New program partners with first-time homebuyers as they enter the housing market

Backgrounders

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.

What do I do and how do I apply?

Step 1: Get preapproval for an insured first mortgage from your financial lending institution.

Step 2: Apply to BC Housing for the B.C. Home Owner Mortgage and Equity Partnership program loan. If you are eligible, you will receive confirmation of eligibility and Homebuyer’s Kit, which includes information for your lender, real estate licensee, and lawyer/notary public.

Step 3: Find your home and provide the details of your planned purchase to BC Housing for approval.

Applications for the program will be accepted starting Jan. 16, 2017, for purchases that will close on or after Feb. 15, 2017.

What information will I need to apply?

Buyers can begin gathering the documents they’ll need to submit an online application. Buyers will need:

  1. Proof of status in Canada and residency in British Columbia.
  2. Secondary identification (must include your photo).
  3. Proof of income and tax filings.
  4. Insured first mortgage pre-approval.

More information about these requirements: https://homeownerservices.bchousing.org/

Support for first-time buyers using the B.C. Home Owner Mortgage and Equity Partnership program

Example #1: Home purchase price – $475,000

This first-time buyer has saved $11,875 towards their down payment, or 2.5% of the home’s purchase price. Through the progam, the Province will contribute $11,875, equal to the buyer’s 2.5% down payment. This brings the total down payment to $23,750 or 5% of the home’s purchase price, as required by Canada Mortgage and Housing Corporation. This loan is interest and payment-free for the first five years.

As a first-time buyer, this person can also qualify for the First Time Home Buyer’s exemption for the Property Transfer Tax, saving: $7,500.

The B.C. HOME Partnership program enabled this buyer to purchase their first home as this buyer did not have the minimum down payment saved to qualify for an insured first mortgage.

Example #2: Home purchase price – $600,000 This first-time buyer has saved 5% of the home’s purchase price towards their down payment, or $30,000.  Canada Mortgage and Housing Corporation requires a 5% down payment for the first $500,000, and 10% for the remaining portion. This means the minimum down payment required for a home valued at $600,000 is $35,000. This loan is interest and payment-free for the first five years.

If this is a newly built home, the buyer can also qualify for the Newly Built Home Exemption for the Property Transfer Tax, saving: $10,000.

The B.C. HOME Partnership program will meet this buyer’s contribution of $30,000, bringing their total down payment to $60,000, and enabling this buyer to purchase their first home as they had not yet saved the minimum down payment required to qualify for a insured first mortgage.

Example #3: Home purchase price – $750,000

The first-time buyer in this example has saved 7% of the home’s purchase price as a down payment, or $52,500.

Canada Mortgage and Housing Corporation requires a 5% down payment for the first $500,000, and 10% for the remaining portion. This means the minimum down payment required for a home valued at $750,000 is $50,000.

The Province will meet the buyer’s contribution up to 5% of the home’s purchase price. In this example, the program will contribute $37,500 towards the down payment, allowing this buyer to put a total of $90,000 towards the down payment of their first home.

Assuming a 3% interest rate, this buyer will save $5,201 in interest payments during the first five years of their mortgage compared to if the buyer had purchased the home without the program.

In addition, if this is a newly built home, the buyer can also qualify for the Newly Built Home Exemption for the Property Transfer Tax, saving: $13,000.

MORTGAGE RULE CHANGES. Will you be impacted?

 

Good Morning and Happy Thanksgiving!!

This is a time to give thanks and I hope that you are getting to do that surrounded by loved ones, young and old.  From my house to yours, may the thankful list be boundless.

Not that I want to intrude on your long weekend festivities, but this may be as good of a time as any to provide you with some important reading on the mortgage market, and thus the real estate market.

As you may have heard, there was an announcement last Monday regarding mortgage regulation changes from the Ministry of Finance.  This is following previous changes announced earlier this year on down payment rules, property transfer tax and foreign buyers' tax.

Due to the depth and breadth of changes announced, I have taken the week to research, listen, and observe the reactions and comments of the lenders, brokerages, brokers, industry associations, financial experts, and the media, before I wanted to share with you the potential impacts these rules may have on you and the market place.

It is without a doubt that this was a shocking and unexpected announcement and it does have the potential to have a great impact on the real estate market. However, by how much and whom will be most effected is yet to be determined.  It will take months for the market to reflect what these changes will do to the market place.  Most speculate that first-time home buyers will bare the the hardest challenges, likely removing 20 per cent of this demographic from the market.  However, investment properties (rentals), refinances, and business-for-self loans have been targeted in a round about way.  Monoline lenders, who's sole business is servicing mortgages and mortgage related products, have been forced to remove mortgage options or change policies. With an exit or limited involvement from these Monoline Lenders, the competition for these specialized products will decrease, and therefore, rates for these products will likely increase while possibly restricting approvals.

Ultimately, the industry and market will adapt to these changes and they will become the new norm.  They are not all bad. They will prepare buyers should rates ever start to increase, which is a strong possibility when 5-year fixed mortgages are currently offered below 2.5 per cent, lowest on record ever.  When the Government is in a position to be able to increase rates, they will, and depending on it's implementation, it could leave some struggling to make payments.  Therefore, it's a protective measure to slow the ever-escalating house prices as well as to ensure that buyers will be able to withstand rate increases in the future.

For my clients, I want you to know that I will be monitoring the market, and if and when rates start to shift, I will ensure we are setting you up for success when it comes time for renewal. I will reach out with ample time to review and assess what your future payments will look like to make sure you are positioned well for your next mortgage phase.  I personally don't foresee a drastic jump in mortgage rates in the next few years, until our economy begins to stabilize from the oil and gas crisis. However, rates are not only maintained by local economic factors, but global ones as well.  Predicting anything on a global-scale is not without it's challenges and leaves expansive room for error.

For home buyers, there is hope that the prices will level off or at least soften in the coming months comparatively to what we have experienced in the last few years, mostly in the Lower Mainland and Toronto regions.  Should home values balance out, hopefully this will open opportunity for speculative buyers to be able to enter the market, even considering the new, higher qualifying requirements.

For home owners, if you were thinking about a refinance to consolidate debt, complete renovations, or for investments such as schooling or properties, this will be the time to access your equity.  Some lenders have already started to increase qualifying measures, ahead of the government deadlines.  Time is limited, so I urge you to reach out now if a refinance has been in consideration for you and your family.

ABOUT THE RULE CHANGES The Ministry of Finance has provided a technical backgrounder on the housing insurance rules and which rules they have changed.  You can learn more here.

The Canada Mortgage Professionals Association has done a great job of summarizing the rules changes.  The four points below are the key take-a-ways, which outlines the definitive changes on the immediate horizon, but there is also consultation happening specific to "sharing of risk" in terms of mortgage defaults. The government would like to consider a shift from our current model of 100 per cent government-back mortgages to having lenders share some of the responsibility for default risk.

Summary of Mortgage Rule Changes

  1. All insured mortgages will now need to qualify at the Bank of Canada benchmark rate (4.64%) instead of the contract rate offered on their commitment. This change is scheduled to come into effect on October 17, 2016.
  2. Portfolio (‘bulk’) insurance must now meet the same criteria as those that are high ratio (less than 20% down payment) insured. This change is scheduled to come into effect on November 30. This means that amortizations greater than 25 years, rental and investment properties and homes with values greater than $1M can no longer be portfolio-insured.
  3. Capital gains exemptions on principal residences will apply only to residents of Canada.
  4. In addition, there is further discussion about ‘sharing in risk’ that is currently borne in large part by the three mortgage insurers (CMHC, Genworth and Canada Guaranty). While high ratio customers and portfolio insurance funders pay for this risk, there is discussion about sharing in the cost of losses beyond just the mortgage insurers. This in and of itself could have significant implications. The Association will continue to monitor any discussion around this.

If you have any questions regarding the mortgage changes or would like to know specifically how these rules may impact you, please do not hesitate to contact me at any time 778-847-8466 or irene@irenestrong.com.

Property Transfer Tax Increases for Foreign ownership of residential properties

Updated data on foreign investment show more than $885 million in foreign investment flowed into Metro Vancouver’s residential real estate market in just five weeks, representing 86% of the capital invested in the sector by foreign purchasers throughout the province.

Beginning Aug. 2, 2016, an additional property transfer tax rate of 15% will apply in Metro Vancouver to purchasers of residential real estate who are foreign nationals or foreign-controlled corporations.

As part of Budget 2016 government began collecting data to identify foreign purchasers, and better understand whether and to what extent foreign capital is having an effect on residential real estate prices.

Data collection began June 10, 2016. From June 10 through to July 14, data for all of B.C. show:

  • 19,383 residential property transactions in British Columbia
  • 1,276 transactions involved foreign nationals
  • This shows a rate of 6.6% of transactions involved foreign nationals
  • The total investment by foreign nationals was $1,024,031,118 representing 7.9% of the total investment

Data specific to Metro Vancouver show:

  • Metro Vancouver accounted for 49.7% of the real estate transactions in B.C., and 73.3% of transactions by foreign buyers
  • By value, Metro Vancouver accounted for a total $8.8 billion worth of transactions; foreign purchasers accounted for $885,393,373.
  • The average investment by Canadian citizen or permanent resident buyers in Metro Vancouver was $911,425, while the average investment by foreign buyers was $946,945.

Updated data specific to the City of Vancouver, Burnaby, Richmond, Surrey and the capital region are shown in the attached tables.

While foreign investment in residential real estate markets is only one factor driving price increases in Metro Vancouver, it represents an additional source of pressure on a housing market struggling to build enough new homes to meet demand. The Province’s additional tax on foreign purchases will help manage foreign demand while new homes are built to meet local needs.

Property transfer data also show that the measures announced in Budget 2016 continue to benefit families buying newly built homes. Budget 2016 introduced the Newly Built Home Exemption to the Property Transfer Tax, which can save purchasers up to $13,000 in property transfer tax when purchasing a newly constructed or subdivided home worth up to $750,000.

Data to July 14, 2016, show:

  • 4,027 families have saved an average of $7,698 on their newly built homes.
  • Total savings to families: $31,770,029
  • 191 per week on average (21 weeks)
  • 27 per day on average.

The existing First Time Buyers Program has also helped more than 11,000 families buy their first home this year.

Learn More:

Data on foreign investment in residential real estate: https://news.gov.bc.ca/files/Property_Transfer_Tax_Report_Jun_10_to_Jul_14_2016.pdf

Presentation: https://news.gov.bc.ca/files/Housing_Data_Update_July_26_2016.pdf

Housing affordability: http://housingaffordability.gov.bc.ca/

Down Payment & Property Transfer Tax Changes

More major changes were implemented in the mortgage industry last week. Both the Federal and Provincial Governments had their say, targeting Down Payments and Property Transfer Tax. One to suppress the heated housing market and the other to stimulate new builds and generate more tax revenues from luxury home buyers. Between 2008 and 2012, four rounds of Federal Government changes have been made to tighten eligibility rules for new insurable loans, including:

  • Increase the minimum down payment to 5 per cent;
  • Decrease the maximum amortization period to 25 years;
  • Limit the maximum insurable house price to below $1 million;
  • Apply maximum debt service-to-income ratios; and,
  • Apply a mortgage rate stress test for mortgages with terms of less than 5 years or variable rates.

This is in addition to Mortgage Insurer, CMHC, removing stated income and second home programs in 2014 and announcing increased premiums in 2015, which was followed by Genworth and Canada Guaranty, two privately owned mortgage insurance companies.

DOWN PAYMENT CHANGES

Effective Monday February 15, 2016, homes purchased over $500,000 will require more than a 5% down payment.  For any portion over $500,000 up to $1,000,000, the minimum increases to 10%. The down payment over $1,000,000 remains at 20%.

Department of Finance Release, "Government of Canada Takes Action to Maintain a Healthy, Competitive and Stable Housing Market"

Department of Finance FAQs

Globe & Mail reports, "New mortgage rules go into effect, part of Liberal plan to limit risks."

PROPERTY TRANSFER TAX CHANGES

After announcing on Tuesday February 16, 2016, new Property Transfer Tax (PTT) changes came into effect Wednesday February 17, 2016.

Despite repetitive appeals by the BC Real Estate Association to lobby for lower PTT, most recently in October 2015, as noted in the article "Major Change to Property Transfer Tax Unlikely" covered by Barbara Yaffe of the Vancouver Sun, tax cuts were not part of the announcement.

Key points of the PTT budget include:

1. First Time Home Buyer Exemption - No Change No changes to the First Time Home Buyer Exemption limits.  This remains at $475,000 or lower, with partial exemptions between $475,000-$500,000;

2. Newly Build Home Exemption All buyers (whether First Time Home Buyers or not) no longer pay PTT on purchases of NEW homes up to $750,000 in value.  The Buyer must be a Canadian citizen or a permanent resident.  There is a partial exemption for homes between $750,000 and $800,000;

3. Higher Tax over $2 Million There is now a 3% tax on amounts over $2,000,000.

Read more by Huffington Post, B.C. Budget 2016: Real Estate Market To See Tax Changes.

QUESTIONS?

If you have any questions regarding these changes, please don't hesitate to call or email Irene at irene@irenestrong.com or 778-847-8466.

Simmy Sandu

[dropshadowbox][/dropshadowbox]

PERSONAL SNAP SHOT

About: Professionally Simmy has an extensive background with over 18 years in corporate sales, business development and marketing. She has made the career transition to starting her own business and taking a long time passion and interest for real estate to now working full time in the industry. She loves challenging herself, and being her own boss has allowed her that, which encourages her to continue learning and develop amidst the trials of running a small business in a fast paced industry. “Knowledge is everything in business, you can’t allow yourself to ever become stagnant.” Which is a true reflection of her professional standards and commitment of expertise to her clients.

Interests: Golf, yoga, running, health & wellness, and gourmet cooking – Food and Wine are definite passions.

Likes (If you had more time, what would you do more of): If she had more time, and financial resources Simmy would devote more of herself to charitable initiatives and work with under-privileged children. She would also focus on the Health and Wellness aspect of her life and take her interests and explore them through a full time practice. The thought of having a full time wellness and nutritional coach, personal trainer and yoga master at her daily disposal has enticing appeal!

Loves (can’t live without): Simmy’s love of things is ever evolving. Adaptation is the key word she lives by. However, the one the one thing that Simmy can’t live without is her family, and on a lighter note her Starbucks Coffee!

BUSINESS BASICS

Started as a Realtor in: October 2014.

Specialization: Vancouver West Side, Downtown and the Coquitlam/Burnaby area.

One-piece of advice for your clients: Don’t allow people to rush you into things. Take the time to make sound decisions. You are investing your hard earned money towards your future and you have the right to be picky. Make sure your needs are being met through a consultative process and what’s important to you is kept top of mind at all times. Build a relationship with someone who becomes your trusted advisor for the long term.

Why Dexter? Dexter has a solid reputation in the industry based on high levels of integrity, professional standards, ethics and personal service. Dexter invests in it’s professionals through training and education that is a cut above the rest. Of all the firms that I interviewed with, Dexter was 100% in alignment with my personal and professional values. Dexter also has a global presence through an exclusive affiliation with Frank Knight based out of the UK. The fact that a firm of Dexter’s size has captured such a large audience in my mind spoke volumes regarding the type of clientele the firm has dealt with over the years. What stands true for Dexter and its quality is “it’s not how big you are, but who you are that matters.”

Q & A

1. What differentiates you from the 11,000 licensed real estate agents in the Greater Vancouver area? My passion, integrity and professionalism are what I live by and I truly love helping people. I have a genuine concern for my clients and care about the decision they are making. I ensure that I focus on a long term relationship with my clients that entails becoming their trusted advisor, not just their realtor.

2. What do you think clients look for in a realtor? All clients have different mandates and needs, but the most important aspects clients should look for are to work with someone they trust, connect with, and easily build a rapport with. Like any relationship you have to like the person you are working with.

3. How do clients describe you and what’s your best feature? As a professional that comes with high standards who gets the job done, and will go the extra mile because of my genuine care for people. My attention to detail and ability to be creative would be my best features.

4. What inspired you to be a Realtor? I have been passionate about real estate my entire career and have always wanted to be a part of the industry, but my career always presented various opportunities that took me in a different direction. At this point I’m diving in and taking a long time passion and turning it into a full time profession.

5. What do you love most about your job? The ability to meet people from all walks of life, share in their experiences and help their dreams become a reality.

6. What is the hardest part of your job? I don’t find anything difficult, because for me this doesn’t feel like work. I enjoy even the most challenging components of the role and the toughest negotiations with an enthusiastic approach and a smile!

Contact Simmy Sandhu Dexter Associates Realty 1399 Homer Street Vancouver, BC V6B 5M9 c. 604.897.5880 o. 604.689.8226 e. simmy@dexterrealty.com w. www.dexterrealty.com

Strong Mortgages

Powered by Mortgage Architects

8801 Delvista Drive, Delta, BC V4C 4A6

Privacy Policy