Competition = Low Mortgage Rates

Should I Purchase a New Home or a Re-Sale?

First-time home buyers have many decisions to make after deciding to purchase a new home. These decisions can be overwhelming and even frustrating if they do not have all the facts.

A common question for many first-time home buyers is whether or not to build brand new or to purchase a re-sale. Let our professional mortgage brokers at Alberta Equity Mortgages ease your frustration by offering solid advice while providing both the pros and cons of building brand new or purchasing re-sale.

Why deal with a Mortgage Broker?

Mortgage Broker represent you, the customer, not the lender. Because they are not employees of a lending institution, Brokers are not limited in the product they can offer you. Brokers seek out the best lender package to suit your specific situation, whether it's with a Chartered Bank, Trust or Insurance Company, or Private Funds.

There is a wide assortment of options and features available to homebuyers today. Shopping around takes a lot of time and effort. The mortgage process within today's very competitive marketplace intimidates many Canadian homebuyers. It pays to work with a mortgage professional who will represent you and ensure the mortgage you get is the one best suited to your needs.

Choosing the wrong mortgage can cost you thousands of extra dollars. Mortgage Brokers are trained professionals who can help you save on your mortgage dollar.

Can I use Funds from my RRSPs as a Down Payment without Tax Penalty?

The answer is yes. Through the Home Buyers' Plan (HBP), Revenue Canada permits you to use up to $25,000 of your RRSP funds as a source of down payment towards buying or building a new qualifying home. Revenue Canada will not view your eligible withdrawal amount as income therefore, that amount will not be taxed. However, there is a catch. The amount withdrawn from your RRSP must be repaid into your RRSP within a 15 year period. If you fail to make the repayment by the specified deadline, the amount that was withdrawn will then be counted as income for that year and you will be taxed.

If you use your RRSPs within the specified guidelines of the Home Buyers' Plan, you will see both immediate and long term benefits. For example, you are immediately able to increase your down payment amount which in turn decreases your principal amount owing. By owing less on the principal, you will gain substantial savings on interest alone over your mortgage term.

Things to Consider When Purchasing a Re-Sale

If you decide not to build brand new and have opted for purchasing a re-sale, it is extremely important to carefully assess the following pros and cons before purchasing:

• You usually get a lower price due to wear and tear
• You get the benefit of upgrades (finished basement, pool, etc.) at a depreciated price
• Your neighborhood is generally established and amenities are in place

• Others have lived in the home
• There is no warranty for repairs required by law (unless it is a condition of purchase)
• The décor might require changes and can be costly or time consuming