B.C. Home Owner Mortgage and Equity Partnership Program

Effective January 16, 2017 the province of British Colombia will provide a Home Owner Mortgage and Equity Partnership Program to support first time homebuyers with the purchase of their first home. As part of the program, the B.C. government will match the down payment being contributed by the new homebuyers (up to 5% of the purchase price to a maximum of $37,500). This will be in the form of a 25 year BC Government administered loan with no interest or payments required for the first 5 years.Some other points to be aware of:1)  the applicants will need a pre-approval letter from either their bank or their mortgage broker in order to apply for the loan.  Loan approval is expected to take approximately 5 days;2)  minimum of 14 days (10 business days) required to fund the loan after final approval (subject removal);3)  gifted funds for the applicants portion of the down payment will be allowed;4)  there is no interest for the first five years, but immediately at year six the applicant will be required to either pay the loan in full, or make monthly payments to a maximum of 20 years.  The interest rate is re-set every five years.The following criteria must be met in order to proceed with this program:
  • First time home buyers only. EVERY person on title must be a first time home buyer.
  • Combined annual income for all parties on title cannot exceed $150,000;
  • The closing date on the purchase of the home must be on or after February 15, 2017.  
  • The mortgage must be high ratio default insured by CMHC, Genworth or Canada Guarantee;
  • A monthly loan payment will be included in the Total Debt Service (TDS) ratio to calculate the approval amount.  The payment will be calculated using the Bank of Canada rate and a 20 year amortization;
  • All applicants must be a Canadian Citizen or permanent resident;
  • Must have been a resident of BC for at least one year;
  • Property must be the applicants principle residence;
  • Applicants must remain in the property for five years.  If they sell the property within the first five years the loan must be paid out;
  • Maximum purchase price of $750,000;
  • The program will end on March 31st, 2020.

Some other points to be aware of:1)  the applicants will need a pre-approval letter from either their bank or their mortgage broker in order to apply for the loan.  Loan approval is expected to take approximately 5 days;2)  minimum of 14 days (10 business days) required to fund the loan after final approval (subject removal);3)  gifted funds for the applicants portion of the down payment will be allowed;4)  there is no interest for the first five years, but immediately at year six the applicant will be required to either pay the loan in full, or make monthly payments to a maximum of 20 years.  The interest rate is re-set every five years;

5)  due to government regulation enacted two years ago, all non spousal applicants who's income is being used to qualify the mortgage must be on title.  On this program, all members on title have to be first time buyers.  So for purchasers who have parents etc. who are co-signing the mortgage, they will not qualify for this program because unless the parents are also first time buyers and will be residing in the property.  

At this stage I have two lenders that have sent out communications indicating that they will be working with the program, Scotiabank and  CMLS.  I have spoken with numerous other lenders who have confirmed they will be announcing their participation on Monday, at which point I will send out another update.

How to Direct Your Clients:
It is imperative that applicants complete the application for the loan directly.  The loan applications can be done on-line at  https://www.bchousing.org/housing-assistance/bc-home-partnership/program-overview-applicant-information starting on Monday January 16th.  They will be required to provide their pre-approval letter along with other supporting documents at the time of the application. 

Once the applicant is approved (approximately 5 business days) they will receive an approval confirmation.  When they write an offer they have to submit their unconditional approval so instructions on funding can be sent the the solicitor (approximately 1 day). 

The loan will be funded directly to the solicitor and registered as a 2nd mortgage on title.

For more information call me today.  604-813-5131.  barry@connerty.ca
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