Last week, B.C. Premier Christy Clark announced a new interest-free loan to help first-time homebuyers cover as much as half of their down payment.
The subject of Vancouver’s housing market has been a matter of intense scrutiny in the last few months. The purpose of the B.C. Home Owner Mortgage and Equity Partnership program is to assist people who can afford the mortgage payments on a new home, but face difficulty in saving up for the down payment.
A Helping Hand to First Time Homebuyers
A maximum of $37,500—or up to five percent of the purchase price—will be available to first time homebuyers from the B.C. Home Owner Mortgage and Equity Partnership program.
“I think most people who have bought their first home can look back and remember how hard it was to make that down payment,” said Premier Clark. “We must make sure it is easier for first-time home buyers to find their way into a really tough housing market right here.”
The 25-year loan will be interest-free and payment-free for the first 5 years, as long as the home remains the principal residence.
Paying Back the First Time Homebuyers Loan
After 5 years, payments will begin at the regular interest rates. This will give homeowners the time and flexibility to save money. Homeowners will then have the option to repay the loan fully, or make payments over the remaining 20-year period. Additionally, the entire payment or extra instalments can be made at any time without penalty.
Not surprisingly, homeowners will need to meet substantial eligibility requirements to qualify. All applicants are required to have been permanent Canadians residents for at least five years—and a resident of BC for at least one year. Combined household income must be $150,000 or less, and homebuyers must be pre-qualified for a high ratio insured mortgage.
Applicants will be pre-screened to ensure they can afford the loans, but the move is meant to ensure young homebuyers have a chance to enter the market. The province will start accepting applications for the Home Owner Mortgage and Equity Partnership program Jan. 16, 2017.