22 Apr

The Home Buyers’ Plan (HBP) | Canada

Mortgage Tips

Posted by: Neena Parmar

Did you know? The Canadian government offers a program known as the Home Buyers’ Plan (HBP), specifically designed to help first-time homebuyers achieve their dream of owning a home. The HBP allows eligible individuals to withdraw up to $35,000 from their Registered Retirement Savings Plan (RRSP), and for couples purchasing a home together, the withdrawal limit increases to $70,000.

The Home Buyers’ Plan operates as a self-loan, where the buyer is required to repay the withdrawn amount to their RRSP over a 15-year period, should they utilize it for the purchase of their first home. If the funds are not repaid within 15 years, a portion of the withdrawn amount will be taxed as income each year until fully paid. The repayment period begins the second year after the year when the funds were first withdrawn from the RRSP(s) for the HBP. For example, if funds were withdrawn in 2023, the first year of repayment will be 2025.

To qualify for this plan, individuals must meet the following criteria:

  • Must be a first-time homebuyer.
  • You are considered a first-time homebuyer if, in the four-year period, you did not occupy a home that you owned, or one that your current spouse or common-law partner owned.
  • If you have recently been divorced or separated, you can qualify as a first-time buyer again, assuming you have been living separate and apart from your spouse or common-law partner for at least 90 days and are not living in a home owned by a new partner or spouse at the time of withdrawing funds.
  • Must have a written agreement to buy or build a qualifying home.
  • You must be a resident of Canada when you withdraw funds from your RRSPs under the HBP and up to the time a qualifying home is bought or built.
  • You must intend to occupy the qualifying home as your principal place of residence within one year after buying or building it.

Moreover, if you have previously participated in the HBP, you may be able to do so again if your repayable HBP balance on January 1st of the year of the withdrawal is zero and you meet all the other HBP eligibility conditions.

Taking advantage of the Home Buyers’ Plan can significantly ease the financial burden of purchasing your first home. However, navigating through the requirements and details of the plan can be complex. That’s where the expertise of Neena Parmar, a Dominion Lending Centres mortgage professional, can be invaluable.

Neena Parmar, with her wealth of experience and knowledge, can guide you through the process, ensuring that you make the most of this opportunity. Here are some insights into how Neena Parmar can assist you:

1. Understanding Your Eligibility

Neena Parmar will help you determine your eligibility for the Home Buyers’ Plan. Whether you are a first-time homebuyer, recently divorced, or separated, she can provide the necessary guidance to ensure you meet the criteria set forth by the HBP.

2. Explaining the Process

Understanding the process is crucial. Neena Parmar will walk you through the steps involved in the Home Buyers’ Plan, from the initial withdrawal of funds to the repayment process. She will ensure you have a clear understanding of how the plan works and what is expected from you.

3. Maximizing Benefits

With Neena Parmar’s expertise, you can maximize the benefits of the Home Buyers’ Plan. She will help you calculate the amount you can withdraw from your RRSP and provide insights into how this withdrawal can best suit your financial situation.

4. Creating a Repayment Plan

Repaying the withdrawn amount is as important as the initial withdrawal itself. Neena Parmar will assist you in creating a repayment plan tailored to your financial circumstances, ensuring that you meet the 15-year repayment deadline and avoid unnecessary tax implications.

5. Providing Ongoing Support

Neena Parmar will be with you every step of the way, providing ongoing support and guidance. Whether you have questions about the Home Buyers’ Plan or need assistance with your mortgage, she is there to help.

How to Get Started

If you are interested in learning more about the Home Buyers’ Plan or other first-time homebuyer support, please don’t hesitate to reach out to Neena Parmar, Dominion Lending Centres mortgage expert. With her expertise and dedication, Neena Parmar will help you navigate the Home Buyers’ Plan and guide you through the process of purchasing your first home. Contact her today to take the first step towards fulfilling your dream of homeownership!

16 Apr

Refinancing Your Mortgage | BC, Canada

Mortgage Tips

Posted by: Neena Parmar

Refinancing your mortgage can be a game-changer, providing avenues to achieve various financial goals. As your trusted mortgage advisor, Neena Parmar has navigated through diverse scenarios where refinancing has proven instrumental. Let’s delve into why refinancing could be the next best step for you.

Refinance your mortgage with Neena Parmar

Refinancing your mortgage opens up a myriad of opportunities, and understanding its key benefits can empower you to make informed decisions.

A Lower Interest Rate

The allure of refinancing often stems from the prospect of securing a lower interest rate. Imagine reducing your monthly payments and saving thousands over the life of your loan! Working with Neena Parmar, a seasoned mortgage broker, significantly enhances this possibility. With access to a vast network of lenders, Neena can pinpoint the most favourable rates tailored to your financial profile.

Consolidating Your Debt

Debt consolidation emerges as a popular motive behind mortgage refinancing. Juggling multiple debts with varying interest rates can be overwhelming. By consolidating high-interest debts into your mortgage with Neena’s expertise, you streamline your payments, potentially lowering your overall financial burden. However, remember the equity threshold required for eligibility – a minimum of 20% equity is typically necessary.

Modifying Your Mortgage

Life is dynamic, and so should be your mortgage. Whether you aspire to expedite mortgage payoff or switch to a more secure fixed-rate option, refinancing offers the flexibility to adapt to changing circumstances. Neena Parmar understands the nuances of mortgage modification. Whether you’ve received an unexpected windfall or harbour apprehensions about market fluctuations, Neena can elucidate the optimal timing and strategy for modifying your mortgage.

Utilize Your Home Equity

Your home is more than just a shelter; it’s a reservoir of untapped potential. Refinancing grants access to your accrued home equity, empowering you to leverage this asset for various endeavours with Neena’s guidance. Whether it’s embarking on a home renovation project or financing your child’s education, tapping into your home’s equity can manifest newfound opportunities.

Conclusion

Navigating the complex landscape of mortgage refinancing demands expertise and personalized guidance. With Neena Parmar by your side, you gain access to a wealth of knowledge and tailored solutions. Refinancing isn’t just about securing a better rate; it’s about optimizing your financial trajectory to align with your aspirations. Whether you seek to reduce monthly payments, consolidate debts, or unlock your home’s equity, Neena Parmar’s expertise ensures you embark on this journey with confidence.

By leveraging Neena’s insights and expertise, you can unlock the full potential of refinancing and pave the way towards financial freedom. Reach out to Neena Parmar today and embark on a transformative journey towards financial empowerment.

If you want to learn more about refinancing, your options, and how to avoid or manage penalties, please contact Neena Parmar to set up an appointment today!

9 Apr

Revenue Properties | Key Considerations For Acquiring Home | BC, Canada

General

Posted by: Neena Parmar

So, you are considering the acquisition of a second property! Congratulations on this exciting venture! This presents a fantastic opportunity to diversify your financial portfolio and establish long-term stability for the future. However, before you proceed with this purchase, there are several important factors to take into account.

Acquiring a property with the intention of renting it out entails distinct qualifying criteria and mortgage product options compared to conventional home purchases. Here are some key points to consider before delving into purchasing a rental property:

1. Minimum Down Payment
The minimum down payment required is typically 20% of the purchase price, and these funds must originate from your personal savings; you cannot utilize a monetary gift from another party.

2. Rental Income Qualification
Only a portion of the rental income can be used to qualify for the mortgage and determine the amount you can afford to borrow. Different lenders have varying policies regarding the percentage of rental income considered. Some may allow you to use 50% of the income in addition to yours, while others may permit up to 80% of the rental income while subtracting your expenses.

3. Interest Rates
Interest rates tend to be higher for mortgages on rental properties compared to those for owner-occupied homes. This premium can range from 0.10% to 0.20% on a regular 5-year fixed rate.

While rental income can be factored into the mortgage application to service the debt, certain lenders may impose a minimum liquid net worth requirement apart from the property. Additionally, if you decide to sell the property in the future, it will be subject to capital gains tax, a matter your accountant can assist you with.

Thinking about Airbnb?

With the burgeoning popularity of Airbnb, many Canadians are exploring the realm of short-term rentals as a means of earning extra income. While it can be a lucrative endeavour, there are several considerations to keep in mind:

  • Check the Rules: Make sure you’re allowed to rent out your place short-term according to your neighbourhood or apartment complex rules.
  • Get the Right Insurance: Talk to your insurance company to make sure you’re covered when you’re renting out your place.
  • Talk to Your Bank: Ask your bank if running an Airbnb could affect your mortgage.
  • Don’t Forget About Taxes: You’ll have to pay taxes on the money you make from Airbnb. You can talk to an accountant to help you understand how much you might owe.

Moreover, offering additional services as a host may classify your rental operation as a business, potentially affecting taxation and regulatory requirements.

If you’re ready to take the plunge and buy a second property, it’s a good idea to talk to someone who knows about mortgages. They can help you figure out the best way to reach your goals and find the right loan for you. Don’t hesitate to reach out to a Dominion Lending Centres mortgage expert. They can give you the guidance you need to make your dreams of owning a second property a reality.
Remember, buying a second property can be a big step, but with the right planning and advice, it can also be a great investment in your future.

5 Apr

Exploring Second Property Options in BC, Canada

General

Posted by: Neena Parmar

Congratulations on considering the purchase of a second property! Whether it’s for investment, rental income, or as a vacation getaway, acquiring a second property can be a significant step towards building wealth and securing your financial future. However, before diving into the process, it’s crucial to understand the nuances associated with each type of property purchase.

Second Property with Intention to Rent

Investing in a property with the intention to rent it out can be a lucrative venture, but it comes with its own set of considerations:

1. Minimum Down Payment and Funding Sources:

Unlike primary residences, rental properties typically require a higher down payment. A minimum of 20% of the purchase price is often required, and the funds must originate from your own savings, excluding gifts from others.

2. Rental Income Qualification:

When assessing your borrowing capacity, lenders may only consider a portion of the rental income. This could range from 50% to 80%, depending on the lender’s policies. Additionally, some lenders may subtract expenses from the rental income to determine the final qualifying amount.

3. Interest Rates and Premiums:

Mortgages for rental properties usually come with slightly higher interest rates compared to those for primary residences. This premium can vary but typically ranges from 0.10% to 0.20% on a regular 5-year fixed rate.

Other Considerations:

  • Lenders may require a minimum liquid net worth outside of the property.
  • Capital gains tax may apply if you decide to sell the property in the future.
  • Consulting with an accountant is advisable to navigate tax implications effectively.

Vacation Property

Investing in a vacation property offers the opportunity to create cherished memories while potentially generating rental income. Here are some key points to consider:

  • Vacation properties are akin to purchasing a second home, providing a retreat from the hustle and bustle of daily life.
  • Fractional ownership within a hotel may offer a convenient vacation spot but could be treated as an investment property if rental income is mentioned.

Secondary Property

Utilizing equity from your primary residence to purchase a secondary property can be a savvy financial move. Here’s what to keep in mind:

  • Interest on equity used for purchasing a secondary property is often tax-deductible.
  • Real estate investments, when compared to stocks, offer the advantage of owning appreciating assets.

Who is a Good Candidate?

Contrary to popular belief, you don’t need a six-figure income to invest in property. Key qualifications include:

  • A desire to make strategic financial decisions.
  • For secondary properties, a minimum down payment of 5% of the purchase price is required, though it’s 20% for rental properties.

Additional Considerations for Airbnb Rentals

As Airbnb and other short-term rental platforms gain popularity, it’s essential to be aware of the following:

  • Review strata and city bylaws regarding short-term rentals.
  • Ensure proper insurance coverage for short-term rental operations.
  • Consult with a mortgage broker to understand how short-term rental income may affect your mortgage approval.
  • Discuss tax implications with an accountant, especially if rental operations are extensive.

Conclusion

Purchasing a second property offers a multitude of opportunities for financial growth and lifestyle enhancement. Whether you’re considering rental income, vacation retreats, or leveraging equity for investments, thorough research and consultation with professionals are crucial for making informed decisions. As your mortgage broker, I’m here to assist you in finding the best solution tailored to your unique needs and goals.