New First Time Home Buyer Incentive

Recently the new 2019 Budget was announced with a new incentive for those First Time Home Buyers out there! Now it’s not been fully decided yet and there are still a lot of grey areas to be determined, but it’s worth analysing what we know vs. what we don’t know at this stage!

But just to clarify, this is a DIFFERENT incentive than the previously BC launched incentive for first time home buying which has now been disbanded.

What We Know
For the ease of reference, we’ll lay this out as follows:
What are they calling it: ‘A Shared Equity Mortgage’
What is it: Additional support with a buyers down payment, in order to reduce their mortgage 
When: This will be launched September 2019
Who qualifies: First Time Home Buyers only and also under a certain income amount 
Restrictions: Only applicable to those with a household income less than $120,000 per year. You can also only qualify for up to 4 x your household income. For example, if your income is $60,000, you can only qualify for up to a $240,000 mortgage value.
How much is it: An additional 5% on resale properties and 10% on newly constructed homes. So assuming you as the buyer put down 5%, adding the assistance from the new incentive, your down payment could be increased to a total of 10% down on a resale property, or 15% down on a newly constructed home.

What We Don’t Know
How is this paid back?
This is one of the biggest questions that is unknown. There has been talk of this being an interest/payment free loan for a designated time. Or as the name suggests, a share in equity of the home. If the latter is chosen, will this mean their share increases beyond their initial investment should the property appreciate in value? Or if the market softens, will the share decrease in value too?

Can Anyone Apply For This
Beyond First Time Home Buyers, what is the limit of these loans? Will the government stop when a certain amount has been reached? Will this amount be based on dollars spent or amount of buyers assisted?

Further Restrictions
Are there any additional restrictions or time limits etc included on this shared equity mortgage?

An exciting prospect for those of you looking to get on the market for the first time. However, the key topic to still be determined will be on how this investment is due to be paid back to the government. Until this is determined, it’s hard to tell whether this is an outright positive move or not, so we reserve judgement for now!

An important note is the change to RRSP’s contributing to First Time Home Buyers deposits. Previously you could take $25,000 each ($50,000 for a couple) from RRSP’s and use it as a down payment on your first home. The caveat being, this amount would need to be paid back within 15 years or just like any other loan, there would be additional fees. For the majority, this remains the same, other than the amounts now being upped to $35,000 each ($70,000 for a couple) as of March 19, 2019. It’s important to be sure you can pay this amount back if you’re taking this option. Also to think what that amount of money could be doing for you over a span of 15 years assuming you are investing it.

Thanks for joining us for this week's blog! We’ll of course update you on further details once they are released. In the meantime, if you’re a first time home buyer or know any who are looking for more information, click here to learn more about our FREE seminar.
Until next week,

Jay Mcinnes
T: 604.771.4606

Ben Robinson
T: 604.353.8523