BC government offers help to first-time buyers

A new government program promises to match the down payment for eligible first-time homebuyers.

The BC Government has announced today the BC Home Owner Mortgage and Equity Partnership Program.

Under the program, the BC government will match down payment funds of eligible first-time homebuyers up to $37,500 with a 25-year term second mortgage.

As an example, a buyer purchasing a $500,000 home can put down 5% using $12,500 of their own funds and $12,500 from the BC Home Partnership Program.

No payments are required and no interest will accrue for the first five years of the mortgage term.

The program was announced by Premier Christy Clark Thursday afternoon. Samantha Gale, executive director at the Canadian Mortgage Brokers Association, attended the announcement.

“This is a necessary program which will assist many first time home buyers to enter the housing market at a time when housing affordability is a serious challenge. This program will provide tangible, necessary assistance which will facilitate the purchase of first homes for many BC residents struggling to save sufficient funds for a property down payment,” Gale said. “There are many potential buyers in BC who simply cannot afford to buy a home because they do not have the necessary down payment saved, despite having sufficient income to qualify for their mortgage payments.

“We find that most potential buyers are aiming to put down on a property purchase either the minimum 5% for an insured mortgage or 20%, so that their mortgage is conventional with no CMHC fees.  We at the CMBA, believe that the borrowers who are aiming to put 5% down are the ones whom this program is likely to benefit the most.”

Applications for the program will be accepted starting January 16 up until March 31 2020.

Below are the qualification requirements. Buyers must:

•             Reside in the home
•             Be a first-time homebuyer
•             Be a Canadian citizen or permanent resident for 5 years
•             Have resided in BC for at least one year
•             Have a combined gross income of $150,000 or less
•             Have saved at least half of the minimum down payment they will require, and
•             Be pre-approved for a 1st mortgage before applying. Brokers should treat the second mortgage as a non-traditional source of down payment.

Additionally, the property must be the principal residence for the first five years, must cost less than $750,000, and must not be a rental or recreational property.

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  • by Joseph 2016-12-15 3:27:46 PM

    So basically just allowing people to accumulate more debt, when they may not otherwise qualify for more mortgage.
    Great idea. lol.

  • by Mr Bigglesworth 2016-12-16 3:23:33 PM

    WHOAAA!!!!?.....another hastily thought-out policy from the Clark government, that will not ease the supply-side of the equation, but sure as hell will increase the demand-side!
    Are the Liberals not listening to Poloz, Morneau, Carney, the IMF, and all the other (knowledgeable and un-biased) industry-watchers that have been warning for years now, about the risks of unfettered easy access to cheap money, ( and this policy is the poster-child for THAT), which will be used for, (and this is the cruel part, for which someone really needs to pin it on Clark when the inevitable happens), you guessed it mr.Poloz...BUYING REAL ESTATE IN THE COUNTRIES MOST EXPENSIVE, AND STILL-SMOULDERING MARKET, THE LOWER MAINLAND....

    Ok, so let's see then....
    Increase demand, without increasing supply one iota.............................................................................................................................CHECK!
    Encourage otherwise unqualified purchasers to take on more debt.....................................................................................................CHECK!
    Encourage Lower-middle-income earners buying into the Metro area at pretty much its HIGHEST-EVER valuations....................CHECK!
    Do all the above at the very beginning of a prolonged upwards trend for mortgage rates, already happening..............................CHECK,

    ....what could POSSIBLY go wrong, for these poor folks?!!

    Would YOU want to be leveraged to 97.5%, ( as per the example given, seeing half your 5% down payment is really just another mortgage. (which you have to start paying off when you go to do your first renewal, in 5 years, and who knows where rates will be at then!)...( hint: look at the 5-year B.o C. yield curve). ...... So you're leveraged FAR BEYOND what any sensible person would be, at a time of Trump-ing interest rates, very possibly a correction to the market, ( yay, you're officially "underwater" now !!!) (look it up if you don't know what negative equity is)....( and good luck on that first renewal, by the way ;) ... My guess is, whether or not the Lib's swipe another election, they won't be pitching in anymore interest-free mortgages to assist you....and as you will find out, the pay down of your principal in the first 5years, (on long amortizations, like yours), is pretty negligible...you will quite probably be left paying significantly larger payments, ( increased renewal rate, essentially un diminished principal, plus now having to start paying off the Clark mortgage, too), for a property that is worth less than you bought it for, and your mortgage-to-value is over 100%. Good luck getting a good rate: you are a crummy risk, and you will be lucky to get posted ( non-discounted) rates. Think your property will be worth more in 5years than the day you buy it, say early-mid 2017? Remember, this program injects some SHORT-TERM demand, which will taper off to almost zero, by the end of your first term, in 2022...That demand will be GONE....and what will replace it, to keep,valuations at their current apogee? ...not rates, not offshore investors, (who generally aren't in your market anyway), no further Clark- mortgages, sorry....they are for new-entrants only....population growth, ( well, if stuff isn't selling today, ( and it isn't), what makes you think it will be hot after 5 years of Trump)....and if the city gets serious with increasing the housing stock in the Lower Mainland, that, too undermines your equity. ...be careful!


    STOP: think about the above points, and there are others. Do you really think it's now-or-never, and that this is truly a good deal, for you?
    LOOK: ....at the landscape: where are rates going?, where is the market going?, and what will your situation look like, in 5 years?
    LISTEN:... to those that have YOUR best interests in mind, ( Poloz, Morneau, etc),... not miss Clark, who really just wants your vote.

    ....the bottom line is this: Those to whom this program is targeted at, are being duped. They are at a disproportionately high risk of losing everything they put into this purchase...Furthermore, this policy thwarts every other initiative we have seen this year, to moderate the market, and protect people from themselves. If YOU are contemplating availing yourself of this program, just know that Miss Clarks thinly-veiled attempt to secure votes in the upcoming election throws YOU under the bus. Just be honest with yourself. If you can't do the deal without resorting to this ( I suspect potentially ruinous) program, then just wait...the time is not yet right. Leveraging is a powerful tool for investors, but not for homeowners. Identify exactly wha the benefit of this program is, and to who. You are dodging interest payments on what, 2.5% of your mortgage?....just exactly what is that, in dollar-terms?. ( well, in the example provided in the lead post, Using a 3% mortgage rate on Clark mortgage of 15K ( 2.5% of 600k purchase price) is about 450$/ year, or about 35-40$/ month ( leaving aside compounding)...so, does this $450 per year in (temporary) savings, REALLY make this notion of buying your first home that much more feasible? Was this the missing part of the picture that, now that you've found it, makes the whole thing now make perfect sense? Sure, interest-freemortgages are nice, but not if they get you hooked into a scenario that doesn't make sense......tread carefully with this one, friends.

  • by Mr. Bigglesworth 2016-12-16 3:32:49 PM

    I should add this: if you are about to pull the trigger on your first purchase anyway, and now this new program just comes along out of the blue, then yes, I would recommend you take advantage of it, and use the Clark mortgage relief to pay down your principal a little bit faster than you otherwise would have. However, if you need this Clark mortgage to make the deal fly, you are WAAAAYY over leveraged and are asking for trouble. MY2c

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