IMPORTANT UPDATE ON LAWS AFFECTING REAL ESTATE:

• APRIL 19 - IMPLIMENTING NEW MORTGAGE QUALIFICATIONS
• HST: HOW WILL IT AFFECT THE RESALE HOME PURCHASER?

APRIL 19 - IMPLIMENTING NEW MORTGAGE QUALIFICATIONS

April 19th brings new mortgage qualifications into effect. Finance Minister Jim Flaherty has made changes to insure that home buyers will not be put in jeopardy should the interest rates raise or the economy/housing market change dramatically. Everyone who qualifies for a mortgage must now meet the criteria for the greater of The Bank of Canada's 5 year Bench Mark Rate or the lender's 5 year fixed rate mortgage. While you may opt to take a variable rate mortgage at a lower interest rate, this requirement for you to qualify for the higher rate will provide you some protection as interest rates rise.

To prevent over-extension of debt should housing prices fall Flaherty has made changes to the rules for refinancing properties. Canadians will only be allowed to refinance to 90% of their home's value. Currently they can refinance up to 95% of this value.

Investment properties (non-owner occupied) will now require a 20 % down payment in order to qualify for financing. Note this change does not apply to duplex or triplex properties with the owner occupying one unit and renting the other(s).

Purchasing a second home can still be done with less than a 20 % down payment provided that it meets the qualifications of a second home. Canada Mortgage and Housing Corporation (CMHC) will continue to offer insurance for financing of second homes, provided that the properties is one unit only and occupied by the owner or a relative on a rent-free basis.  

HST: HOW WILL IT AFFECT THE RESALE HOME PURCHASER?

As of July 1st, HST will replace GST. This tax is not applied to resale homes, but will increase the amount of tax that is levied on commissions paid to real estate brokerages, home inspections and lawyers' fees.