home builders, renovators, developers, trade and supply companies, and professional services.
for first-time homebuyers
70 New home Guide | may 10 - jun 7, 2013