Buying a  first home can be a tough journey. Especially trying to come up with a 20 per cent down payment in order to avoid having to purchase mortgage loan insurance.

Under the Home Buyers’ Plan (HBP), first time homeowners can borrow up to $25,000 tax free from their RRSPs to buy or build a home. If you are purchasing a home with a spouse, you can each withdraw $25,000 if you qualify.

Here are a few things to consider:

The Pros
• If you can use your RRSPs under the plan to make that 20 per cent down payment, you might not only avoid paying the mortgage loan insurance, but you could also qualify for a lower interest rate.
• With a larger down payment, your monthly mortgage payments will be smaller
• This is one of the only ways to make a tax-free withdrawal from your RRSPs
• Your RRSP can help you buy your first home if you don't have much in terms of savings. This is a great option for young adults.
• There is no penalty for repaying more each year than what your scheduled payment amount is.
• It is a tax-free and interest-free loan over a 15-year span.

The Cons
• You will lose years of compound growth, depending on how fast you reinvest your money.
• The HBP means that you are taking on debt. Except, instead of owing to credit card companies or the bank, you owe it to yourself.
• If you don’t make your repayment each year, the unpaid amount is fully taxed as income for that year.
• If you declare bankruptcy, you will still need to make payments back into your RRSP each year.

Plan eligibility
• You have to be a first-time home buyer (or buying for somebody who is disabled) and a resident of Canada.
• You must intend on living in the house purchased under the HBP within one year of purchase or completion. However, there is no minimum amount of time that you have to stay there.
• You must have entered into a written agreement to buy or build a home.
• You cannot own the home for more than 30 days before the withdrawal.

Plan rules
• Starting the second year following the year in which you made the withdrawal, you will need to start repaying the money back into your RRSP.
• You have up to 15 years to repay the full amount, where each year 1/15th of the total amount is due. For example, if you withdrew the entire $25,000, you would have to make payments of $1,666 each year for the next 15 years.
• RRSP contributions made less than 90 days before your withdrawal date cannot be used towards the HBP. This means you wouldn’t be able to make a last-minute contribution into your RRSP in order to take it out again for the HBP.

For more information on eligibility and rules, please visit the CRA website. 

Repaying the HBP
You don’t actually have to make your first payment until the second year following the year in which you made your withdrawal. For example, if you withdrew your money in 2010, you wouldn’t need to make your first payment until the tax year of 2012.

The annual repayment amount is determined by the total amount you have borrowed from your RRSP, divided by 15. If you pay more than the minimum each year, future payments will be the remaining amount owing divided by the number of payment years you have left to go.

Your notice of assessment will have all of your Home Buyers’ Plan information on it, including payments due, so you won’t have to calculate the payments yourself.

Source: The Toronto Star

OTTAWA, February 17, 2011 — After trending lower in the second half of 2010, housing starts are forecast to stabilize at levels consistent with demographic fundamentals in 2011 and 2012, according to Canada Mortgage and Housing Corporation’s (CMHC) first quarter Housing Market Outlook, Canada Edition.¹

Housing starts will be in the range of 157,300 to 192,900 units in 2011, with a point forecast of 177,600 units. In 2012, housing starts will be in the range of 154,600 to 211,200 units, with a point forecast of 183,800 units.

“Modest economic growth will continue to push employment levels higher this year and next. This, in conjunction with relatively low mortgage rates, will continue to support demand for new homes. Housing starts will remain in line with long term demographic fundamentals over the course of 2011 and 2012,” said Bob Dugan, Chief Economist for CMHC.

Existing home sales will be in the range of 398,500 to 485,500 units in 2011, with a point forecast of 441,500 units. In 2012, MLS^®2 sales will move up and are expected to be in the range of 406,300 to 519,700 units, with a point forecast of 462,900 units.

Mr. Dugan also noted that the existing home market will remain in the balanced to sellers’ market range in 2011 and 2012. As a result, growth in the average MLS^® price is expected to remain in line with economy-wide inflation in 2011 and 2012.

As Canada's national housing agency, CMHC draws on 65 years of experience to help Canadians access a variety of quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making informed decisions.

Source: CMHC

The most common mistake home buyers make is that they buy with their heart instead of their head. This often means they pay more than they should or are disappointed when they uncover defects in the home or find out the neighbourhood isn’t quite what they thought.

Here are 10 ways to prepare yourself.

1. Be prepared

The best way to avoid this is to be prepared when you buy a home. This means doing research and finding the right agent – should you choose to use one – and other professionals to protect your interests.

2. Why an agent is a good idea

Agents give you objective advice about what a home is worth. The agent will also have connections to lenders and home inspectors to ensure you get the best mortgage rate and that the home is properly inspected before you buy. They will also be able to explain the fine print of any agreement so you know what to expect on closing. Although it is not mandatory to use an agent to represent your interests, you will not have the benefit of the advice and experience of an objective third party before making probably the largest investment that will ever make.

3. How to find an agent

Start by asking family and friends. Look for signs in the area that interest you, especially “Sold” signs. This is a good indication that the agent has the area’s pulse and knows how to properly price a home. They will also likely be aware of any problems, such as sewage backups, termites or vandalism; things that may only be known by locals. Also check the website of agents you may interview. Do they offer tips and explain what services they provide? Do they offer information about the neighbourhood including parks, religious institutions, demographics and schools?

4. What to look for in an agent

When interviewing agents, ask for testimonials from satisfied clients. Look for words such as ‘careful’, ‘followed up’ and ‘protected my interests’. If you want to go one step further call these people. Be wary if you hear words such as “pressured me”, “always in a hurry”, or “did not respond in a timely manner.”

5. Visit the neighbourhood on foot

Take a walk through the neighbourhood and talk to people. Drive by at 7:30 in the morning to see how many school buses are picking up children. You can also tell how long it may take you to commute to work during rush hour. By speaking to people, you can not only get a sense of the friendliness of the community, but also as to whether there are any surprises that no one is going to advertise, a local haunted house or former grow op, or the neighbour from hell.

6. Go to City Hall

Visit your local building department and find out if any new developments are planned. New development may increase property values but also increase traffic. Check to see how many owners have applied for minor variances, to either build homes or additions that are larger than the by-law permits. This gives an indication of the future direction of this neighbourhood.

7. How much can you afford

When it comes to mortgages, it is not enough to know in advance how much you can safely borrow based on your income. Buyers should also realize that the lender will do an appraisal and if the lender believes you paid more than the house is worth, they will not give you the full amount of the loan that you expect. So, be very careful about stretching yourself to the limit when you make an offer on any home.

8. Title insurance is a must

Title insurance can be arranged through your lawyer. You will be protected against unpaid taxes or water bills by the seller, as well as problems that are not known at closing. This includes problems where part of the home or swimming pool is in fact on your neighbour’s property. However, it is a mistake to believe that title insurance will protect you against everything. For example, title insurance will not compensate you if you thought your lot was 50 feet and a later survey showed that it was only 48 feet.

9. Why a survey is important

A survey will reveal all boundary issues in advance, which will ensure that you do not have problems after closing, especially if you plan on making additions or other improvements.

10. Choose a home inspector carefully

The home inspection is a critical part of the process, so do your research. Make sure the company is registered before retaining them. The Ontario Association of Home Inspectors is a self-regulating body that defines qualifications for home inspectors, and grants the designation RHI, or Registered Home Inspector, to qualified practitioners in Ontario. Most inspection firms have a limitation of liability clause, which states that if they miss something that costs you money, they are not responsible. It is better for you if the company does not have this type of clause.

If you’re thinking of renting the basement as a separate apartment ask the inspector if it meets proper fire code standards and if not, an estimate of what it would cost to make it comply. The inspector should also be able to give you advice on what upgrades you’ll need to cut insurance costs. For example, knob and tube wiring or asbestos insulation could cause your insurance premium to double or more.

If you follow these simple steps and buy with your head instead of your heart, chances are you’ll get the house you want at a price you can afford.

Source: The Toronto Star

Your heating system

A heating system converts fuel into heat which then flows through a house. The efficiency of a heating system depends on the amount of fuel consumed to meet heating needs. Using less fuel means your system has increased its energy efficiency. 

Check your heating system first

One way to maximize output using the least amount of fuel is to reduce air leakage. Before deciding to replace or upgrade your present heating system you will have to consider how much of your present system can be saved. Are the heating ducts or water distribution pipes in good condition? Oil and gas fired furnaces require a constant supply of air to operate, because fire needs oxygen to burn. An air-starved furnace can cause carbon monoxide to build-up in quantities that can be dangerous.

Additional ventilation can sometimes be required in houses with heating systems that require little or no indoor air, electrically heated homes, homes with chimney-free condensing furnaces, or houses with a fuel burning furnace enclosed in a room with air for combustion from the outside.

Improve heating efficiency

If you decide to change your system, you'll have to consider what type of fuel you want to use. Cost and availability of fuel is usually the deciding factor. If you're keeping your present system, here are a few ways you can improve its operation.

• Hot air ducts are notorious wasters of heat and money. If your basement feels too warm, too much heat is probably seeping out of your ducts. You can seal all joints and seams in the ducting with vinyl duct tape. With forced air-systems, the furnace filters should be changed regularly.

• With hot water systems, the exposed accessible heating pipes should be insulated with flexible foil- faced fiberglass at least 19mm thick. If there is an aquastat on the boiler, (a water temperature control) the water temperature can be reduced to about 49 Celsius of 120 Fahrenheit during warmer parts of the heating season. (If your boiler is made of stainless steel, or if your main boiler also heats your domestic hot water, you shouldn't reduce the water).

• "Downsizing" your oil furnace can reduce fuel bills by seven to 10 per cent. Retention head burners mix the air and oil spray very quickly which permits the combustion of oil with less air. Less air entering the burner means that less heat escapes out the chimney.

If you think you might be having problems with household air supply, contact a registered heating contractor for advice.

Source : Orea

I have been a Sales Representative with Royal LePage since 1986 and have been a top producer for the company. Establishing a long lasting relationship with my clients is a priority.

I am active in the community and do numerous fundraising activities for local and international charity organizations and loving it.