Before we completely jump the gun here and give the provincial government a standing ovation and run out the door and get ourselves into the Home Owner Mortgage and Equity Partnership Program, let us define what it is and really examine what it means for the consumer. Like all financial decisions in our lives, we should analyze it and how it will affect us. Not only in the short term but also in the long term.

What it is:

For first time home buyers, the provincial government has decided to help the lower to middle class income earners enter the housing market in British Columbia. They plan on contributing by matching up to 5% of the home’s purchase price, to a maximum value of $750,000.00 for a down payment, registered as a second mortgage on title. These loans, meant to help in meeting the minimum requirements for a down payment, are interest free for 5 years and will become fully due after 25 years. For a more in depth look into the details and eligibility for the Home Owner Mortgage and Equity Partnership Program take a look at this link : http://housingaction.gov.bc.ca/tile/home-owner-mortgage-and-equity-partnership/. This should provide you with the answers to any questions about the program that may come to mind.

Some things to consider:

First off, this is NOT a grant. You must repay the loan. Think of this program as a student loan. In essence it is very similar and many of us can relate. The funds are there for us to borrow, if we qualify, and with no immediate interest obligations. In the short term, it is a no brainer. But as the years pass and the repayment period initiates, we must come to terms with the debt we have accrued. In some situations it can put us in a very uncomfortable financial position.

If you cannot afford to save up your own down payment, you should also consider if you will be able to afford being a homeowner. With homeownership comes much more financial responsibility. Things like unexpected maintenance costs such as plumbing & yard work, fluctuating property tax, strata fees, among others, can really add up. It is best to err on the side of caution, before getting yourself into a loan.

I know, I know, it all sounds very negative. But here’s the thing: I just want to make sure that borrowers fully understand the situation that they are engaging in and carefully consider the implications. By understanding both the positive and negative aspects, one can make the best judgment call.

This is obviously a great option for first time homebuyers. For many first-time home buyers it can be quite the challenge to save that initial lump sum down payment. With the cost of rent sometimes fetching even more than a base mortgage payment, tenants can assume that they can afford a mortgage payment themselves. They might just need some help getting their foot in the door.

Another interesting aspect of this Government initiative is individuals that already have the full down payment amount available can consider still opting to get involved in the program so that they may invest that now freed up capital for higher return investments.

And here we are:

With another tool in your tool belt, you need more knowledge and professional advice now more than ever. Here at Oceanvale Mortgage & Finance we can assess your circumstances and consult you on how to best take advantage of your situation - considering what is affordable and what is suitable for you. We are only a phone call, email or short visit away and we can be certain to help you through the application process for the Home Owner Mortgage and Equity Partnership Program as well as service all of your mortgage needs.