With all the real estate activity there is, somewhere in the mix there are likely many first-time buyers, or perhaps first-time-buyers-to-be. If you’re among them, or you know somebody who is, you might find this blog particularly interesting.
To help first-time buyers qualify for a mortgage, the Central Mortgage and Housing Corporation makes it easier to buy a home and have lower mortgage payments, via a shared equity mortgage. Like most such incentives, it’s an opportunity for some, but not for all.
In addition, faced with first-time buyers who living in major cities like Vancouver means they’ve been priced out of the market. So what CMHC did in Vancouver (also Toronto and Victoria) is raise the incentive’s maximum house price from about half a million dollars to more than $700,000. As Vancouver house prices go, this is a start.
Here is the example CMHC gives on its website:
Anita wants to buy a new home for $400,000 and has saved the minimum required down payment of $20,000 (5% of the purchase price). Under the First-Time Home Buyer Incentive, Anita can apply to receive $40,000 in a shared equity mortgage (10% of the cost of a new home) through the program.
This lowers the amount Anita needs to borrow and reduces the monthly expenses.
As a result, Anita’s mortgage is $228 less a month or $2,736 a year.
Ten years later, Anita sells the home for $420,000. The Incentive will need to be repaid as a percentage of the home’s current value.
This would result in Anita repaying 10%, or $42,000 at the time of selling the house.
More details, and the incentive in greater detail, are available here on the CMHC website.