Lots new for the New Year!

Happy New Year!

There are a number of items worth mentioning at this point. I'll list them and then explain a little more

• GST reduced to 5%
• New record set in 2007 for resale homes
• 40 year mortgages have arrived
• Ontario Land Transfer Tax rebate for first time buyers
  

As mentioned in a previous post or two, as of January 1, the G.S.T. has been reduced to 5% across the board so be sure to check all of your receipts. Rumour has it that some merchants have been "slow" to implement the change.

From the Toronto Real Estate Board, a new record was set in 2007 for the total number of resale home transactions. There were 93,193 homes sold in the calendar year, up 12% over last year and up 11% over the previous record year 2005 (84,145 sales). On a year-over-year basis, the average price rose 7% to $376,236. So unlike the real estate market in the U.S., the Toronto market (and the Canadian market in general) is still going strong.

According to an article in today's Star by Ellen Roseman, you can now get a mortgage amortized over 40 years. Unfortunately, you can't lock in the interest rates for this length of time (max. 10 years) but you can certainly lower your monthly payments, if you wish. HAving said this, let me also say that you'll pay far more in interest payments with this amortization.

Here's an example. Let's say that you borrow $300,000 at 7% interest.


Amortized over 25 years, you'll pay $330,376 in interest payments, on top of the original $300,000.
Amortized over 40 years, you'll pay $584,429 in interest payments, on top of the original $300,000 loan. That's an additional $254,053 in interest just for the extra 15 years.

All that just to reduce your monthly payment by $258.


And finally, the provincial government has agreed to extend the rebate on the provincial Land Transfer Tax to include first-time-buyers of resale homes. Previously, the rebate was only for first-time-buyers and *new* homes. Talk to your lawyer for more details about it.