BC  Home Owner Mortgage & Equity Partnership Program

“Don’t let small thinking cut your life down to size. Think big, aim high, act bold. And see just how big you can blow up your life.

— Gary Keller

As discussed a month ago, Christy Clark has just announced the details regarding a home owners down payment matching program coming January 2017 to help our first time buyers. We are pumped as the government anticipates this will help an estimated 42,000 families over the next 3 years #BCFIRST

Under the program, the BC government will match down payment funds for eligible first-time buyers 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 on the second mortgage and no interest will accrue until the sixth year of the mortgage term. The total amount of matched funds will not exceed 5% of the purchase price.

Before all previous home buyers get too upset that they were not eligible please remember this will only continue to drive your home prices up further. This helps all BC home owners significantly.

Buyers must:
– Reside in the home they are purchasing
– 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 at least half of the minimum down payment required to purchase (2.5% down payment from self for 5% total)
– Be purchasing a property under $750,000
– Must live in the property for first five years (to be eligible for interest free loan)

To be eligible, buyers much be pre-qualifed for an insured high-ratio mortgage (mortgage down payment is less than 20% of the home price). On completion of the sale, program funds will be advanced and the loan will be registered as a second mortgage on the property’s title.

Home owners can repay the second mortgage to the Partnership Program part or in full at any time in the first five years with no penalty. After five years the interest will start to accrue and home owners will need to start making monthly payments of principle and interest. The interest rate will be outlined in the conditional loan approval letter.

The program starts Jan 16th, 2017 and is will run for three years until March 31, 2020.

Congratulations first-timer buyers and current home owners, all the best in 2017.

In our lengthy discussions with lenders over the past month since the new rule changes took place the message has been resoundingly clear – Rates are rising and the bottom is behind us. Major insurers are looking to share risk on mortgages in Canada. CMHC for example has backed over $550 Billion in mortgages and is likely feeling a little squeamish. They have now looked to major banks to share risk on homes and mortgages with greater than 20% equity. They will be tripling fees for bulk insured mortgages come Jan 1 2017 and that cost will cause a ripple effect in the mortgage market.

This does mean rates will continue to rise and we can most assuredly expect to see rates climbing close to 3.49% on conventional 5 year fixed mortgages into Q2 2017 (still an amazing rate compared to 4.5% only 5 years ago). Insured mortgages (less than 20% down payment) will remain 0.20% or so lower but are still expected to rise.

We still like variable rates as they are not set to rise until the economy turns back around however; the security of fixed rate mortgages has had an appeal to more than 75% of our clients this year.