In this article, we explain these tools and look at how they can help you buy a home. The tools include the Home Buyers’ Plan, the new First-Time Homebuyers’ Incentive, and the various tax rebates and credits available to first-time homebuyers.

Home Buyers’ Plan: Borrowing from your RRSP

The Home Buyers’ Plan lets any first-time homebuyer buying or building a home to borrow up to $35,000 from their Registered Retirement Savings Plan (RRSP). This amount used to be $25,000 until March 19, 2019, when it was raised to $35,000. If you’re purchasing your home with someone else, like a significant other, each person can use the Home Buyers’ Plan for a total of $70,000.

Although it mentions “first-time” homebuyers, if you’ve previously participated in the plan, you may be able to do it again if your borrowing balance is 0 as of January 1st of the year. Just remember that every year that the money isn’t in your RRSP is another year that it’s not growing. Without the help of this appreciation, it could impact what you have ready for retirement.

Although withdrawing this money is tax-free, it has to be repaid within 15 years to remain so. The repayment period starts the second year after the year that the money is withdrawn. So funds withdrawn in 2019 have 2021 as the first year of repayment. The tax consequences of not paying back the loan within the allotted time could result in a hefty income tax.

Unlike mortgages and other loans, there are no consequences for paying back the money early.

First-Time Homebuyer Incentive: Sharing Equity with the Government

The First-Time Homebuyer Incentive (FTHBI) started on September 2nd, 2019 as part of the government’s national housing strategy. It’s expected to help Canadians fitting into a specific criterion reduce monthly mortgage payments by $286.

The government does this through a shared-equity mortgage program, where they provide a first-time homebuyer with 10% of the purchase price of a new home, or 5% of a resale home. This capital comes interest-free because it is not a loan. The government is actually purchasing part of the equity.

When the property is sold or after 25 years, the homebuyer must pay back either 10% or 5% of the home’s current market value. Thus, if the home declined in value, the homeowner pays back less than what they got. If the home’s value appreciated, they must pay back more.

For example, a homebuyer purchases a $100,000 new home and receives $10,000 (10%) from the FTHBI. If the home appreciates to $400,000 after 25 years or when they sell, they’ll have to pay back $40,000—10% of the market value after 25 years or at the time of the sale. One big benefit is that this amount can be paid back at any time, meaning you could pay it back when the property market is weaker to maximize the benefit.

As great as it sounds, there are severe limitations to this tool. To qualify for FTHBI, homebuyers must have a combined household income of $120,000 or less. The price of the mortgage plus the incentive amount also cannot exceed more than four times the buyers’ household income. This effectively limits the maximum purchase price of a qualified home to around $500,000. This likely rules out Vancouver or Toronto purchases, as even most condos in these cities have surpassed this maximum purchase price.

Another drawback of the program is that homebuyers using the plan with less than a 20% downpayment still need mortgage default insurance. If you have 10% of the purchase price ready and hope to get another 10% from FTHBI, this won’t help you wiggle your way out of default insurance. The FTHBI is almost like a second mortgage on your home—not part of your down payment.

Tax Rebates and Credits

In addition to tools that can help you get the money you need for a down payment or to reduce monthly mortgage payments, multiple tax rebates and credits can help avoid some of the costs of purchasing your first home.

First-Time Home Buyers’ Tax Credit

The First-Time Home Buyers’ Tax Credit came into effect in 2009. It provides a $5,000 non-refundable tax credit if you and the home you’re buying fit a certain criterion. The credit works out to a maximum of $750 back in your pocket.

To qualify, you and your spouse/common-law partner need to buy a qualifying home and must also have not lived in another home owned by you or your partner in the past four years. You and your partner also get a combined total of $5,000 tax credits. This means that regardless of whether it’s a solo or joint purchase, the maximum tax credit is $5,000.

HST/GST Rebate

The HST/GST housing rebate allows a homeowner to recover the GST or federal portion of HST from the purchase of their home or from any renovations that they made to it. To qualify, this home must be your primary place of residence, among other conditions. Depending on your province, the PST or provincial portion of the HST may also be recoverable.

Land Transfer Tax Rebate

If you’re a first-time homebuyer purchasing a home in British Columbia, Ontario, or Prince Edward Island, you could also recover some or all of the land transfer tax paid on your purchase. The recoverable amount depends on the specific province. The City of Toronto also provides a rebate on the city’s land transfer tax, in addition to the provincial one. The qualifications for each rebate differ depending on the province and whether you’re purchasing in the City of Toronto.

As a first-time homebuyer, many tools can help you purchase your first home. You can borrow from your RRSP through the Home Buyers’ Plan, split the equity of your home with the government via First-Time Homebuyer Incentive, or recover some money through various tax credits and rebates. Make sure to speak to an accountant and your realtor to make the best use of these tools.

The post The Tools Available to Canadians Purchasing Their First Home first appeared on RankMyAgent - Trusted resource about Buying, Selling and Renting.

Not only are online reviews widely used, but they’re also important in how we make buying decisions. 57% of consumers in the same survey stated that they only patroned a business with an online review of four or more stars. 

But how accurate are these reviews? It’s not uncommon for business owners to either fake positive reviews for their own business or negative ones for their competitors. Reviews can also be biased due to influence from the business in the form of discounts and promotions. In this article, we review how to weed out fake reviews and see if a business is truly as bad or good as you hear. 

Can you actually trust an online review? 

Fake and bias reviews run rampant on every site. One survey found that 58% of businesses reported receiving a fake review. This is true on e-commerce, social media, and even dedicated review websites. Businesses also use promotions and refunds to entice consumers to leave good reviews or to remove bad ones. 

In e-commerce for example, aside from untrue reviews, businesses may provide refunds to anyone not satisfied with their product in exchange for the removal of their review.  As a result, the overall rating of the product is swayed towards five stars, as anything less than that has been removed. This can provide an improper picture of how the product actually is. 

Similar issues occur with social media websites like Facebook or Google (while Google Plus is gone, Google Review is alive and well!). Business owners commonly entice positive reviews with free products or discounts. It’s also not uncommon for their marketing team to create fake Facebook and Google users to leave reviews that push their rating closer to that perfect five stars. At the same time, these fake accounts can leave poor reviews on their competitor’s pages.

Then there are dedicated review websites such as Yelp, Angie’s list, and RankMyAgent. These websites value the trust of their audience and know that fake reviews would eliminate this trust. Dedicated review websites usually put more effort into monitoring posted reviews. Some review sites such as RankMyAgent go as far as to verify that all reviews first. Others like Yelp allow businesses to report what they believe to be a fake review, and their moderators scour through postings for suspiciously positive ones. These sites also watch out for businesses trying to solicit favourably bias reviews.  

If you really want to know if a review is trustworthy, it’s important to find out a site’s procedures in tackling fake and bias reviews. A site that is passive towards fake reviews is ultimately not as trustworthy as a site where reviews are heavily monitored or require verification. 

What to look out for when reading an online review 

No website is perfect in monitoring their reviews. So how can you figure out whether a business deserves the number of stars or positive/negative ratings it has? Furthermore, how can you get the best flavour of whether this product or service is really worth your money? 

Check the number of reviews: The number of reviews says a lot about a product. When the total number is low, a few bad or good reviews can easily slant the overall rating. This could incentivize someone to post fake reviews—whether positive or negative. However, if a product or service has hundreds or thousands of reviews, the rating is robust and a few good or bad ratings won’t make any substantial changes. It’s also very difficult to fake hundreds of reviews.  

Check the number of reviews: The number of reviews says a lot about a product. When the total number is low, a few bad or good reviews can easily slant the overall rating. This could incentivize someone to post fake reviews—whether positive or negative. However, if a product or service has hundreds or thousands of reviews, the rating is robust and a few good or bad ratings won’t make any substantial changes. It’s also very difficult to fake hundreds of reviews.  

Look for Patterns: Patterns are an indicator of what the business is good or bad at. For example, a particular item on their menu or a certain trait about their abilities as a realtor could be brought up multiple times in various reviews. But patterns go beyond this. Look for patterns in spelling and grammar, length of review, and the names of the reviewers. If coincidences are popping up, it could be a sign of a single person using multiple accounts to write fake reviews. 

Detect Bias: The people writing reviews are not professional reviewers in most cases and are likely not neutral. A reviewer who happens to be a friend or family member will likely give the business five stars. Although it’s hard to weed these bias reviews out, it’s important to look at both positive and negative reviews, even if the business has 4.5 stars. 

Read three-star reviews for the most balanced picture. Five-star reviews are commonly overly gushy about how great the business is while one-star reviews are often a spill of venom when someone is in a bad mood. Neither situations are helpful to you. Three-star reviews look at both the pros and cons of the business and are less extreme than its one- and five-star counterparts. 

While online reviews are a great resource for seeing if something is worth your money, it may not always be the most accurate portrayal of a business. Fake and bias reviews run rampant for any website with a review system. Look at how the website moderates its posts to see how trustworthy it really is. Designated reviews sites like RankMyAgent are sure to provide a more accurate portrayal than websites that don’t verify whether a posting is real or fake. 

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