First-time homebuyers in B.C. will be able to apply for an extra loan from the provincial government starting in the new year.
The loan, which will remain interest- and payment-free for five years, will match downpayment loans up to $37,500 on homes costing less than $750,000. Buyers must have the first half of their downpayment saved up and live within the home for the first five years.
— Christy Clark (@christyclarkbc) December 15, 2016
“We must make sure that it is easier for first time homebuyers to find their way into a really tough market right here,” Premier Christy Clark told reporters on Thursday.
She said the new three-year program, called the B.C. Home Partnership, expects to see 42,000 people apply, but that there is no cap on the number of accepted applicants accepted or the amount of available funding, which comes out of the property purchase tax.
After five years, the 25-year loan will turn into a market rate mortgage loan, at which point homeowners no longer need to have the property as their principal residence.
According to the regional real estate boards, the November benchmark price for single-family detached homes in both Metro Vancouver and the Fraser Valley is out of the $750,000 range of the program, at $1.5 million and $860,800 respectively.
The benchmark price for a townhouse in Metro Vancouver is $667,100 and $424,000 for the Fraser Valley. Benchmark apartment prices are $512,00 for Metro Vancouver and $258,600 for the Fraser Valley.
Applicants must first be pre-aproved for a mortgage from an approved lender – a guarantee, Clark said, that will ensure buyers don’t try to purchase homes that would otherwise be out of their reach.
“We’re helping people get over that up-to-$50,000 lump payment that they need to pay on a down payment,” she said. “We want people to become homeowners.”
But NDP housing critic David Eby said that the province was just creating a housing shortage and adding more debt to a demographic already “struggling with credit card debt, student debt, record levels of debt.”
Instead, Eby would like to see developments on government-owned land.
“The province has huge parcels of publicly owned land that they could do amazing developments on, to build housing that’s actually affordable, so they don’t have to take on more debt,” said Eby.
“They could be using leasehold, they could be using co-ops, but instead, in Vancouver, which is ground zero for this housing crisis, they’re selling off huge parcels of land, Oakridge, Jericho, Little Mountain.”
According to the province, all names on the title have to be first time homebuyers and must make a combined annual income of less than $150,000.
Applicants must have been Canadian citizens or permanent residents for at least five years and have lived in B.C. for at least one year.