Mandeep  Toor

Mandeep Toor

Real Estate Broker

RE/MAX Realty Specialists Inc., Brokerage *

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New Mortgage Rules On It's Way

As a result of recent announcements by the federal, provincial and municipal governments, change is coming to the real estate industry and real estate agents and their clients must be prepared to adapt in order to succeed in the coming year. Here are five issues you need to know about.

1. New federal assistance for qualified first-time buyers

The federal government, through Canada Mortgage and Housing Corp., will offer first-time homebuyers assistance for resale or new home purchases. To qualify, the buyers must have total household income less than $120,000. They can qualify to purchase a home up to $500,000. The government will provide a no-interest equity mortgage of five per cent for a resale home and up to 10 per cent for a new home. The program is scheduled to begin on Sept. 1, 2019.

It is not clear as to the terms of repayment but given that it is announced as an equity loan, you can assume that if you sell your home later and make a profit, part of the profit will have to be shared with the government. This should also mean that if you lose money in the future on a resale, the government should share in the loss. More details will be given prior to the launch of the program.

2. RRSP homebuyer withdrawal limit increased to $35,000 per person, $70,000 per couple

First-time buyers will also receive the benefit of increased withdrawals from their RRSPs to put into their down payment. It is important to remember that if you are topping up your contribution this year to plan for this, the money must be in your RRSP account at least 90

days before it can be withdrawn. Make sure you review this when you are setting any closing date for your home purchase so that you will be able to withdraw the funds in time for closing. The money is repayable over 15 years, to your own RRSP.

3. Toronto council looking to increase land transfer taxes on luxury properties

The proposal would be to raise the Municipal Land Transfer Tax, which is currently the same as the provincial Land Transfer Tax, to three per cent or 3.5 per cent for the values of a property worth more than $3 million and an even four per cent for a property worth more than $4 million. For example, the Toronto municipal tax today on a $3.5 million property is $66,475. At three per cent, this would rise to $71,475.

4. Silent auctions may be coming

The Ontario government has been asking for feedback about the current bidding war process in Ontario. One of the suggestions has been to permit a form of silent auction in a bidding war, where all buyer bids are transparent. While there are arguments both for and against this proposal, it is expected that some form of silent auction will be permitted, as long as it has the express consent of the seller and every buyer who is involved.

5. Will escalation clauses be banned?

“I agree to pay $1,000 more than anyone else.” This is an example of an escalation clause, which is used in a bidding war to try and achieve an advantage for one of the buyers. There is controversy at the moment as to whether this type of clause is even legal, due to how it is used or accepted in any offer. It is expected that when the new Ontario government changes are announced in regard to bidding wars, they will also advise whether this type of clause is permitted.

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