On January 21st the Bank of Canada (BoC) made a surprise announcement cutting the overnight lending rate by ¼% from 1% to 0.75%. This is the first change in over 4 years and dispels all the rumours and predictions that rates would soon begin to rise. At the time of writing, the major banks have not followed this decrease by lowering their prime lending rate which currently remains at 3%. As each bank controls their individual prime rate, this BoC rate cut currently will not affect consumer lending rates for everything from car loans and lines of credit, to variable rate mortgages.
Hopefully the banks will make a change before too long as the whole point of the Bank of Canada lowering rates is to help stimulate the economy, so if consumer borrowing costs don’t come down, the move may not have the desired results....
The RRSP contribution deadline is looming – it’s March 2nd, 2015 – and I know I will be getting quite a few calls and emails from people scrambling to make a last minute decision on whether or not to max out their RRSP, because they expect to be buying a home soon.
If you are a first-time homebuyer who has money sitting in RRSP, then The Home Buyers Plan is your go to guide. The HBP is a program that allows you to withdraw funds from your registered retirement savings plans (RRSPs) to buy or build a qualifying home. You can withdraw up to $25,000 in a calendar year.
There are lots of benefits to contributing to your RRSP. The most important of these, from a first-time homebuyer perspective:
What if only one spouse has contributed?
What if your spouse doesn’t have enough money in his or her RRSP to withdraw the entire $25,000? If one of you makes substantially more income than the other, and you expect this to continue for the foreseeable future, consider a spousal RRSP contribution.....
If you have a job awaiting you on Canadian soil, it’s possible to also secure the purchase of a home if you plan ahead and connect with professionals before you even begin packing.
The main reason you’ll want to get in touch with the right professionals before you start to pack is to find out what important paperwork you’ll need to set aside to ensure smooth sailing through the home financing and purchasing processes.
Your first step should be to get in touch with an experienced mortgage professional. In doing so, you can set the home financing process in motion by securing a mortgage rate guarantee and pre-approval, and figuring out what supporting paperwork you need to provide to purchase a home in Canada.
The services of mortgage professionals are typically free – they are paid by lenders for bringing in new business. Mortgage professionals have access to multiple lenders – including banks, credit unions and trust companies – where they can compare products and rates, and find the ideal mortgage to meet your unique needs.
In most cases, Canadian mortgage lenders and insurers want to see employment letters that prove your offer of employment and salary in Canada. You must also have at least a 5% down payment for the home from your own resources – which means it has to be your own money, not borrowed or gifted. So, for instance, if you’re selling your home in another country and using some of the proceeds as a down payment on a home in Canada, you must be able to prove this.....
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