The provincial government launched a program last week intended to give first-time homebuyers a hand.
The new B.C. home owner mortgage and equity partnership program contributes to the amount first-time homebuyers have already saved for their down payment, providing up to $37,500, or up to five per cent of the purchase price, with a 25-year loan that is interest-free and payment-free for the first five years.
“We believe every British Columbian deserves a place to call home,” said premier Christy Clark. “We’ve invested in affordable rental housing, we’ve invested in transitional and emergency housing, and now we’re partnering with first-time buyers to make the purchase of their first home more affordable.”
During the first five years, no monthly interest or principal payments are required as long as the home remains the homebuyer’s principal residence. After the first five years, homebuyers begin making monthly payments at current interest rates.
However, opposition leaders say the plan won’t fix housing issues in the long term.
The B.C. New Democrats are saying the province is making families go into more debt instead of fixing the housing crisis.
“Instead of taking real action to bring down the cost of homes for young families struggling with record debt levels, the Christy Clark government is encouraging people to take second mortgages for down payments,” said B.C. New Democrat housing spokesperson David Eby.
“Christy Clark’s plan for first time home buyers doesn’t do anything to help affordability. Instead, it puts young people who are already facing record levels of debt further into debt, while rewarding developers and speculators,” he added.
Andrew Weaver, leader of the B.C. Green Party, called the new program a “populist, short-sighted, and irresponsible move.”
“The cost of purchasing a home has gone through the roof in this province because of irresponsible speculation and government inaction. The reason people can’t afford a home isn’t because the downpayment is too big – it’s because the average home in Vancouver costs more than $1 million. That’s the real problem, and this government is avoiding it entirely.”
“Instead of tackling the real problems that are causing out of control housing prices – like deregulation and speculation – the government is announcing a band-aid solution that will build an even bigger housing crisis down the road,” he added.
The new program will start accepting applications Jan. 16, 2017. To be eligible, buyers must be pre-approved for an insured high-ratio first mortgage (mortgage down payment is less than 20 per cent 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.
Through the new program, homebuyers will repay the loan over the remaining 20 years, but may make extra payments or repay it in full at any time without penalty. The loan must be repaid in full when the home is sold or transferred to another owner. Learn how to apply at https://news.gov.bc.ca/files/housing_campaign_home.pdf