What is the First-Time Homebuyer Incentive?
The Government of Canada offers a shared equity mortgage (loan) as a first-time home buyer incentive. There are no ongoing payments or interest paid on the incentive, but the loan must be paid back within 25 years or when the property is sold, whichever occurs first.
How does the Incentive work?
The incentives vary depending on whether it is a purchase of a preowned house, or a presale/new construction house. The following are the benefits of the first-time home buyer incentive:
Since this is a shared equity mortgage, the incentive sum to be repaid is determined by the property’s market value at the time of repayment. More will need to be repaid if the value of the property has risen at the time of repayment, and less money will need to be repaid if the property value has decreased at the time of repayment.
For instance, if you paid $435,000 for a house, but it is worth $500,000 when sold, the 5 or 10% incentive repayment is based on the $500,000.
The Government of Canada will limit its share in the appreciation of the property: homeowners will pay back up to a maximum gain of 8% per annum (not compounded) on the incentive amount, from the date of advance to the time of repayment (retroactive to September 2, 2019).
The Government of Canada also limits its share in the depreciation of a property at the time of repayment, up to a maximum loss of 8% per annum (not compounded) on the incentive amount from the date of advance to the time of repayment (on or after June 1, 2022).
There is no pre-payment penalty, no ongoing repayment requirement, and no interest charged on the incentive.
The following requirements must be met to be eligible for the incentive:
You must be buying the property to live in it to qualify for the incentive; it is not made available to people who are buying for investment purposes.
If you fit one of the following criteria, you qualify as a first-time homebuyer:
Please Note: If you are married or in a common-law relationship, you may be eligible for the First-Time Home Buyer Incentive with the 4-year clause even if you have previously owned a property.
To begin the home-buying process, call The Auxilium Team at 250-590-6520 (toll-free 1-855-590-6520) for a free consultation. During regular business hours, you can also stop by 307 Goldstream Avenue to see us. We can also schedule an appointment with you during or after regular office hours.
This post reflects the best available information at the time of writing/last update. In order to ensure that you have the most up-to-date information, contact us to confirm the details for your specific situation.