Setting The Record Straight

By David Rees, TD Canada Trust

Earlier in the year, the Canadian government announced that new lending rules would come into effect as of April 19th, 2010. At the same time, our local BC government was set to introduce the HST only a few months later, on July 1st, 2010. The combination of the new rules and the introduction of the HST were misunderstood by many consumers and the result has been much confusion about home finance requirement and what implications the HST may have on the purchase of a home. Let’s take a closer look.

How much of a down payment do I need to purchase my new home?

Contrary to what you may have heard or believe yourself, you still only need as little as 5% down to purchase! Many clients I assisted this summer were under the belief that the new Government changes increased the required down payment to 10% – simply not true. If you are an EXISTING home owner, the maximum you can re-finance your EXISTING property is up to 90% of the value of your home (or 10% left in equity). However, any NEW PURCHASES still require only as little as 5% down. So yes, it’s still affordable to get into the market!

How much more will it cost for my home now that HST has been introduced?

I can’t tell you how many times I have spoken to client’s that were under the impression that the HST would add a substantial amount more to the price of a home. Again, contrary to popular belief, the effect of the HST on RE-SALE (homes that have been previously lived in) is negligible. The HST tax is ONLY charged on services that are associated with the sale of a property (legal fees, home inspectors, conveyance fees). The effect of this tax in association with these services is negligible when looking your actual cost of the house itself! The HST IS, however, charged on NEW HOMES (homes that have never been lived in, or homes that have had a substantial amount of renovation work done). In this case, there is still a rebate that can be applied for on new homes up to a purchase price of $525,000 (up to a maximum rebate of $26,250).

Some minor misunderstanding with major implication for home buyers!

David Rees is a Mortgage Specialist with TD Canada Trust. He has been in the financial services industry since 2005. He specializes in all residential real-estate secured transactions, including new home (project site) purchases, re-sale home purchases, re-finances, equity take outs and investment properties. If you have any mortgage related questions, please feel free to contact David any time @ 778.217.0624 or