5 First-Time Home Buyer Rebates That Will Help Save on Closing Costs

One of the most important financial decisions you’ll ever make is purchasing your first home. There are a number of factors that purchasers need to keep an eye on, including the final purchase price, mortgage rates, loan qualification, and of course, closing costs. If you are currently on the market for a property, it is a good idea to seek the assistance of professionals who can help you expedite the search.

The Ontario government offers helpful programs for first-time homebuyers so that they can make it through the home-buying process unscathed, and snag the greatest offer there is. On the other hand, if you’re looking to purchase or sell a home in Canada, The Canadian Home app can make it easier than ever.

Now we’ll get into the meat of the blog, which is exploring the numerous benefits that first-time homebuyers could experience as they seek to minimize their closing costs.

The rebates

Most Canadians know they’ll need a 5% down payment or more when purchasing a home. However, there are a number of up-front charges that fall under the category of closing costs that you might not have considered. In general, you should set aside 1.5% - 4% of the home’s purchase price (or $4,500 - $12,000 on a $300,000 home) to cover closing fees, given their variability. However, a first-time buyer may do much more than merely improve their savings strategy to bring down the closing costs.

01Land transfer tax refund

The provincial government of Ontario provides discounts on land transfer tax for first-time homebuyers. In some cases, you may be eligible for a property transfer tax rebate of up to $4,000. The maximum rebate applies to home purchases of $368,000 or less. Whether you’re looking at a townhome, a single-family home, or a semi-detached home, the procedure is the same.

Furthermore, purchasers can get a refund of up to $4,475 in municipal transfer tax. First-time homebuyers in Toronto can take advantage of not just the municipal tax rebate but also the provisional tax rebate. When purchasing real estate, land transfer tax must be paid as part of the final agreement.

02Homebuyer's plan

Buyers can access their Registered Retirement Savings Plan (RRSPs) for down payments and other closing costs with the homebuyer’s plan. You can withdraw up to $25,000 from your RRSP under this scheme. You and your partner or spouse are eligible for further advantages. The maximum RRSP withdrawal allowed for you and your spouse is $70,000, or $35,000 each. This loan has no interest and a 15-year repayment period.

03Homebuyer's tax credit

The first-time homebuyer tax credit is a non-refundable tax benefit for those who purchase a property that meets the program’s requirements. If either you or your spouse is the legal owner of the home, you can apply for the program. Eligible properties include preexisting homes, townhomes, condominiums, and other types of dwellings.

You cannot have purchased a home in the preceding four years to be eligible for this program. The tax is also totally reliant on the federal income tax rates. Please be aware that this program is not limited to first-time homebuyers and is open to anybody with a disability.

04First-time home buyer incentive

This program can help a homebuyer save money by reducing the amount of money they have to borrow for a mortgage each month. In addition, qualified homebuyers might get a 5% or 10% down payment assistance grant from the federal government.

To purchase a home, a borrower must first have a mortgage pre-approval for at least 80% of the purchase price. Moreover, the goal of this initiative is to reduce the financial burden associated with purchasing a home. Buyers are required to pay back the tax-free loan when they sell the property or within 25 years, whichever comes first.

Find out more about the first-time home buyer incentive program.

05GST/HST Housing rebate

The Goods and Services Tax (GST) or Harmonized Sales Tax (HST) is added to the purchase price of a new home by first-time purchasers. A portion of the GST or HST may be refunded to eligible participants. A wide variety of residential properties are covered by this insurance, including those undergoing restoration, construction, enlargement, or transformation from commercial to residential usage.

The federal and provincial HST components may both be eligible for rebates. Determine if you qualify for this program, and if so, get your paperwork in order.

The final words

Closing expenses involve a number of factors and it might be challenging to keep track of all of the various costs and charges that accumulate. Keep things basic and aim to have 2-3% of the purchase price stashed away to pay for closing charges. Therefore, you can rest assured that you have the funds to complete the home purchase. After that, you can start looking for ways to save money utilizing the various plans mentioned above.

Do not rush into making a decision about a house for sale without first doing a thorough study. Read the fine print so you know exactly what to expect from any application programs. Rehearse the entire home-buying process until you feel confident with it. Prepare yourself and make use of all the resources available to you as a first-time purchaser in Ontario. You can also connect with The Canadian Home experts to guide you through the process. Happy home searching!