Requirements to Qualify for the Bonus ELIGIBLE FIRST-TIME NEW HOME BUYER
You will qualify as a first-time new home buyer if:
»» You purchase or build an eligible new home located in B.C.;
»» You, or for couples, you and your spouse or common law partner, have never
previously owned a primary residence;
»» You file a 2011 B.C. resident personal income tax return, or if you move to B.C.
after December 31, 2011, you file a 2012 B.C. resident personal income tax return (you will not be eligible for the bonus if you move to B.C. after December 31, 2012);
»» You are eligible for the B.C. HST New Housing Rebate; and
»» You intend to live in the home as your primary residence. ELIGIBLE NEW HOME
An eligible new home includes new homes (i.e., newly constructed and substantially renovated homes) that are purchased from a builder and
that are owner-built. The bonus will be available in respect of new homes purchased from a builder where:
»» A written agreement of purchase and sale is entered into on or after February 21, 2012;
»» HST is payable on the home (e.g., HST will generally be payable if
ownership or possession of the home transfers before April 1, 2013 – see
further details below); and
»» No one else has claimed a bonus in respect of the home.The bonus will be available in respect of owner-built homes where:
»» A written agreement of purchase and sale in respect of the land and building is
entered into on or after February 21, 2012;
»» Construction of the home is complete, or the home is occupied, before April 1, 2013; and
»» No one else has claimed a bonus in respect of the home. A substantially renovated home is one where all or substantially all of the interior
of a building has been removed or replaced. Generally, 90% or more of the interior of the house must be renovated to qualify as a substantially renovated home (90% test).
Amount of the Bonus
MAXIMUM AMOUNT
The bonus is equal to 5% of the purchase price of the home (or in the case of owner-built homes, 5% of the land and construction costs subject to
HST) to a maximum of $10,000.
PHASE-OUT FOR HIGHER INCOME EARNERS
The bonus will be reduced based on an individual’s/couple’s net income (line 236 of your income tax return) using the following formula:
»» For single individuals, the bonus is reduced by 20 cents for every dollar in
net income over $150,000 (bonus is reduced to zero at $200,000 net income).
»» For couples, the bonus is reduced by 10 cents for every dollar in family net
income over $150,000 (bonus is reduced to zero at $250,000 family net income).
APPLICATION PROCESS
Individuals must apply for the bonus through the B.C. government. Individuals can apply once
application forms have been posted on the B.C. Ministry of Finance website later this year. Applicants will be required to submit documentation demonstrating eligibility for the bonus.
ELIGIBLE NEW HOME
The bonus is available in respect of new homes (i.e., newly constructed and substantially renovated homes) where HST is payable. HST will generally be payable on homes purchased from a builder where ownership or possession transfer before April 1, 2013.
Potential buyers should consult with the builder to determine if the home will be subject to the HST.
For owner-built homes, the bonus will be based on land and construction costs subject to the HST. Eligible new homes will include:
»» Detached Houses, semi-detached houses, duplexes and townhouses,
»» Residential condominium units,
»» Mobile homes and floating homes, and
»» Residential units in a cooperative housing corporation.
For examples by property price click here
Tuesday, February 21, 2012
Tuesday, February 7, 2012
CMHC - Stated Income Programs - BIG CHANGES
There’s a growing air of uncertainty in the mortgage industry, one we haven’t sensed since the tail end of the credit crunch.
Regulators, media and politicians are waving the caution flag on housing and mortgages, and the foundation of our market (CMHC) is suggesting they’re running out of insurance room.
This has much of the industry in a risk minimization (“risk-off”) mode. In turn, mortgages that are not insurable, income-qualified and owner-occupied are now attracting more scrutiny.
Here’s what we’re hearing…
On CMHC’s $600 billion insurance cap…
CMHCThe consensus among industry executives we spoke with is that CMHC will not receive near-term approval to write more than $600 billion worth of mortgage default insurance. Political and risk concerns are the most cited reasons for this.
That may change if CMHC approaches parliament with urgency to lift its cap. (We don’t have enough information to judge this probability, so we won’t.)
“The government doesn't want lenders insuring low loan-to-values,” one capital markets expert told us, on condition of anonymity. Insuring low LTV mortgages suggests banks are abnormally concerned about risk and eager to find a way around OSFI’s capital guidelines (buying mortgage insurance lowers banks' capital costs in many cases).
Lenders are reportedly disproportionately relying on low-ratio insurance to cover themselves on mortgages in Toronto and Vancouver where price risk means 80% LTV is less security than in most cities.
“There is a false comfort in loan-to-values.” It’s often better to have more room to service debt, than more equity, said the above source. “If I’m choosing between an 80% LTV with a 42% TDS and a 95% LTV with a 30% TDS, I’ll take the latter.”
We’ll find out how close CMHC is to its present $600 billion cap when it issues its 4th quarter financials (due by month’s end).
On covered bonds…
Pressure to increase the $600 billion ceiling may wane if the government decides it will no longer guarantee covered bonds. (We could hear more about that in the next 30-60 days when new covered bond legislation is rumoured to be due).
Covered bonds used up roughly $24 billion of insurance capacity in 2011.
The government’s position is that covered bonds don’t need to rely on insurance, and that’s true in some cases.
The Covered Bond Report cites evidence that RBC’s covered bonds (which are backed by uninsured conventional mortgages) demand yields as low as five basis points above insured covered bonds. (That’s a tight spread. Albeit, other issuers would likely pay more than RBC, given its strong credit rating.)
Our key source above told us: “The Feds are going to have to increase the covered bonds limit if they're serious about not harming liquidity.”
On lenders' backup plans…
Word is, a slew of lenders have been on the phone with Genworth and Canada Guaranty. They’re looking for a replacement to the bulk insurance they can no longer buy in size from CMHC.
We spoke with other knowledgeable sources who speculate that private insurers may only be able to fill demand for a year or so before hitting their own insurance limits.
Another question is, what cost premium will investors demand from lenders in order to buy mortgages backed by private insurers (who have a 90% government guarantee versus CMHC 100% guarantee). At the consumer level, a 10 basis point interest rate disadvantage is a turnoff in today’s competitive mortgage arena.
Non-bank lenders have been calling “every available liquidity source” one lender executive told us yesterday.
Another lender said: “Investors' appetite for private insurance will dictate how much conventional business monolines do…Banks can withstand this because they will put it on their balance sheet....with no conventional rate premium.”
On CMHC portfolio insurance limits…
The ramifications of CMHC nearing its $600 billion insurance cap are potentially great. The most noticeable outcome so far has been CMHC’s first-ever bulk insurance rationing system. Depending on how CMHC allocates bulk insurance to lenders, it could:
adversely impact smaller lenders who rely on portfolio insurance for liquidity OR provide an advantage to certain smaller/newer lenders (depending on whether their cap on buying bulk insurance is based on an industry average [which could be relatively large for a small lender])
adversely impact major banks that use portfolio insurance for capital relief.
adversely impact consumers by way of fewer product options and higher rates on low-ratio mortgages
Ron-SwiftRon Swift, CEO of Pacific Mortgage Group Inc., told us yesterday: “The result of these restrictions ultimately means there will be an impact on liquidity in the market place. I think this will first impact products that have the higher insurance costs, such as stated income & self-employed. They will either be stopped or the rates charged to these clients will have to be significantly increased. Either way, tightening liquidity, reducing mortgage options or increasing the costs will take some buyers out of the market, which will affect all of us.”
Thus far, we’ve seen a handful of non-bank lenders announce higher conventional (<=80% LTV) mortgage rates. More are expected to follow.
On stated income mortgages…
OSFI, Canada’s bank regulator, has been concerned about stated income mortgages for months.
firstlineFirstLine, a major lender and one of CIBC’s mortgage divisions, dropped a bombshell on brokers Tuesday. It announced that it’s suspending stated income approvals effective immediately. (Refis and switches among CIBC’s own brands are not impacted.)
We’ve already heard of other lenders either terminating their stated income programs or upcharging the rates.
As a side note: CIBC says its “changes affect FirstLine only,” which will really tick off brokers. It seems that CIBC’s decisions to: a) apply this policy only to brokers, b) severely undercut brokers on renewal, and c) apply rate favouritism to its retail channel, are destroying FirstLine’s long-standing goodwill among brokers. We hate saying that because we have all the respect in the world for the BDMs, underwriters and management we have had the privilege of knowing at FirstLine. This decision obviously comes from above their heads.
This information came from http://www.canadianmortgagetrends.com
Regulators, media and politicians are waving the caution flag on housing and mortgages, and the foundation of our market (CMHC) is suggesting they’re running out of insurance room.
This has much of the industry in a risk minimization (“risk-off”) mode. In turn, mortgages that are not insurable, income-qualified and owner-occupied are now attracting more scrutiny.
Here’s what we’re hearing…
On CMHC’s $600 billion insurance cap…
CMHCThe consensus among industry executives we spoke with is that CMHC will not receive near-term approval to write more than $600 billion worth of mortgage default insurance. Political and risk concerns are the most cited reasons for this.
That may change if CMHC approaches parliament with urgency to lift its cap. (We don’t have enough information to judge this probability, so we won’t.)
“The government doesn't want lenders insuring low loan-to-values,” one capital markets expert told us, on condition of anonymity. Insuring low LTV mortgages suggests banks are abnormally concerned about risk and eager to find a way around OSFI’s capital guidelines (buying mortgage insurance lowers banks' capital costs in many cases).
Lenders are reportedly disproportionately relying on low-ratio insurance to cover themselves on mortgages in Toronto and Vancouver where price risk means 80% LTV is less security than in most cities.
“There is a false comfort in loan-to-values.” It’s often better to have more room to service debt, than more equity, said the above source. “If I’m choosing between an 80% LTV with a 42% TDS and a 95% LTV with a 30% TDS, I’ll take the latter.”
We’ll find out how close CMHC is to its present $600 billion cap when it issues its 4th quarter financials (due by month’s end).
On covered bonds…
Pressure to increase the $600 billion ceiling may wane if the government decides it will no longer guarantee covered bonds. (We could hear more about that in the next 30-60 days when new covered bond legislation is rumoured to be due).
Covered bonds used up roughly $24 billion of insurance capacity in 2011.
The government’s position is that covered bonds don’t need to rely on insurance, and that’s true in some cases.
The Covered Bond Report cites evidence that RBC’s covered bonds (which are backed by uninsured conventional mortgages) demand yields as low as five basis points above insured covered bonds. (That’s a tight spread. Albeit, other issuers would likely pay more than RBC, given its strong credit rating.)
Our key source above told us: “The Feds are going to have to increase the covered bonds limit if they're serious about not harming liquidity.”
On lenders' backup plans…
Word is, a slew of lenders have been on the phone with Genworth and Canada Guaranty. They’re looking for a replacement to the bulk insurance they can no longer buy in size from CMHC.
We spoke with other knowledgeable sources who speculate that private insurers may only be able to fill demand for a year or so before hitting their own insurance limits.
Another question is, what cost premium will investors demand from lenders in order to buy mortgages backed by private insurers (who have a 90% government guarantee versus CMHC 100% guarantee). At the consumer level, a 10 basis point interest rate disadvantage is a turnoff in today’s competitive mortgage arena.
Non-bank lenders have been calling “every available liquidity source” one lender executive told us yesterday.
Another lender said: “Investors' appetite for private insurance will dictate how much conventional business monolines do…Banks can withstand this because they will put it on their balance sheet....with no conventional rate premium.”
On CMHC portfolio insurance limits…
The ramifications of CMHC nearing its $600 billion insurance cap are potentially great. The most noticeable outcome so far has been CMHC’s first-ever bulk insurance rationing system. Depending on how CMHC allocates bulk insurance to lenders, it could:
adversely impact smaller lenders who rely on portfolio insurance for liquidity OR provide an advantage to certain smaller/newer lenders (depending on whether their cap on buying bulk insurance is based on an industry average [which could be relatively large for a small lender])
adversely impact major banks that use portfolio insurance for capital relief.
adversely impact consumers by way of fewer product options and higher rates on low-ratio mortgages
Ron-SwiftRon Swift, CEO of Pacific Mortgage Group Inc., told us yesterday: “The result of these restrictions ultimately means there will be an impact on liquidity in the market place. I think this will first impact products that have the higher insurance costs, such as stated income & self-employed. They will either be stopped or the rates charged to these clients will have to be significantly increased. Either way, tightening liquidity, reducing mortgage options or increasing the costs will take some buyers out of the market, which will affect all of us.”
Thus far, we’ve seen a handful of non-bank lenders announce higher conventional (<=80% LTV) mortgage rates. More are expected to follow.
On stated income mortgages…
OSFI, Canada’s bank regulator, has been concerned about stated income mortgages for months.
firstlineFirstLine, a major lender and one of CIBC’s mortgage divisions, dropped a bombshell on brokers Tuesday. It announced that it’s suspending stated income approvals effective immediately. (Refis and switches among CIBC’s own brands are not impacted.)
We’ve already heard of other lenders either terminating their stated income programs or upcharging the rates.
As a side note: CIBC says its “changes affect FirstLine only,” which will really tick off brokers. It seems that CIBC’s decisions to: a) apply this policy only to brokers, b) severely undercut brokers on renewal, and c) apply rate favouritism to its retail channel, are destroying FirstLine’s long-standing goodwill among brokers. We hate saying that because we have all the respect in the world for the BDMs, underwriters and management we have had the privilege of knowing at FirstLine. This decision obviously comes from above their heads.
This information came from http://www.canadianmortgagetrends.com
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