The Province of British Columbia recently announced a new program to help make home ownership more accessible among first time home purchasers in British Columbia.
The Home Owner Mortgage and Equity (HOME) Partnership program matches a first time purchaser’s contribution to the down payment (with certain restrictions, detailed below) in the form of a loan, which is interest- and payment-free for the first five years of its term.
Could this new program help make your Whistler home ownership dreams more accessible? Keep reading for more information.
Who is Eligible?
If you have never owned a property or an interest in a property – in British Columbia or anywhere else in the world – you may be eligible for the HOME Partnership. Applicants must be Canadian citizens or permanent residents, and they must have resided within the province of BC for at least a year prior to making the application.
The property being purchased must be used as the applicant’s primary residence, meaning the applicant (or his or her spouse, common-law partner, or child) must use it as their main home. The household income cannot exceed $150,000 (combined), and the property’s purchase price must be under $750,000, not including taxes and additional fees.
What Are the Details of the Loan?
The amount of the loan will match the down payment saved by the purchaser, up to a maximum of 5% of the purchase price. To illustrate:
if the purchaser saves 2% of the purchase price for a $500,000 property, the loan amount will match this 2% contribution (2% x $500,000 = $10,000)
if the purchaser saves 5% of the purchase price for a $500,000 property, the loan amount will match this 5% contribution (5% x $500,000 = $25,000)
if the purchaser saves 10% of the purchase price for a $500,000 property, the loan amount will be the maximum of 5% of the purchase price (5% x $500,000 = $25,000)
The loan will have a term of 25 years (which matches the term of most insured Canadian mortgages). For the first five years of its term, the loan is payment- and interest-free – although the purchaser can choose to make payments or pay of the loan in its entirely throughout this period, without being penalized for doing so. Five years into the term of the loan, the purchaser will either need to pay off the loan or start making monthly payments on the loan, consisting of payments on both the principle amount and the interest charged on the loan. Details of the interest rate to be charged will be included in a letter as part of the application process, and the rate will be re-assessed every five years in accordance with RBC’s Prime Rate plus 0.5%.
If the purchaser moves at any point during the term of the loan (or otherwise transfers ownership, including adding new people to the title), the loan (including outstanding interest, if it was past the five year point) will become due.
How to Apply
Applications are being accepted beginning January 16, 2017, and the program will continue to accept applications for a three-year period. Prior to making an application, applicants should contact a mortgage broker or lender and become pre-qualified for an insured residential mortgage – a letter confirming this pre-approval is required as part of the application process.