Lender suggests unique policy to encourage first-timers

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Following Ontario’s announced first-time homebuyer tax break, one professional is arguing in favour of a different kind of policy.

“I understand what they’re doing here but, to me, if they could give first-time homebuyers a break on some of the carrying costs … if I had my way, maybe give them a break on the first year on electricity, give them a break on home or condo taxes for the first couple years so that the carrying costs are lessened and therefore their cash flows better and it makes home owning more affordable,” Bill Whyte, SVP and chief of member experience at Meridian Credit Union, told MortgageBrokerNews.ca. “While this is a one-time thing for homebuyers, but if they were able to do something along those lines … I think that could actually have a greater impact.”

The Ontario government announced Monday it was doubling the rebate on the land-transfer tax for first-time homebuyers to $4,000.

It said half of first-time buyers won’t pay the tax in the province.

At the same time, Ontario announced it was increasing the tax on luxury homes that sell for over $2 million.

And while the rebate for first-timers is welcome, Whyte believes the government should focus on carrying costs as opposed to initial costs if it wants to make it easier for Ontarians to get into the market.

“In the scheme of the things, it’s small to be frank; but it’s something. You don’t want to look a gift horse in the month,” he said. “Now, first-time homebuyers can actually buy a home and won’t have to pay any tax up to almost $400,000, so it’s something. It doesn’t help them with the carrying cost.

“You can put it toward household expenses or savings or anything else. It’s a small thing in my mind in the total scheme of things.”

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  • Steve Porter on 2016-11-16 9:32:31 AM

    Absolutely. I agree with Bill. It's one thing to make entry into the housing market affordable but in most cases first-time homebuyers are tapped out financially after making the commitment. As our Provincial goverment is so quick to act with LTT rebates why don't they consider dropping the PST on the Default Insurance premium? Here's a large expenditure that must be paid upfront in addition to all other closing costs as part of an insured homebuyers closing costs.

  • John Greenlee on 2016-12-02 11:25:03 AM

    Hate to disagree here as I feel first time buyers should always be encouraged, however; the issue should always be first and foremost about affordability. Giving someone a break on carrying costs for a year or two, doesn't really do anyone any favours.

    A lot of people, tend to spend what they have. If you reduce carrying costs for a year or two, most people will end up finding a way to spend that money else where (think cars etc.). Then when the bills go up, they'll be strapped and overall arrears have a greater potential to increase.

    This is why we as Mortgage Professionals should be ensuring that borrowers not only qualify, however; can afford the home they are purchasing in the long run.

    Just my thoughts on it.

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