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5 home-buying hacks to make ownership easier

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5 home-buying hacks to make ownership easier

Photo courtesy pallspera.com Entering the real estate market isn't an easy feat in today's economy. With sky-high housing prices and stricter-than-ever mortgage rules, buying your first house may seem out of reach. But there are a few ways to make the burden of a down payment a little easier to swallow. Read on to find out how you can become a homeowner sooner than you might think. 1. Apply for an RRSP loan. First-time buyers can qualify for the Home Buyers’ Plan even if they don’t have RRSP savings to withdraw for their down payment. Some banks will offer an RRSP loan (at the rate of prime plus one percent) that can go toward the down payment or closing costs for a home purchase. That means you can essentially buy a home without having saved a down payment, or you can buy a home that’s more expensive than what you’ve qualified for mortgage-wise. It also allows you to make an RRSP deduction on your tax return and possibly get a refund come tax season. 2. Take a cash back mortgage. CIBC offers cash back mortgages that put money in your pocket upon closing. While these terms inevitably add percentage points to your rate and dollars to your monthly payment, buyers almost always end up saving in the end. If the house you’re buying isn’t move-in ready, that upfront cash can go toward renovations or cosmetic upgrades. Or, it can simply go toward your first (and possibly second) mortgage payment. 3. Take advantage of tax breaks. The first year of homeownership can be a difficult one. The First-Time Home Buyers’ Tax Credit is a $5,000 federal credit for new buyers of a qualifying home. The tax credit is multiplied by the lowest personal income tax rate for the year, currently 15 percent. That equates to $750 back in your pocket. Similarly, Saskatchewan offers up to $1,100 in provincial tax credits. 4. Buy a preconstruction home. Developers often offer preconstruction pricing on new homes and condos. While that means you’ll have to wait for the property to be built, it also means savings in your pocket—even more important when you consider that in some provinces, HST is charged on the purchase of newly constructed residences. 5. Save on mortgage insurance. Most prospective buyers are aware that a minimum 20 percent down payment will save them from purchasing Canada Housing and Mortgage Corporation (CHMC) insurance. (Your CHMC premium is calculated as a percentage of your mortgage value. With a five percent down payment, the premium is calculated at 3.15 percent.) But there are other ways to save on premiums. Some energy-efficient developments can qualify for a mortgage loan insurance premium refund. Check to see if your home building program qualifies. Now, while these options are available, that doesn't mean they're suitable for everyone. Always consult with a financial adviser or mortgage specialist to ensure you're ready for the responsibility of owning a home. Photo courtesy pallspera.com via Mark Moz/FlickrCC
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5 home-buying hacks to make ownership easier

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