This article is mainly for originators in NS, but it is of interest to everyone. The NS Government is rolling out a tax rebate for new construction homes. This is on the heels of the new CMHC stats that show new home starts are down 30%. Good timing me thinks. The article is from today’s Halifax Chronicle Herald.
NDP rolls out rebate for new houses
By DAVID JACKSON Provincial Reporter Thu. Aug 13 - 6:12 AM
Home builders and homebuyers stand to benefit from a new tax break, Premier Darrell Dexter said Wednesday.Buyers of newly constructed homes can now apply for a 50 per cent rebate on the provincial portion of the harmonized sales tax.It’s a program the Nova Scotia Home Builders’ Association suggested to the three major political parties before the spring election.The NDP put the program in its platform, but with a start date of May 1. The government has changed it to Jan. 1, at the association’s urging. A maximum of 1,500 rebates will be offered.To qualify, buyers of new homes must have a municipal building permit dated on or after Jan. 1, 2009, and before April 1, 2010. The home must be the primary residence and construction has to be completed between Jan. 1, 2009, and March 31, 2010, or the purchase closed by March 31, 2010.Cottages and income properties don’t qualify.Mr. Dexter said the government changed the start date because the association was concerned that homes started between January and May might not have sold because the tax break came later in the year.“They indicated that they had been working through the winter, trying to keep people employed, so . . . there were a large number of building permits between Jan. 1 and the May 1 date. The result of that, of course . . . potentially, would have been to strand that inventory," Mr. Dexter said.Speaking at a Dartmouth townhouse construction site, Mr. Dexter said there were about 600 permits issued in the province between January and May, although he didn’t know how many homes were under construction. Opposition leaders said the tax incentive sounds more like a reward.“I don’t see it stimulating any activity that otherwise wouldn’t have happened," Liberal Leader Stephen McNeil said.Mr. McNeil also said he is skeptical whether a $7,000 benefit will be enough to entice people making a $200,000 or $300,000 purchase. And he wondered whether home builders would increase their prices, negating the benefit of the tax break to the buyer.Mr. Dexter said buyers will negotiate their prices, and he thinks competition will take care of Mr. McNeil’s concern.“There are a lot of companies out there that are really looking to get work, so I expect there to be a very competitive market, and that this rebate will ultimately benefit those who are intended to benefit," he said.Interim Tory leader Karen Casey said people now looking at buying a new home may be concerned that the 1,500 rebates will be gone by the time they apply.Service Nova Scotia Minister Ramona Jennex said at the news conference that the website www.getyourrebate.ca will track the number of applicants and rebates.Ms. Casey said the original intent of the program — to spur economic activity and keep tradespeople working — was good, but that doesn’t seem to be happening.“I consider this now a reward, rather than an incentive," she said.Andrew Holley, president of the home builders association, said he would have preferred the qualifying date go back to October, but he was still pleased with the new program.“We didn’t get everything that we wanted, but it was a good compromise," Mr. Holley said.Mr. Dexter said the NDP did its own due diligence on the proposal and decided the province could do it.The province would forgo $10.5million if the maximum number of people gets the top rebate.The maximum — $7,000 — kicks in for homes costing $175,000 or more.“I don’t think there’s anything wrong with listening to the stakeholders who are involved in the industry, and thereby turning the wheels of the economy," Mr. Dexter said.“That’s really what we’re here for, to try and make sure that we get through what is a very difficult economic time, try to recognize the importance of the residential construction sector and make sure that we keep tradespeople working."Mr. Holley said more than 20,000 people work in the residential construction industry across the province, while new housing accounts for more than $800 million in annual revenue.A Canada Mortgage and Housing Corp. report released this week said housing starts, which include apartment buildings, were down close to 30 per cent in the province during the spring and early summer. In Halifax, the decline was 44 per cent.Housing sales, provincewide, were also down by 14.5 per cent when compared to the same period last year.
More information is available at www.getyourrebate.ca, or by calling 424-5200 in the Halifax region or toll-free 1-800-670-4357.(djackson@herald.ca)
Friday, August 7, 2009
How are HELOCs affecting credit scores
Interesting article from Canadian Mortgage Trends today about how some HELOC mortgages are being reported to Equifax and changing the clients credit score. I am checking to see if our HELOCs were reported (but I don’t think they were).
August 06, 2009
HELOCs & Credit Scores
Lots of people are now choosing HELOCs for their next mortgage. HELOCs offer features like:
Fully open terms
Interest offsetting (where positive savings or chequing balances reduce your debt and interest)
Re-advancebility (i.e. the ability to re-borrow after you make principle payments)
Multiple segregated sub-accounts (to separate different types of borrowing)
Interest-only payments
What many don’t realize is that choosing a HELOC instead of a mortgage can have a potentially adverse effect on their credit score. That’s because HELOCs are often reported to credit bureaus while mortgages are generally not. (In cases where mortgages are reported, sources at Equifax, the nation’s largest credit bureau, say they don’t harm your score).
We recently came across a case where a person’s credit score dropped 80 points after putting their $300,000 mortgage in a HELOC.
Causation is hard to quantify because Equifax doesn’t disclose its scoring algorithms, but here are the facts of this particular case:
The individual’s score before the HELOC was in the low 700’s. Following the HELOC being reported to the credit bureau, the score fell below 630.
There were no other major differences on this individual’s two credit reports (i.e. the report before the HELOC and after)
After the HELOC closed, an explanatory note appeared on the person’s credit report stating that his balances were too high in relation to his credit limits.
The lender reported the HELOC balance as being 99% of the HELOC limit. (Which is common when the mortgage amount and HELOC limit are similar)
Given that Equifax bases 30% of its Beacon scores on credit utilization and 15% on account age, a brand new $300,000 HELOC, at 99% of its limit, is a big potential negative.
Now, an 80 point drop is not catastrophic to some people, but to many others it can be. 80 points is over 10% of the average Canadian’s score. A drop like that can cause you to no longer qualify for financing on other properties, for financing on consumer loans, for credit cards, and even for getting a job (some employers check credit before hiring).
At the very least, it’s something to keep in mind when comparing lines of credit. There are a handful of lenders who do not report HELOCs to the bureaus. If you’re concerned about your score, you’d do well to consult a mortgage professional and consider those options.
Posted at 06:18 PM
August 06, 2009
HELOCs & Credit Scores
Lots of people are now choosing HELOCs for their next mortgage. HELOCs offer features like:
Fully open terms
Interest offsetting (where positive savings or chequing balances reduce your debt and interest)
Re-advancebility (i.e. the ability to re-borrow after you make principle payments)
Multiple segregated sub-accounts (to separate different types of borrowing)
Interest-only payments
What many don’t realize is that choosing a HELOC instead of a mortgage can have a potentially adverse effect on their credit score. That’s because HELOCs are often reported to credit bureaus while mortgages are generally not. (In cases where mortgages are reported, sources at Equifax, the nation’s largest credit bureau, say they don’t harm your score).
We recently came across a case where a person’s credit score dropped 80 points after putting their $300,000 mortgage in a HELOC.
Causation is hard to quantify because Equifax doesn’t disclose its scoring algorithms, but here are the facts of this particular case:
The individual’s score before the HELOC was in the low 700’s. Following the HELOC being reported to the credit bureau, the score fell below 630.
There were no other major differences on this individual’s two credit reports (i.e. the report before the HELOC and after)
After the HELOC closed, an explanatory note appeared on the person’s credit report stating that his balances were too high in relation to his credit limits.
The lender reported the HELOC balance as being 99% of the HELOC limit. (Which is common when the mortgage amount and HELOC limit are similar)
Given that Equifax bases 30% of its Beacon scores on credit utilization and 15% on account age, a brand new $300,000 HELOC, at 99% of its limit, is a big potential negative.
Now, an 80 point drop is not catastrophic to some people, but to many others it can be. 80 points is over 10% of the average Canadian’s score. A drop like that can cause you to no longer qualify for financing on other properties, for financing on consumer loans, for credit cards, and even for getting a job (some employers check credit before hiring).
At the very least, it’s something to keep in mind when comparing lines of credit. There are a handful of lenders who do not report HELOCs to the bureaus. If you’re concerned about your score, you’d do well to consult a mortgage professional and consider those options.
Posted at 06:18 PM
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