Buying your first home is very exciting and because it is such a big investment, it is important that you are aware of every detail surrounding the purchase. This is a very big financial decision and there is a lot to consider, including a deposit, a mortgage, and the monthly payments, which you need to be certain you can make. The process can feel overwhelming but qualifying for a first-time homebuyer loan (FTHBL) before you start your home shopping can help. It can eliminate some of your stress and can help turn your dream of buying a home into a reality.
A first-time homebuyer loan is an incentive provided by the government of Canada and first-time homebuyers can qualify for tax-free loans and tax rebates through a shared-equity mortgage. It’s important to note that not everyone is eligible for this type of loan, so you need to see if you qualify. In order to be eligible, you must be a first-time homebuyer who has never owned a home. You also qualify if you owned a home with a spouse or common-law partner but have not lived in the house for the past four years or if you have gone through a divorce or have parted from your common-law partnership.
It is also important to note that a first-time homebuyer mortgage only applies to homes with mortgage default insurance, which is an insurance that applies to all homes where the buyer puts a down payment lower than 20%. This percentage is the maximum down payment allowed for homes under first-time homebuyer loans.
If you’re wondering why it is called a shared-equity mortgage, it is because under the FTHBL, the government of Canada becomes a part-owner and suffers losses and enjoys profits on your home. The government will generally loan you 5% of the home’s price for a house on resale and 10% of the home’s price for a new house.
There are a number of benefits to this option, including the ability to save on immediate payments for the down payment and mortgage insurance. Additionally, you will not have to make monthly payments on the loan or pay interest on it but you will have to pay it back in 25 years or whenever you sell your home. This will depend on whichever comes first and the loan repayment will be based on the fair market value of the house during the time of repayment or resale. Depending on the market, you can end up paying more or less than what you borrowed.
Benevolent Bancorp can provide you with more details and our private mortgage brokers will guide you in the right direction. We provide exceptional rates and whether you need pre-approved mortgages, a home equity line of credit, a 2nd mortgage, or a mortgage for the self-employed, we can help. If you want to work with the best and have been searching for mortgage brokers near me in the Surrey area, give us a call today!