Global News Morning: First time home buyers

Clinton Wilkins sits down to talk with Jeremy on Global News about Federal changes that provide new opportunities for first time home buyers.

Don’t feel like watching? Check out the video transcript below.

Transcript:

Federal budget announced

Jeremy: [00:00:00] Well 2019 / 2020s federal budget was released a week ago meaning experts have now had the necessary time to go through and figure out what these changes will mean for Canadians and we’re hearing some new regulations could be making it easier for first time homebuyers which is welcome news to those looking to purchase their first home. So joining us to talk all about the new measures is Clinton Wilkins of Centum Home Lenders Ltd. Welcome to you Clinton.

Clinton: [00:00:23] Thanks for having me this morning.

Jeremy: [00:00:24] I appreciate you coming in a little early. You had mentioned before this is something you’ve talked about at length many times. It’s something I’m a little interested in as someone who has not purchased a home so you’re going to take us through it here you’re going to make make me understand this a little bit. The first thing I want to know is in terms of the federal budget what’s there that’s really going to help first time homebuyers to get their foot in the door.

First time home buyers

Clinton: [00:00:45] I think it’s a really exciting time for first time homebuyers. You know I think homeownership is part of the Canadian dream and I think it’s very realistic here in Halifax and Atlantic Canada for homeownership. There’s other areas of the country which it’s a little bit more of a challenge but we do have an advantage here because our cost of real estate is quite low compared to other regions. And there’s some exciting news that’s come out of the federal budget. So, for example, they’ve extended the First Time Home Buyers Plan.

They’re able to borrow from their RRSP now up to thirty five thousand and seventy thousand per couple, which is really exciting. So, you’re able to borrow from yourself tax free. You get the tax benefit for putting the money into your RRSP and you can borrow it as a first time homebuyer tax free which is great. They also give you 15 years to pay that money back into the RRSP which is really wonderful. It really, you know, enables people who were really good at saving, to basically borrow from themselves.

Jeremy: [00:01:40] Right.

New opportunities

Clinton: [00:01:40] There there’s some other changes that they’ve also announced. They’ve announced that there’s going to be an equity incentive that’s going to be done by the Canadian Mortgage and Housing Corporation. So that can be available down the road in the fall where they would contribute 10 percent for a new construction home or 5 percent for a resale home for households with a maximum income of one hundred twenty thousand. So, it could really reduce the actual cost of borrowing because it would be an interest free loan. And there would be no payment for that for that loan. But eventually you know that equity position would need to be paid back. You know if someone were to refinance down the road or if they were to sell their home they would need to pay back that interest free loan from the Canadian Mortgage Housing Corporation.

Hurdles for first time home buyers?

Jeremy: [00:02:21] And those loans are those some of the biggest hurdles that first time homebuyers, or homebuyers in general, face in terms of purchasing a home? You know, is that one of the biggest obstacles that they kind of have to get through and obviously it sounds like a no interest loan would really sort of help that.

Clinton: [00:02:38] Yeah the home homebuyer would still need to put up a minimum of 5 percent. And you know sometimes that can be a challenge. The 5 percent can come from you know their savings that come from their everyday savings or their investments or their RRSPs. A lot of homebuyers are looking to family to help them out as well. So for first time homebuyers gifted down payment is huge. It could be gifted from mother, father, brother, sister which is really helpful. And we also have a borrowed down payment solution that could be accessed.

So that could be potentially a cashback program, line of credit, a credit card, or loan. I mean that’s a little bit less ideal but there are options for first time homebuyers to get into get into the market. I think spring is a great time to think about homeownership. It’s typically one of the busier real estate markets. I can tell you here locally in Halifax the market’s really good right now. You know on average the house prices went up about 4.5 percent last year which is a steady increase. And it’s a lower increase compared to maybe some of the other areas of the country over the past few years. I think you know getting pre-approved is is a great solution.

Spring market

I think in the spring you know when people are going out to start looking at homes and the market starts heating up having a preapproval in hand is definitely very valuable because when you make an offer you can make an offer with confidence that you know that you can get an approval. And typically, you know, with a preapproval what we’d look at is, you know, income, assets, and credit and you know in terms of assets for the down payment that’s one of the big things that we would look at in terms of getting a preapproval in place.

Jeremy: [00:04:08] You mentioned it being a coming up on a good season to be thinking about buying. For people who are renting, what are some of the real benefits to purchasing a home versus continuing to rent. I mean somebody would maybe he’s been thinking about it for a while but really needs to kind of be taken over that that hump into thinking that maybe they should be buying a home what are some of the main benefits?

Buying vs. renting

Clinton: [00:04:28] I think that when people are looking about, you know, buying versus renting it’s really around maybe the servicing costs you know is it cheaper to own on a monthly basis than rent. I think that’s huge. But I think also paying yourself first you know really has a lot of value you know with a mortgage it forces you to pay down the debt. And you know we’re also look at the real estate should appreciate like as I said in Halifax house prices went up 4.5 percent last year so the house price continues to go up and you pay down the debt you’re in you know increasing your net worth really. On a monthly basis as you pay down the debt which is really great.

Jeremy: [00:05:03] Like you said it’s part of the Canadian dream. Well said Clinton.

Clinton: [00:05:06] One hundred please.

Jeremy: [00:05:07] Really appreciate you coming in. Thanks very much.

Clinton: [00:05:09] Thanks for having me. And you know spring is a great time to get pre-approved I can’t urge people enough you know really speak to your unbiased mortgage professional and going into spring I think it’s gonna be a busy market here.

Jeremy: [00:05:19] Perfect. We’ve got a board here with all the information if you want to talk to Clinton and his team.

If you have any more questions, feel free to contact us!