Blog

Financial expert Pattie Lovett-Reid provide tips on what Canadians should be doing during this uncertain times to manage their finances.

Getting More Bang for Your Buck in a Condo Purchase In Toronto’s ever-evolving real estate market, buying a condo is often seen as the go-to entry point for homeownership. But with resale condos averaging around $1,000 per square foot and pre-construction units soaring between $1,400 to $1,600 per square foot, finding an affordable option that still offers ample space can feel like searching for a unicorn. Enter co-ops and co-ownerships—two lesser-known but compelling alternatives that can help you maximize your purchasing power while offering a unique community-based lifestyle.

Ford government plans to remove bike lanes on major Toronto streets like Yonge Street. Conservative Party’s proposed to eliminate the GST/HST on new homes under $1 million. City incentivizes the development of purpose-built rental housing, including reducing development charges.

A new CRA ruling calls for 13% HST on property value when selling short term rental properties. Toronto proposing strict renovation eviction bylaws, raising concerns for landlords.

A recent ruling by the Tax Court of Canada that shows homeowners who have regularly rented out their properties on Airbnb or other short-term rental sites will be subject to paying 13% HST when putting their homes up for sale.

Sales of Toronto homes are surging, while condo sales are lagging behind. New mortgage rules allow 10% down payment for homes up to $1.5M, likely boosting competition in $1-2M range. Stress test removed for mortgage renewals with more than 20% equity.

The Liberal government has introduced a new housing policy that aims to make it easier for first-time homebuyers to enter the market. But does it truly deliver the promised benefits? As someone who is passionate about helping people achieve homeownership, I think it’s worth examining the potential impacts of this policy. Breaking Down the Latest Announcement Yesterday, the government announced that starting December 15th, first-time buyers of resale homes will be able to choose a 30-year amortization period instead of the usual 25 years. At first glance, this sounds promising—lower monthly payments could mean improved affordability. However, spreading those payments over a longer period results in higher overall interest costs. And that primarily benefits one group: the banks. We rarely talk about where all this interest money ends up. It doesn’t just vanish into thin air; it fattens the banks’ bottom lines. You can almost hear the champagne popping in their boardrooms. Consider this: Example 1: Example 2: In this scenario, the bank would receive over $116,000 more in interest with the extended amortization. While the policy may reduce monthly payments, it significantly increases long-term costs. Missed Opportunity: Revisiting the Stress Test If the goal is to improve housing affordability, the current mortgage stress test also deserves attention. The test requires buyers to qualify at rates 2% higher than the actual interest rates, which can limit their purchasing power. Some argue that adjusting or removing the stress test could allow buyers to qualify for more affordable loans without taking on larger overall interest payments. This could be a more direct way to help first-time buyers. Investors vs. Homeowners: Unequal Benefits The policy also extends the 30-year amortization option to pre-construction home buyers. While this may seem like a positive change for all, investors may see the greatest benefit, as they can write off mortgage interest. In contrast, Canadian homeowners do not have this advantage, unlike in the U.S., where mortgage interest can be deducted from taxes. Easier Access for Higher-Priced Homes Additionally, the policy allows buyers purchasing homes priced up to $1,499,999 to put down less than 20%. While this might help buyers with strong incomes but smaller down payments, it could mainly benefit those in higher income brackets, potentially overlooking others still struggling to afford a home. Final Thoughts While the latest announcement may bring some relief to specific groups of buyers, broader changes—such as adjusting the stress test—might provide more substantial and lasting support for first-time buyers. Whether this policy will create meaningful improvements remains to be seen. Thanks to Jim Jiang, Mortgage Agent level 2 from Outline Financial on his contribution to the financial scenarios above.