Buying your first home in Brampton can be a challenge. Now, the federal government hopes to help alleviate the pressure.
On Thursday (July 25), Adam Vaughan, the Parliamentary Secretary to the Minister of Families, Children and Social Development announced the details of the First-Time Home Buyer Incentive.
The program hopes to help middle-class families take their first steps towards homeownership by reducing monthly mortgage payments required without increasing the amount they need to save for a downpayment.
“The First Time Home-Buyer Incentive is designed to benefit those who need more assistance with housing costs, middle-class Canadians,” said Vaughan. “Thanks to mortgage payments that are more affordable, many families will have hundreds of dollars more each month in their pockets – money to spend on things like healthy food, sports activities for their kids, or even save for the future.”
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The program also provides first-time homebuyers with a chance to finance a portion of their home purchase through a form of shared equity mortgage with the Government of Canada. This depends on the insurance company the buyer using, such as CMHC, Genworth or Canada Guaranty.
The government says no on-going repayments are required, the incentive is not interest-bearing, and the borrower can repay the incentive at any time without a pre-payment penalty. The government also states it will share in the upside and downside of changes in the property value.
To qualify for the incentive, you must be a first-time homebuyer with a qualified annual household income of up to $120,000. Also, a participant’s insured mortgage and the incentive amount cannot be higher than four times the participant’s qualified annual household income.
The buyer must also repay the incentive after 25 years, or if the property is sold.
“Through the National Housing Strategy, more middle-class Canadians, and people working hard to join the middle class will find safe, accessible and affordable homes,” said Jean-Yves Duclos, the Minister of Families, Children and Social Development. “Our proposed measures will reduce the monthly mortgage for your first home by up to $286. This will help up to 100,000 families across Canada to buy their first home.”
The program will go into effect on September 2, 2019.
Photo courtesy of the Canada Mortgage and Housing Corporation