There has been a lot of changes with regards to qualifying for a mortgage as of late, but I was happy to see that there is now some relief available for Canadian first time home buyers when it comes to buying a home and saving for a downpayment.
The BC Government has implemented the BC Home Owner Mortgage and Equity Program granted to Canadian citizens or permanent residents who have never previously owned a property and only apply to homes worth less than $750,000. A buyer must be able to pre-qualify for a mortgage (that’s where I come in) and have a gross household income of less than $150,000. Applications open Jan. 16, and the program ends March 31, 2020.
The government would put a second mortgage on a property to reflect the amount it loaned, but not require any interest payments or payments on the principal for the first five years. After that, the 20-year repayment plan would be set at the prime lending rate plus 0.5 per cent, leaving the homeowner to pay back both the original mortgage and the down-payment loan at the same time. There is no restriction to pay the loan out in part or full at any time.
The loans are available for condos, townhouses or detached homes. On a property worth $600,000, the government loan could help a buyer meet or exceed the federally set minimum down payment of $35,000. In one example, provided by B.C. Housing, a person who saved $30,000 could apply to get an additional $30,000 from the province, giving the buyer a $60,000 down payment.
Another example for reference is; as the minimum downpayment requirement is 5%, you, the consumer, would have to come up with 2.5%, then the government would match the additional 2.5% required to make up the total 5% downpayment. There are different sources of downpayment to consider as well; RRSP, Borrowed, gifted from a family member or your own savings.
As always if you’re considering purchasing a home in the near future, the best thing to do is be informed. My consultations are free and there is no obligation. If you are simply looking to explore your options or curious and have some questions, please do not hesitate to email me at email@example.com or call me toll-free at 1-888-819-6536.