B.C. offers interest-free loans up to $37,500 to 1st-time

[Navtaj Chandhoke]

B.C. offers interest-free loans up to $37,500 to 1st-time home buyers

Mortgage program to help 1st-time home buyers with down payment

The B.C. government is offering to help first-time homebuyers cover the cost of a mortgage down payment with an interest-free loan.

“I think most people who have bought their first home can look back and remember how hard it was to make that down payment,” said Premier Christy Clark. “We must make sure it is easier for first-time home buyers to find their way into a really tough housing market right here.”

“Our B.C. government wants to be your partner, if you want to buy your first home.”

The intention of the program is to assist people who can afford the mortgage payments on a new home but are challenged to make the down payment.

The province will start accepting applications for the program on Jan. 16, 2017.

Homebuyers will pay no monthly interest or principal payments over the first five years as long as the home remains their principal residence.

After the first five years, homebuyers begin making monthly payments at current interest rates.

The provincial government said the program will allow homeowners to save during the first five years of the mortgage and have the option of paying off the entire loan at that point.

Homebuyers can repay the loan over the remaining 20 years, but may make extra payments or repay it in full at any time without penalty.

Economist concerned prices will go up

The maximum purchase price of a home that qualifies for the loan is $750,000.

There are substantial eligibility requirements. Applicants must be permanent Canadian residents for the past five years and B.C. residents for the past year.

The income or combined income of applicants must be $150,000 or less. Homebuyers need to be pre-qualified for a high-ratio insured mortgage and can buy anywhere in B.C.

The province provided an example of a home purchase price of $475,000. The minimum down payment required for an insured first mortgage is $23,750. The new buyer would be able to receive up to an $11,875 interest-free loan for five years under the new program.

The loan support will run for three years and the province estimates about 42,000 new homebuyers will take advantage of the program.

The province would soon introduce rules to restrict abuses on fixed-term tenancy agreements.

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