Interest rates are at a historic low, and in addition to that there are many incentives available to First-Time Homebuyers (FTHB’s) to help you purchase your first home.
First-Time Homebuyers Tax Credit
Effective January 27, 2009 a new tax credit was introduced for FTHB’s to claim for a refund that can then be used to offset things like legal fees, disbursements and other closing costs. The credit is based on an amount of $5000 and can generate a refund up to $750.
Improvements to the RRSP Home Buyers Plan
The Government has increased the tax-free amount First-Time Home Buyers may withdraw from their RRSP’s to use as a down payment. The amount has gone from $20,000 to $25,000 and is repayable over 15 years.
Land Transfer Tax Rebate
When buying a new construction home a FTHB does not pay the land transfer tax. In addition to this FTHB’s are eligible for a refund of up to $4,000 when they purchase a resale home. This credit will be applied via your lawyer upon closing.
Your Credit Score – What it means to your Borrowing Power
What you should do…
- Check Every 6 Months
- Ensure information is accurate. Common errors include a collection item that is not yours, a collection showing open when it is in fact paid in full, credit card or loan showing late payments, incorrect names, date of birth, address and employer.
- Ensure all payments made have been reported on your bureau.
What not to do…
- Do not exceed your credit limit
- Try and keep all your credit limits 25% below your actual limit. For example, if your credit card has a limit of $10,000, keep the amount owing to $7500 and under if possible.
- Do not credit shop. Every time an institution does a credit check it can reflect poorly on your overall credit score.
What to do if you have Creditors contacting you…
- If you have any current collection items on your credit bureau, you will be required to pay them and provide proof of payment in order to qualify for a mortgage or any further credit.
- If you have a collection item that is older then 6 years, it should drop off your report. If it has not contact the creditor and advise them it must be removed. You may also contact Equifax.
What to do if you miss a payment…
- Always pay our bills on time, preferably before the due date as payments made on-line, via mail or at a bank branch take time to reach the creditor.
- Do not assume that doubling up your next payment will correct things. A missed payment is a missed payment, make the require payment immediately.
Our thanks go to Shelia Johns who provided us with this great information.
Mobile Mortgage Specialist
Royal Bank of Canada
Tobermory, Lions Head, Wiarton, Sauble Beach & Surrounding Area