Here is more information to help you understand how the program works.
Since this BC first-time homebuyers loan program is very new and only effective on Jan 16, 2017, a lot of terms and conditions are still pending to be fine-tuned. Here are the highlights of the program:
To be eligible for the program, the property must be a legal, self-contained, mortgageable residence located in B.C. and be used as the homebuyer’s principal residence for the first 5 years, with a purchase price that does not exceed $750,000 (Rental properties and seasonal/recreational properties are not eligible). Furthermore, the buyer(s) has/have to;
- Be a first-time homebuyer
- Be a Canadian citizen or permanent resident for at least five years
- Have resided in B.C. for at least one year
- Have a combined gross income of $150,000 or less
- Have saved at least half of the minimum down payment they will require
- Applicants must be pre-approved for a 1st mortgage before applying (Note: 1st mortgage must be high-ratio for more than 80% of the purchase price and CMHC, Genworth and Canada Guaranty are participating in the program)
Additional loan details:
- The loan can be up to a 25 year term, and is registered as a second mortgage
- Monthly principal and interest payments begin in year six, amortized over remaining 20 years
- Interest rate for years 6 to10 set near first mortgage rate at time mortgage is registered (The rate is being set at the RBC prime rates plus 50 bps)
- Interest rate reset to near first mortgage rate at years 10, 15 and 20 (This provides great security if rates increase over time)
- Homeowner may repay in full or in part at any time without penalty
The loan will be due and payable in full upon:
- The home ceasing to be the principal residence in the first five years
- Default on the first mortgage
- Sale of home or change of ownership (E.g., adding anyone to title)
- Any other default on the loan (second mortgage)
Starting January 16, 2017, eligible applicants will be able to apply online via the BC Housing website.
The program will run for three years with loans advanced from February 15, 2017 to March 31, 2020.