Many parents use Canada Child Benefit to pay mortgages

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Pradip Rodrigues

This week the federal government announced that the Canada Child Benefit will go up this summer. The benefit to parents with children under the age of 18 will increase upping the maximum benefit to $6,639 for each child under the age of six and $5,602 for each child between the ages of six and 17.

Last year, families could get a maximum of $6,496 for each child under the age of six and up to $5,481 for each child between six and 17.

A while ago I met a RESP education plan agent who was having a hard time getting new immigrants as well as immigrants with tenure to invest in the program. The reason was that most households were living paycheck to paycheck as mortgage payments for their first or second properties gobbled up most of their income. He found that most people he met used the Canada Child Benefit (CCB) for household expenses, vacations and more often toward their mortgage. Very little of it went toward anything of value for their children in the form of extra-curricular activities or other enriching programs. The purpose of this tax-free monthly payment is being defeated and children are the ones being cheated by their parents.

The benefits have given roughly $23.7 billion to about 3.7 million Canadians and their families so far and it would be really interesting to know how much of that money has gone into the real estate sector.

If the government was indeed serious about ensuring that the money meant for children was used for their betterment, it would’ve created some way of tracking how parents were spending this money. Those parents found using the money toward things other than their children should really be penalized. A better way would be to go back to the Canada Child Tax benefit.

Millennials and other young couples who cannot afford to buy homes leave alone having children do not and likely may never enjoy this free money. The government should now create a program where young couples without children are given money to use toward rent or their mortgage. This would really go a long way to helping them settle down and perhaps even have children someday.

Bypassing the stress test, desi style

Two weeks ago, a couple looking to buy a house in Mississauga visited an Open House, they loved the place and told the agent that given their incomes, it was unlikely they’d pass the bank’s mortgage stress test. The agent laughed and told them not to take stress. He asked them to get in touch with a broker he worked with who could arrange for the bank mortgage, note, not private mortgage. Later the buyer contacted the agent who told them that he could arrange for things like employment letters, pay stubs etc. for up to $50,000. That would then satisfy the bank and he would get them their mortgage with a reputed lender.

I am told that this is a pretty widespread practice and there are any number of unscrupulous real estate agents who work with so-called mortgage brokers who can arrange mortgage. No one knows for certain just how many homeowners have bought homes with fake letters of employment but what is certain is the system has been compromised. -CINEWS

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