A new provincial government initiative will offer loans to first-time homebuyers to help them enter the housing market.

Government offers financial help to first-time homebuyers

The province will be offering a loan to first time buyers that is interest-free for the first five years.

The provincial government has announced a new loan for first-time homebuyers, which will come into effect in January 2017; and a local realtor says that it’s “definitely going to be an opportunity to get first-time buyers into the market.”

Hedda Hall, a broker and the owner of Royal LePage Ashcroft Realty, cautions that there are pros and cons to the loan, however. The government has said that the loan—which will be classified as a second mortgage—will be interest-free for the first five years. After that it will be subject to the current interest rate, and must be paid off within 20 years.

“If the first-time buyer handles it properly—if you can put aside money and pay it off in the first five years—it’s good. But if you can’t handle it properly, there could be a problem. Who knows where interest rates will be in five years? And if the interest rate goes up, it will be a burden.”

She feels that the loan is designed to help people trying to break into the hot Vancouver real estate market, where prices have skyrocketed in recent years. The average price of a single-family home in the Vancouver area is $1.47 million, and while the loan is only available for properties valued at less than $750,000, it can also be used by people looking to purchase an apartment, townhouse, or condo.

The average price of a single-family home in the Ashcroft/Cache Creek area is $200,000 to $250,000, which Hall says is below the national average, although property prices have increased here as well.

Speaking to The Globe and Mail, Rich Coleman, the Minister Responsible for Housing, said that when he thinks about who will benefit from help with a down payment, he casts his net wider than Vancouver, Richmond, or Burnaby. “A person in Penticton or Clinton or Prince George is also benefiting from this in housing markets that are also softer.”

The loan is restricted to people whose total household income is less than $150,000, and is intended to match money they have already raised for a down payment. The amount of the loan is capped at $37,500, or five per cent of the property’s purchase price, whichever is lower.

To be eligible, buyers must be preapproved for an insured high-ratio first mortgage (one where the mortgage down payment is less than 20 per cent of the purchase price). They must also have been a Canadian citizen or permanent resident for at least five years; have resided in B.C. for at least one year immediately preceding the date of application; and must use the property as their principal residence for the first five years.

Any balance left on the loan must be repaid in full when the house is sold, or transferred to another owner. The loan program will run for three years, and the government estimates that it will invest some $703 million in it, and help an estimated 42,000 homebuyers enter the market for the first time.

“It’s a good situation, as it gets first-time buyers into the market,” says Hall. “But you have to handle it properly.”

 

 

Just Posted

Protected bighorn sheep killed near Spences Bridge

The sheep are considered a species of concern because of their low population in B.C.

Learn how to Restart a Heart and possibly save a life

Community paramedica teach how to perform CPR and use AEDs

Local News Briefs: Recycling info sessions coming soon

Plus news about the Santa Claus parade, a Christmas sale, giving pests the cold shoulder, and more.

Speed limits reduced on 570km of B.C. highways

Highway 1 from Savona to Tobiano among sections that have seen the speed limit decreased

The Rundown: Clinton News

Get your tickets now for the David Stoddart School PAC Dinner and Auction on Nov. 17.

REPLAY: B.C’s best video this week

In case you missed it, here’s a look at the replay-worth highlights from this week across the province

NEB approves operating pressure increase to repaired Enbridge pipeline

The pipeline burst outside of Prince George on Oct. 9, now operating at 85 per cent

B.C. VIEWS: Setting speed limits in a post-fact environment

Media prefer ‘speed kills’ narrative, even when it fails to appear

Controversy erupts over Japanese flag in B.C. classroom

Online petition demanding removal has collected more than 5,700 signatures

Death toll rises to 76 in California fire with winds ahead

Nearly 1,300 people remain unaccounted for more than a week after the fire began

Trump says report on Khashoggi death expected in a few days

Jamal Khashoggi was a columnist for The Washington Post who was slain Oct. 2 inside the Saudi Consulate in Istanbul

CUPW requests mediator as deadline for Canada Post offer expires without deal

Prime Minister Justin Trudeau weighed in Saturday night with a last-minute plea to the two sides

Trudeau says he won’t negotiate in public on future of LGBTQ rights in USMCA

Legislators urged Trump not to sign the agreement unless the language was removed.

Price makes 36 saves as Habs edge Canucks 3-2

Late goal lifts Montreal past Vancouver

Most Read