What is the first time home buyers incentive?

We just passed Labour Day, the winds are changing and fall is nearby and the Federal Government just introduced a new program called the first time home buyers incentive. At Robert Floris’ Mortgage Architects office we will help explain this new program and share some of our thoughts.

Purchase

• Encourage home ownership in Canada
• To help first time buyers with less than $120,000 in income

Eligibility for first time home buyers incentive

To participate in the first time home buyers incentive program:

• One person must be a first time home buyer
• A common law partner or marriage who recently went through a marital split
• You or your spouse or common-law partner cannot have owned a home in the last four years
• Only owner occupied homes
• Only insured mortgages, nor conventional or homes were more than 20% down payment is given

How does the program work?

• The government will provide another 5% down payment if you are purchasing an existing home
• The government will provide another 10% for any newly constructed home
• It must be noted that the purchasers must come up with at least 5% from their own resources
• The government will share in the ownership
• Program participants have to re-pay the amount borrowed after 25 years or when the home is sold, which ever comes first

Example

Joseph buys an existing home for $400,000. He provides his initial $20,000 for his down payment and the government provides another $20,000. In 20 years, Joseph sells his home for $600,000. Then Joseph must re-pay the government back $30,000.

Our Thoughts

Well, it is my believe that this is a very weak attempt to help the housing market with the first time homebuyers incentive and I comment on this for the following reasons:

• Limited program not open to all Canadians
• Will it really help in cities like Vancouver or Toronto
• I do not personally like the government sharing homeownership. It used to be the bank and the homeowner, now we have added another layer
• What his prices come down, what happens then
• I realize you save money on the monthly payments but who cares if you have to pay them back in the future

The best and only way to keep the Canadian home buoyant is taking care of our citizens with a strong economy and good paying jobs. This first time home buyers incentive solution is artificial and will not have the impact it strives to achieve.

Robert Floris is a Mortgage Broker. His office is located at 651 Fennell Avenue East in Hamilton, Ontario. If you would like to speak with Robert, he can be reached at 905-574-9200 #215. Alternatively, you can contact Robert here.

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