Sub-Prime Mortgages

What is Sub-Prime Mortgage?

Sub-prime lending is pretty much as it sounds: a loan provided by a financial institution or other lender to a borrower that for various reasons doesn't qualify for a "prime" mortgage.
With home prices perpetually climbing higher and with banks continuing to tighten lending standards, more people are being pushed into the sub-prime space when applying for a mortgage, which requires higher interest rates and often more stringent repayment terms.
Applicants: young people fresh into the workforce,People whose income doesn't allow them buy home.

Why taking on a sub-prime mortgage is not optimal...

In addition to having higher interest rates, sub-prime loans often come with higher fees. What's more,sub-prime mortgages typically include lender fees that are required upon the closing of the mortgage and extremely high penalties if the mortgage is broken,making it difficult and expensive to refinance before the end of the term.

Remember to...

•    Read the fine print. Know what you are getting into. 
•    Borrow what you can afford. The typical rule of thumb is mortgage payment should be no more than 50 per cent of your after-tax income.
•    Have a down payment/pay it down.
•    Ensure the duration of the loan is short enough and manageable enough to strengthen credit.


First Time Home Buyers

When you buy land or an interest in land in Ontario, you pay land transfer tax. First-time homebuyers of an eligible home may be eligible for a refund of all or part of the tax.

How much money could I receive?

The maximum amount of the refund is $2,000.

For example:

Cost of Home

Tax Payable

Tax Refund

Net Tax Payable

$100,000

$725

$725

$0

$200,000

$1,725

$1,725

$0

$300,000

$2,975

$2,000

$975

If the refund is claimed at time of registration, it may offset the land transfer tax ordinarily payable. If not claimed at registration, the refund may be claimed directly from the Ministry of Finance, within 18 months after the transfer. No interest is paid on this refund.

Do I qualify?

To get a refund of land transfer tax, you:

  • must be at least 18 years old

  • must occupy the home as your principal residence within nine months of the date of transfer

  • cannot have ever owned an eligible home, or an interest in an eligible home, anywhere in the world

If you have a spouse, your spouse cannot have owned an eligible home, or an interest in an eligible home, anywhere in the world while being your spouse. 
You must apply for a refund within 18 months after the date of the transfer.

Harmonized Sales Tax (HST)

The HST applies to newly constructed or substantially renovated homes, but does not apply to resale homes. Buyers of new homes may receive a rebate of up to $24,000 of the provincial portion (8%) of the HST.

You may be entitled to claim a GST/HST new housing rebate for a house purchased from a builder if you purchased a new or substantially renovated house (building and land) from a builder