I am cautiously optimistic that the National First Time Home Buyers incentive will help some people to get into the market where they would not have been able to before.
How Does the FTHBI Work?
The FTHBI will provide shared equity loans of 5% toward the down payment of a resale home, and 5% or 10% for newly-built homes. By providing a larger down payment on an eligible home the owner will see reduced mortgage payments.
Overall this looks like a promising program but there are a few caveats I think people should be aware of.
- in BC with our high-end market - the maximum value of loan allowable for this program is limited to 480k (4 times the max household income of up to 120K). This doesn't buy much in the lower mainland except for condos or townhouses. This will have more benefit for people wishing to purchase detached homes in the more rural l areas in BC.
- The Government of Canada will be on title and will, therefore, have some say in any refinancing that may be required down the line.
- If you sell your home or reach 25 years you will need to pay back the incentive. The government will share in the profit on the incentive if the value of the property increased - for example if you received a 5% incentive of the current value of your house - you will pay back the 5% value of the house at the time of sale or at 25 years. If the value of the property goes down then you still pay back the original incentive amount. The incentive can be repaid in full at any time without penalties (repayment must be in a lump sum of the current % valuation of the home.
While this program will not be suitable for everone it will be a viable option for those who can't get into the market any other way.
For More information on the First Time Home Buyers Incentive please view the following articles