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A first-time homebuyer gets a rebate applied towards the LTT. The maximum rebate is $4,000 from the Ontario Government which covers the first $368,250.40 of the purchase. The buyer will be responsible for paying the LTT over and above this amount.
For purchases in the City of Toronto there is another LTT. This rebate is $3,725 which covers the first $400,000 of the purchase.
If there are two applicants and one does not qualify as a first-time homebuyer, only 50% of the rebate will be applied.
Only 5 year fixed rate mortgages that will require insurance need to qualify at this rate. Many lenders will still use the 5 year fixed contract rate for qualifying if the mortgage does not require insurance.
Some lenders still offer mortgages with a 30 year amortization. Only mortgages that do not require insurance can be considered for a 30 year amortization.
It is important to know that keeping balances greater than 50% of the credit limit will have a negative effect on the credit score. Higher limits do not translate into better credit scores. A client can improve their credit quickly if they pay down credit card debt to 50% of the limit.
Car lease payments are monthly liabilities which are included in the Total Debt Ratios. These ratios are what the lenders use to determine maximum affordability.
First-time homebuyers can withdraw up to $25,000 of their RRSPs without having to pay taxes at the time of withdrawal. It is considered a loan and must be repaid within 15 years. Commencement of repayment must occur within the first 2 years after the purchase. The CRA will inform you how much must be repaid on a yearly basis. If the required amount is not repaid in the fiscal year, the CRA will add the balance to your income to be taxed for that year.
Depending on the type of investment the RRSPs are in at the time of purchase there may be penalties to withdraw them from the specific investment.
Please note the funds must have been in RRSPs at least 3 months prior to the purchase to qualify.
Although the borrower pays the insurance premium, this insurance is actually to protect the lender in case of a default.