I had the opportunity today to be part of a webinar discussing the new BC Home Partnership Program for first time home buyers. After being presented with the information in the webinar it is fairly straight forward and easy to understand from an experienced Realtor’s perspective. I could also see that first time home buyers in Kamloops may need some help and direction navigating the entire process. I thought it was important to create a guide to help buyers understand how the program works and where to start. There were also a number of points that were brought up in the webinar that I feel are important to consider.
STEP 1: Who can qualify for the BC HPP?
- Canadian Citizen or Permanent Resident for the last 5 years Minimum.
- Must have resided in BC for the full 12 months preceding the application.
- Must be a first time home buyer and never have owned a property before. This would also include being on title of a parent’s property as I find this does happen. If a buyer were on title at any time this usually would disqualify a buyer as a first time home buyer.
- Only registered buyers on title can be first time home buyers (ie. a couple wants to purchase a home and one of the two buyers have owned a property before). This would disqualify the buyers based on the one person having owned a property.
- Purchase price of the property not to exceed $750,000.
- Must be a high-ratio insured mortgage (less than 20% down payment).
- Combined household income not to exceed $150,000 per year.
- The Buyer’s property purchase must be their primary residence for 5 years.
- Mobile homes on a lease or rental pad do not qualify.
- Recreational properties do not qualify.
- Minimum 2.5% down payment required to qualify.
STEP 2: So you think you qualify ~ What next?
- Get pre-approved with a mortgage broker. Mortgage brokers will approve you based on the down payment that you have and ensure all your documents are in order for the first mortgage.
- Your pre-approval must be for a high-ratio first mortgage from a lender approved by the National Housing Act.
STEP 3: You are pre-approved by your Mortgage Broker ~ Congratulations! Next steps:
- Fill out the online application here for the BC HPP.
- In the application you must have the following:
- Proof of status in Canada (one of the following):
- Canadian Birth Certificate
- Permanent Resident Card
- Certificate of Canadian Citizenship
- Secondary Identification that includes a photo (BC Drivers License, BCID, Passport, Secure Certificate of Indian Status are the main options)
- Proof of income: Notice of Assessment from CRA or Proof of Income Statement from CRA.
- Proof of pre-approval from a mortgage broker: Must be a Lender approved by the National Housing Act. Your mortgage broker will provide a letter to you that you will upload for BC HPP.
- Proof of status in Canada (one of the following):
You have submitted your full application, the BC Home Partnership Program will give you a pre-approval within 5 business days of submission.
STEP 4: Go find your home!
- Begin your search for that dream home. We have a number of resources available for our buyers outlining the process for purchasing a home. We would be happy to help you with this process!
- Write an offer on a suitable home and begin to work on the conditions of the sale (ie. financing, home inspection, etc).
- At this time the accepted contract is submitted to both your Mortgage Broker and BC HPP.
- BC Home Partnership Program will take one business day to review your final application. You will also have to have a final approval by your mortgage broker for your high ratio insured mortgage.
- Once approved by both your mortgage broker and BC HPP you are safe to remove the condition to financing.
STEP 5: Complete on the sale.
- You will need to have a lawyer or notary represent you to finalize all documents and register the mortgage. In Kamloops a lawyer or notary can run anywhere from $1,100 to over $1,500. I always suggest making a few calls to real estate lawyers or notaries to find one that fits you as a buyer. We have a list of trusted professionals we can provide our clients.
- BC HPP also has a legal fee that a Buyer is responsible for in the amount of $560. This is in addition to the Buyer’s legal fees with the lawyer or notary they choose. This fee is due upon completion of the sale of the property.
STEP 6: Get moving!
Here is a simple flow chart showing a simplified version of the application process:
A FEW NOTES AND IMPORTANT FACTS TO KNOW:
- Interest will not be paid on the BC HPP loan until year 6. That interest rate will be set from year 6-10 at 3.3%
- Year 11 on-wards the interest rate is pegged to the Royal Bank of Canada’s Prime Rate plus 0.5%.
- There is NO interest or NO penalty for early payment of the BC HPP loan.
- Co-signers will be considered and don’t have to be first time home buyers. A co-signer would not appear on title.
- The purchase contract must allow at a minimum of 14 days to complete the sale. So this means there must be at least a 14 day time period between the day you remove subjects and the day you pay for the home.
- The down payment can be a ‘gift’. Your mortgage broker will advise you as to what documentation you would need to qualify for a first mortgage with a gifted down payment.
- Does the house you are buying need improvements? There is the opportunity to obtain a purchase plus improvements mortgage under this program. Consult your mortgage broker for more info about how this works.
- If you choose to sell your home before the 5 year term is up the loan becomes due upon completion of the sale and must be paid in full. You cannot transfer the loan to another property.
- BC Home Partnership Program is not limiting the number of approvals it will provide. Buyers have up until March 31st, 2020.
For more information about this program visit the BC Home Partnership Program’s website here.
Consult a mortgage broker for all mortgage related questions. As a Realtor I facilitate the sale of a property and do not advise clients regarding financing and mortgage qualification. Contact me anytime if you would like a recommended list of great mortgage brokers in the Kamloops area or if you would like to start your home buying process.