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Government Programs To Assist With Your Home Purchase
Written by Administrator
Monday, 04 May 2009 11:28
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The expression "Now is the time to buy a new home" is more than just a fancy slogan to sell new homes. Thanks to a number of genuinely beneficial programs offered by the government, the dream of owning a new home is now more possible than ever before. If you think that these programs are just for other people, think again. You can take advantage of many of the programs currently available.

First Home Loan Insurance Program

Since 1992, new home buyers can purchase a new home with a down payment of only 5?. That's a down payment of only $6,000 to purchase a townhouse in many areas of the region. The mortgage loan is limited to $125,000 in most areas of Canada, but in larger urban areas, including Ottawa, the limit is $175,000. Any home buyer is eligible for this program. Prior to May, 1998, the purchaser must not have owned a home for at least five years. However, most qualifications for this program have now been removed, opening it up to all home buyers. The principal and interest payments plus taxes and heating must not exceed 35? of the purchaser's income, and total debt payments cannot exceed 42? of income.

Further information is available from the Ottawa office of Canada Mortgage & Housing Corporation at 748-2000.

Home Buyer's Plan

Under the Federal Government's Home Buyer's Plan, consumers can borrow up to $20,000 tax-free ($40,000 for couples) from their RRSP funds for the down payment and closing costs on a home. Home owners then have fifteen years to repay the money to their RRSP, otherwise the amount originally withdrawn becomes taxable. Further information is available from the Ottawa office of Canada Mortgage & Housing Corporation at 728-6884.

Land Transfer Tax rebate program extended

The Ontario government offers a rebate of the Land Transfer Tax for first time home buyers. The program, which saves new home buyers up to $2,000 in land transfer tax, is set to expire on March 31, 2000. Buyers must take possession of the house no later than December 31, 2000 to be eligible for the rebate and the transfer must be registered by December 31, 2001.

To be eligible for the rebate, purchasers cannot have previously owned a house. Spouses cannot have previously owned a house during the marriage. The purchaser cannot have received a land transfer tax refund under the OHOSP program.

The amount of the refund will be the entire amount of tax payable, up to a maximum refund of $2,000. Any home with a sale price of $227,500 or less will receive a full refund of the tax.

For further information about the land transfer tax refund, contact the Ontario Ministry of Finance at 1-800-263-7965.

Ontario Home Ownership Savings Plan (OHOSP)

In Ontario, the Provincial government offers the Ontario Home Ownership Savings Plan to benefit first time home buyers. The program allows people saving for a first home to deposit money in a OHOSP account and receive a credit against their Ontario personal income tax. There are some eligibility restrictions based on total family income. Further information on OHOSP is available from any lending institution or the Ontario Ministry of Finance at 1-800- 263-7965.

GST Rebate

A 2.5? rebate applies to new homes with sale prices up to $350,000. On a $120,000 townhouse, this represents a saving of $3,000. Nearly all builders reduce the advertised sale price of their homes by the amount of the rebate, thus letting you have your rebate money immediately. In these instances, the agreement of purchase and sale includes an assignment of the rebate to the builder.

Combine these great incentive programs with the superb interest rates offered by financial institutions or even reduced rate mortgages offered through some builders, it is clear that now really is your best time to buy a new home.

Richard Lee is executive director of the Greater Ottawa Home Builders' Association.
 
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