Province unveils up to $37,500 interest-free loans for first-time homebuyers

In a surprise move, the B.C. government has announced interest-free loans to first-time homebuyers to help them pay for the cost of a mortgage down payment.

Called the B.C. Home Owner Mortgage and Equity Partnership, the program will hand out up to $37,500 on a 25-year loan that is interest- and payment-free for the first five years. After the first five years, home buyers will make payments at regular interest rates.

“We’ve invested in affordable rental housing, we’ve invested in transitional and emergency housing, and now we’re partnering with first-time buyers to make the purchase of their first home more affordable,” said Premier Christy Clark in a statement. “We believe every British Columbian deserves a place to call home,”

The maximum purchase price of qualifying homes is $750,000. Applicants must be permanent Canadian residents for the past five years and B.C. residents for a year.

The Official Opposition reacted to the announcement by saying the initiative comes too late and puts young homeowners further into debt.

B.C. New Democrat housing spokesperson David Eby said the solution doesn’t address the problem of affordability.

“People can’t afford housing because Christy Clark sat on her hands for two years while prices spiraled out of control,” said Eby. “Now, instead of taking action to fix the problem by increasing the supply of affordable housing, Christy Clark thinks that first time homebuyers should get two mortgages instead of one.”

Eby said the plan “puts young people who are already facing record levels of debt further into debt, while rewarding developers and speculators, many of whom are big donors to the B.C. Liberal party.

“Christy Clark’s early Christmas present to Bob Rennie won’t make homes more affordable, it will cause prices of the homes that qualify for this program to increase. It is not a solution to the housing crisis, it is more debt for the middle class, and more cash for Christy Clark’s B.C. Liberal donors,” said Eby.

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In a media release, the B.C. government provided the following background information on the new program.

B.C. Home Owner Mortgage and Equity Partnership program details: Am I eligible for a partnership loan?

The program supports eligible first-time homebuyers who are approved
for an insured high-ratio first mortgage. To qualify for the program,
all individuals on title must:

* Have been a Canadian citizen or permanent resident for at least five
years.

* Have resided in British Columbia for at least one year immediately
preceeding the date of application.

* Be a first-time buyer who has not owned an interest in a residence
anywhere in the world at any time.

* Use the property as their principal residence for the first five
years.

* Purchase a home that has a purchase price price of $750,000 or less
(excluding taxes and fees).

* Obtain a high-ratio insured first mortgage on the property for at
least 80% of the purchase price.

* Have a combined, gross household income of all individuals on title
not exceeding $150,000.

* Have saved a down payment amount at least equal to the loan amount
for which the buyer applied.