When the BC Liberal Government introduced it’s all new BC Home Partnership Loan Program this past December, we had just as many questions as you did. But immediately Silverman Mortgage Group set to action to become thoroughly knowledgeable about how this program could benefit First Time Homebuyers, and also what the possible pitfalls could be. Click here for an in-depth look at this above step by step guide, which details how to apply.
There is no question that as the clock ticks down to January 16, the first day that applications will be received, that there will be much more information, and many more questions, to come. However, let’s get started with exploring the ins and outs of what this Loan Program is all about, and if it is right for you.
The below table gives examples of the types of first time home buyers situations that this program would be ideal for, and what the financial scenario would look like:
FAQ’s: BC Home Loan Partnership Program
How long will this program run?
The BC HOME Partnership is a three-year program with loans advanced between January 16, 2017, and March 31, 2020.
Where is the program available?
Are there any restrictions on the cost or type of house the loan applies to?
The home must be a legal, self-contained mortgageable residence located in British Columbia, with a maximum purchase price of $750,000. The home must be the principal residence; rental properties and seasonal or recreation properties are not eligible.
Examples of eligible homes include, but are not limited to:
The home buyer must take possession of the home within 30 days of closing and move in within six months. The home must be maintained as your principal residence for the first five years (or less if the loan is repaid in full). You must be the registered owner of the home and cannot hold title to the home in trust for anyone else.
What is the definition of a principal residence?
Principal residence is defined as the home that is designated (and is eligible to be designated) as the owner’s principal residence for tax purposes, and where all persons registered on title live permanently (for at least six months per year) in a self-contained unit with access to all living facilities at all times to conduct their daily activities (such as cooking, sleeping and receiving mail) and is the residential address used by the persons registered on title on documentation including but not limited to identification, vehicle registration and income tax returns.
What happens once an application is approved?
After homebuyers have applied online and have been approved by BC Housing, the homebuyer will provide a package containing:
Detailed program information and buyer’s checklist
Information to provide to their lender, real estate licensee and lawyer or notary
The applicant must advise their primary lender that they have received conditional approval for a BC HOME Partnership Loan to ensure that the lender will agree to the secondary financing.
Once the applicant has an accepted offer on a home, they must provide BC Housing with the details. They will then receive a conditional loan commitment letter with the amount of the BC HOME Partnership loan. The applicant can take this to their primary lender to finalize financing.
The BC HOME Partnership loan approval is a conditional approval only until the final first mortgage insurance underwriting review is conducted and approved.
What is the repayment process?
While the first five years is interest and payment free, the homeowner may make additional payments or repay the loan in full at any time with no penalty. At the beginning of the sixth year, interest will start accruing and the homeowner will begin making principal and interest payments, amortized over the remaining 20 years.
The BC HOME Partnership loan is due and payable in full upon any of the following:
Default on the first mortgage or the BC HOME Partnership loan
Transfer of the home or change of ownership (including addition of a person to title)
The home is no longer the purchaser’s principal residence in the first five years
What happens if the homeowner sells the property or transfers ownership?
The homeowner must repay the loan at the time of change in ownership.
Silverman Mortgage Group would be happy to help in any way we can, with any questions that you may have. Contact us today, to discover your first mortgage made for you.