Ten Things You Should Know About The BC Home Owner Mortgage and Equity Partnership Program
- The BC
Home Owner Mortgage and Equity Partnership Program helps eligible
first-time home buyers who have saved part of a downpayment and can afford
a mortgage. This three-year program began accepting applications January
16, 2017 and ends March 31, 2020.
- The
program offers a downpayment loan of up to 5% of a home’s purchase price,
to a maximum of $37,500, on a home with a maximum price of $750,000. The
loan matches the buyer’s downpayment and is interest-free and payment-free
for five years.
- Before
applying, the applicant must have a partial downpayment saved (or gifted)
and must be pre-approved for a high-ratio
insured first mortgage for at least 80% of the purchase price.
Buyers must have qualified under all rules for a mortgage including the
stress test. The combined, gross household income of all individuals on title
cannot exceed $150,000.
- The
pre-approval letter can come from a mortgage broker.
- To
qualify, the home buyer(s) must meet requirements on this eligibility
checklist. They must be a Canadian citizen or permanent resident for
at least five years, have lived in BC for one year, be a first-time buyer
who hasn’t owned an interest in a residence anywhere in the world at any
time, and plan to live in the home as their principal residence for the
first five years.
- The
program is delivered entirely online with a smartphone friendly interface.
There’s no physical paperwork. Buyers submit their application here.
They must register first. This online
calculator helps determine eligibility.
- Only
the buyer can complete the application. There are liability
considerations. If the buyer claims to have never owned a home anywhere in
the world, and the government later discovers this is untrue, the buyer
can’t say “My REALTOR® completed the application for me.” If the buyer has
questions they can phone the BC Housing information line at 604-439-4727.
Staff members speak multiple languages.
- In
BC, 87% of apartments, 73% of attached homes, and 19% of detached homes
currently on market could qualify for this program, according to Dan
Maxwell, Chief Financial Officer of BC Housing.
- After
five years, buyers repay the loan or begin monthly payments at a fixed rate
equal to the Royal Bank of Canada Prime Rate plus 0.5%. This interest rate
is reset at each of the 10, 15 and 20 anniversaries. Loans are due after
25 years.
- The
home buyer is responsible for all costs associated with the purchase and
financing of their home, including legal costs.
The Process
- The
applicant gets pre-approval for insured first mortgage.
- The
applicant applies to BC Housing (BCH) which issues a confirmation of
eligibility letter highlighting details and key dates within five business
days. BCH issues a Home Buyer’s Package.
- The
applicant makes offer to purchase an eligible home, and provides BCH with
copy of Contract of Purchase & Sale.
- BCH
issues Conditional Loan Approval Letter for the applicant to take to the
lender to finalize first mortgage approval.
- The
applicant completes due diligence and removes subjects.
- The
applicant provides BCH with the unconditional Contract of Purchase and
Sale at least 14 days before closing.
- BCH’s
lawyer sends the mortgage package and closing instructions to the
applicant’s lawyer.
- The
applicant completes the home purchase with their lawyer. The BC HOME loan
is secured by a second mortgage registered on title to the home on the
closing date. The HOME Partnership loan funds are released following
registration of second mortgage.
Source: BC Housing
Example #1 – Home purchase price $475,000, home
buyer has saved $11,875
- Minimum
downpayment required for an insured first mortgage - $23,750
- BC
HOME Partnership loan - $11,875 (equal to home buyer’s downpayment, equal
to 2.5% of purchase price)
- Total
downpayment - $23,750
Example #2 – Home purchase price $750,000, home
buyer has saved $52,500
- Minimum
downpayment required for an insured first mortgage - $50,000
- BC
HOME Partnership Loan - $37,500 (maximum 5% of purchase price)
- Total
downpayment - $90,000
At 3%, this home buyer will save $5,201 in interest payments
during the first 5 years of their mortgage compared to if they had purchased
the home without BC HOME Partnership.
How many loans?
The government forecasts:
- 42,108
loans will be issued by 2020.
- These
will have a total dollar value of $703 million.
- The
average loan will be $16,685.
No comments:
Post a Comment