Buying A Home Made Easy Through The First-Time Home Buyer Incentive Program
Good news to all potential first-time home buyers! Now’s the best time to prepare your savings and application documents to finally fulfill your dreams of getting your own home. The federal government acknowledges that the middle-class and the younger middle-class Canadians largely contribute to the economic growth of the country. Despite that, they are the ones who can’t afford to live in a home they could call their own. With the rising mortgage rates and stricter mortgage implementation, they turn to nearby provinces to settle and purchase a much affordable property.
Well, there’s a good chance you can finally purchase your first home this year! The government now offers the First-Time Home Buyer Incentive Program to reduce the cost of your mortgage.
How does the First-Time Home Buyers Incentive Program work?
Through the First-Time Home Buyers Incentive Program, middle-class families will be able to purchase their own home with a lower monthly mortgage payment without the burden of shelling out a sizeable amount for a down payment. Potential first-time home buyers can then choose from these offers:
- 5% incentive for first-time homebuyers who wants to purchase an existing home
- 10% incentive for first-time homebuyers of a new construction or new home
So, say, you want to buy a newly constructed home worth $400,000. You are required to pay a 5% minimum down payment, which could cost you $20,000. When you apply and get qualified for the program, you will receive $40,000 from the government.
With the incentive, your monthly mortgage payment is $228 less a month. You could save $2,736 in a year!
You’re probably asking now, “What’s in it for the government?” Well, the incentive serves as a shared equity mortgage. This means that the government will be with you whether your property value goes up or down.
This program also creates a different kind of incentive for real estate developers and builders. They will begin to address the needs of middle-class families demand to have more homes that would suit them.
How can I qualify for this program?
By the name of the program itself, you must be considered a first-time home buyer. To be considered, you must meet at least one of the following qualifications:
- You do not have your own home and never purchased a home.
- You did not occupy a house owned by your spouse or partner in the last four (4) years.
- You went through a divorce or break up with your spouse or partner.
If you are then considered as a first-time homebuyer, you must also meet the eligibility criteria of the incentive. This means that the total maximum income of your household must not exceed $120,000. You should also certify that you are a Canadian Citizen, permanent resident, or a non-permanent resident with legal documents as proof.
How will I be able to repay for the incentive program?
When you avail of the First-Time Home Buyer Incentive, you must repay the incentive after 25 years or when your home officially gets sold.
The total amount you have to repay should be based on your property’s current market value. As mentioned earlier, the government will be with you through the ups and downs of your home. This is also applicable when it comes to the repayment.
For instance, you were able to enjoy 10% or $40,000 for your home worth $400,000. If the market value of your property increases in 25 years, you should be able to repay 10% of its current fair market value. Let’s say, your $400,000 home is now worth $450,000. Then, your repayment should amount to $45,000. If your property decreases in market value over time, then your repayment amount also decreases.
If you are stuck in an unfavorable financial situation and have problems with repayment, you must consult the program administrator immediately. They will work with you and offer personalized solutions to address your repayment requirements.
When’s the best time to prepare for the First-Time Home Buyers Incentive?
The Canadian government will be allocating $1.25 billion in three years for the First-Time Home Buyers Incentive. This is to cater to as many first-time homebuyers as possible.
This program will then be officially launched to the public, especially potential first-time homebuyers on September 2, 2019. But take note, the first closing will take effect on or after November 1,2019! If you want to qualify for the program, it’s best to start searching for a home that could fit your style and budget. Don’t forget to prepare for your down payment as well.
We bet there’d be lots of potential first-time homebuyers who will be interested in this. So, you better be ready!