HOMEFINDER: Some risks involved with new B.C. mortgage program

A new government program that can see first-time homebuyers become eligible for a down-payment loan may not be all it’s cracked up to be.

A new government program that can see first-time homebuyers become eligible for a down-payment matching loan may not be all it’s cracked up to be, warn some industry experts.

“It’s tough when you’re trying to get your first home,” said Cheryl Johns, a West Shore broker with the Dominion Lending Centres Modern Mortgage Group Corp.

While the government loan will allow some homebuyers to reach the 10-per-cent down level, she said, that loan will be considered debt and must be taken into account when determining how much home potential homeowners can afford. “It could just be giving (them) more debt … I don’t know how much it’s going to help at this point.”

Starting in 2017, first-time homebuyers in B.C. may apply for an extra loan, which will remain interest- and payment-free for five years. The government will match buyers’ down payment loan savings up to $37,500 on homes costing $750,000 or less, and buyers must live in the home for the first five years. After that the 25-year amortization loan will revert to a market rate mortgage and the homeowners need not maintain the property as their principal residence.

While lenders and mortgage insurance agencies have yet to announce how this new loan will affect the way they deal with clients, Johns said mortgage brokers are waiting to see how it will translate for potential buyers. “Every situation is going to be a little different,” she noted.

Other unknowns could see first-time buyers taking on more risk. If the market fell, Johns said, homeowners would have less equity in the home, which could affect their ability to purchase their next home. She did note that for anyone expecting to come into money – such as an inheritance or a bonus – who is able to repay the loan within five years, the program could be a great aid.

Asked whether the loan program could result in more buyers looking for homes under $750,000 – and potentially driving up prices at the lower end of the market – Johns wondered how much higher prices could go. “(But) there isn’t much inventory out there for first-time buyers or anyone.”

Between this latest announcement and other new mortgage regulations rolled out a couple months ago, she said it’s best to talk with a professional about the options. She encouraged individuals to set up an appointment, even if they are just considering whether to get into the market.

“There’s still some uncertainty. I want to believe it’s a good thing, but we’ll just have to see,” Johns said.

– with files from Katya Slepian/Black Press

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Sooke temporary homeless shelter packs up early

Occupants to leave facility by June 22

Name of victims ‘ripped down’ from Victoria display

Organizers feel the act is ‘malicious’

Government Street becomes pedestrian-priority corridor

One block of downtown street closed to cars entirely

Greater Victoria transit usage sees gradual rise

Ridership still down 66 per cent compared to last year

VIDEO: View Royal resident spots cougar in nearby backyard

B.C. Conservation notified about early Thursday morning sighting

March dental conference key to many of B.C.’s COVID-19 cases

Early infections from China, Iran were quickly contained

POLL: Are you sending your children back to school this month?

Classrooms looked decidedly different when students headed back to school for the… Continue reading

Cortes Island affordable housing project hangs by a thread

Regional decision makers resort to COVID-19 concerns despite virtual meeting option and push hearing to September

MAP: Dr. Henry reveals which B.C. regions have seen most COVID-19 cases

B.C. health officials release a first look at how the novel coronavirus has reached all corners of the province

North Island recreation camping site closed due to vandalism

Damage happens every year, forcing site manager to reallocate improvement budget to repairs

Tla-o-qui-aht First Nation woman, 26, fatally shot by police in Edmundston, N.B.

Police were conducting a well-being check at the time of the incident

Seniors to receive up to $500 in promised COVID-19 emergency aid in early July

The Liberal government first promised the extra help in mid-May, but had to create a new system to deliver the aid

VIDEO: Revelstoke bear wanders into Animal House pet store

Staff got ready to chase it out with a broom

Man found dead in his tent at Island homeless camp

Facebook posts tell of personal struggles and attempts to stay clean and sober

Most Read