First-time Homebuyers Taking Advantage of Home Partnership Program
Prince George, B.C. – Those new to the housing market have been busy taking advantage of the Province’s new BC Home Owner Mortgage and Equity Partnership program.
The government says more than 250 applicants have been approved – totaling $1.1 million in conditional loans since applications opened on Jan. 16, 2017.
Sixty-seven of the successful applications have entered a contract of purchase and sale for a home and have received their approval letter.
To date, 340 applications have been received and there have been over 60,000 page views of their website.
The program was created to help first-time homebuyers who can afford the costs of home ownership by matching the amount they have already saved for their down payment, up to five per cent, to a maximum of $37,5000.
The 25-year loan is interest -free and payment-free for the first five years. Victoria estimates investing over $700-million over the next three years to help an estimated 42,000 enter the market for the first time.
But NDP housing spokesman David Eby says forcing homeowners to take second mortgages for down payments does nothing to address affordability in the province.
Rather, he says it will plunge young people already facing record levels of debt further into debt while rewarding developers and speculators, many of whom he says are big donors to the B.C. Liberal party.
“It is not a solution to the housing crisis, it is more debt for the middle class, and more cash for Christy Clark’s B.C. Liberal donors.”
David Eby is correct, and the experts agree with him!
“Joshua Gottlieb of the Vancouver School of Economics says instead of promoting home ownership, the province’s policy promotes owning a small fraction of a home while taking on big risks with borrowed money, a risk that taxpayers could be on the hook for if buyers default on mortgage payments.”
This means us taxpayers will be taking on more financial risk because it will be our government who is on the hook if buyers default on their mortgage payments. Most of the experts agree this program will drive housing prices up and encourage people to take on more debt. If you are a first time home buyer and you don’t have enough money for a down payment, you should not be taking on more debt.
Exactly. They borrow the down payment from the government,if they later can’t pay for the house, the bank moves in, sells the house, pays the mortgage balance if there’s enough, and then, and only then, would the province get some cash. Highly unlikely.
And on top of that they are getting interest free – so that means all the renters in the province have to pay tax to fund the down payment for home buyers.
This was one of the more ill conceived Liberal schemes, but plays well for an election.
I wish we had an option C.
The US Fed says they are planning four interest rate hikes this year alone. Even if they are all only a quarter basis points each increase that would be enough to wipe out the equity that these second mortgages represent. Then the home owner with no equity is not eligible for a renewal and the banks make themselves whole on the CMHC insurance policy that the home owner is forced to buy under this scheme. Then with no home and no equity the ‘home owner’ is now saddled with the second mortgage for the next 25 years.
Just bad ponzi policy all around. The only way it would work is if we were at the top of the interest rate cycle, rather than the bottom… But then the interest cost to government would make the program cost prohibitive and home owners would simply rely on the lower market values for properties to get into the market.
Sorry but they have been proven wrong by actual people who know what they are talking about. Yes it is interest free for the first 5 years but those are the 5 years it has to be your principle residence, which means renters won’t be paying for anything. Perhaps your paraphrasing is in error as this is a registered second mortgage
Oh yes can see all the people in PG lining up for $5,000 or less cost of lawyers be more than grant. Just cut user fees and other increased costs and we will buy on our own
We paid under 500.00 for our lawyer, they must have seen you coming
I know right? It’s been a while for myself, but at one point the fees for a notary was around $1800 for purchase and sale, around $1200 for purchase only, and around $800 for sale only. Those included transactions with mortgages (additional LTO fees involved). Cash only transactions were way cheaper.
Cut lawyers period and streamline the red tape and first time homeowners can put that money to good use! Anything you can cut lawyers out of means saving money!
I agree should have a crown agency to process the transaction at a nominal fee. The lawyers sell a product they don’t and have no intention of ever backing. Most lawyers don’t even do their own work they just out source it to their secretaries and interns, then collect the full fees for shoddy work.
Why anyone would get a lawyer and pay the bandits for a house transaction is beyond me. Do some leg work on your own and find a notary who will assist in the process that you need. My son did this and it was one heck of a savings! One has to do the leg work for the savings. Heck of a lot cheaper than using a money grabbing lawyer. Ever wonder why it costs $50 dollars and up for a lawyer to get one lawyer to mail a letter??? rtc. etc, ……
Actually the lawyer fees aren’t much for buying/selling a house. If you read the breakdown, the majority of the fees charged by the lawyer/notary covers the filing fees and document costs with the Land Title Office.
But agreed, this isn’t a great idea. Just allowing people to borrow even more to buy a house that they may or may not be able to afford.
People can’t borrow even more for a house they cannot afford. They already qualify for the mortgage to which they can borrow matching funds in the form of a second mortgage for a down payment.
I haven’t looked into it closely, do you know if the bank takes that additional loan from the government into consideration when approving someone for a mortgage? If that’s the case and the bank considers that additional debt load (up to $37500) on top of the mortgage and still approves them, then yes I would say they can afford it. But if it’s additional debt on top of what the bank has already looked at and approved, then I would say it’s a bad idea.
n order to borrow 37,500 they have to put in 37,500. Being that the cap on a house price is 750,000 they already have 5%.
Also the reason anyone who has the required down payment would do this is to get a lower rate from CMHC. 5% down they pay 3.6 percent now and on 10% they would only pay 2.4%. On a 750,000.00 loan (with minimum down) CMHC fees are 25,200.00 over 25 years. Add the BC second mortgage amount and the CMHC portion on 750,000.000 is 15,900.00 over 25 years. Make sense now why people would chose to do this? You save 10 grand on the purchase of your first home.
That aside there is a fee from BC Housing for this service.
The bank has to acknowledge that they took this loan into consideration when providing the insured mortgage approval.
“The homebuyer must obtain approval from a first mortgage lender for a high-ratio insured first mortgage. As the lender, you must be aware that the homebuyer will be receiving this loan and agree to have the BC HOME Partnership loan registered on title as a second mortgage.”
What difference does it make if it is registered as a second mortgage? If they default on the first, what do they care about the second?
If they have to borrow to make up the rest of the down payment, how many of them will default on their obligations when interest rates rise?
If they default, who pays for all those second mortgages that were taken out? Sure, the bank could pay the money back to the government assuming they can re-sell the foreclosed property for enough, but who absorbs the cost if they can’t?. The government, meaning taxpayers, is on the hook because they back stopped the loan.
This program is just another vote buying mechanism by the SoCreds. It will be shut down as part of budget cuts shortly after the steeple reflect her and her SoCreds.
Yes, dippers gotta hate
Very ad hominem of you to say I hate Christy Clark and her SoCreds because I don’t agree with this vote buying policy of hers. Funny, you attack me as a “Dipper” because I would feel the same way if the NDP was doing this.
I just hope the market is still full of first time home buyers when we sell this spring. I really don’t see where people think this is allowing first time buyers buying a house they haven’t already qualified for, this is simply a means to allow them to have a larger down payment. Likening this to the fiasco in 2008, like some people have done, in the states is like comparing fruits with vegetables.
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