HST Simplified
The past few months have been exceptionally busy for my office and the overall real estate market in BC. The confusion of the new mortgage rules has left many people feeling like a drunken collage kid on Spring break, but in a bad way. Back and forth, back a forth. Why can’t we just walk in a straight line? I get it, don’t over-leverage yourself. To keep you in the loop, I posted the changes below with an update on HST. For the record, I am STRONGLY against HST. We are one of the most taxed places to live in the world and it’s about to get a lot worse.
Here are the new mortgage rules simplified:
- VRM (variable rate mortgage) and fixed mortgage terms less than 5 years are now qualified on the bank posted rate when the LTV is 80% or higher on a purchase or refinance.
- Minimum down payment for rental units is now 20%.
- Maximum LTV (loan to value) is now 90% on refinances and 85% for stated income (can’t prove income).
- BFS (business for self) are required to prove their income after year 3 of business when using CMHC insurance for their mortgage. Genworth has not yet emulated this restriction but will likely knowing they generally follow CMHC or vise versa.
- Realtors, mortgage brokers and commissioned BFS must prove their income with NOA’s (notice of assessment) or use high ratio (CMHC or Genworth) and pay a premium.
HST simplified:
- The 12% HST (5% GST & 7% PST) only affects new construction.
- Affects new construction purchases with ownership or possession on or after July 1st, 2010.
- Contracts before November 18, 2009 are not affected by HST regardless of closing date.
- A rebate is provided so homes below $525,000 pay no more tax then prior to HST.
- Maximum rebate is $26,250.