Buying a home can be a daunting experience, especially if it's your first time. One of the biggest challenges for many first-time homebuyers is coming up with a down payment. However, with the First-Time Home Buyers Incentive, eligible homebuyers can increase their down payment from 5% to 15% and save thousands of dollars in the process. In this blog, we will explore how the incentive works and how purchasing a new construction property like Thompson Landing in Kamloops, BC, can help first-time homebuyers take advantage of this incentive and enjoy significant savings.
What is the First-Time Home Buyers Incentive?
The First-Time Home Buyers Incentive is a program launched by the Canadian government in 2019 to help first-time homebuyers afford a home. The program allows eligible homebuyers to borrow a portion of the down payment from the government, which reduces the amount of their mortgage and monthly mortgage payments.
Under the program, eligible homebuyers can borrow up to:
Type of Property: Incentive Amount:
Existing 5%
New Construction 10%
The government provides the funds as an interest-free loan, which must be repaid within 25 years or when the property is sold, whichever comes first. 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, in addition to the original amount borrowed.
How does the incentive work?
Let's say you're a first-time homebuyer looking to purchase a home for $500,000. If you have a down payment of 5%, you would need to come up with $25,000. However, if you're eligible for the First-Time Home Buyers Incentive and decide to purchase a new construction property like Thompson Landing on Royal in Kamloops, BC, you may be eligible to increase your down payment to 15% by borrowing an additional 10% from the government, which increases your total down payment to $75,000.
In this scenario, your down payment would be $75,000 ($25,000 from your savings and $50,000 from the government). By increasing your down payment, you would have a smaller mortgage, resulting in lower monthly mortgage payments and less interest paid overtime. This means that you could save thousands of dollars over the life of your mortgage by utilizing this program.
In addition to reducing your monthly mortgage payments and interest paid, having a larger down payment can also help reduce your default insurance premiums, which could save you even more money over time. Default insurance, often referred to as CMHC fees, is mandatory for any mortgage where less than a 20% down payment is made. However, the closer you get to 20% the lower your default insurance is. This program allows you to go from 5% to 15% down, resulting in much lower premiums for the borrower.
Assuming a home purchase price of $500,000 and a mortgage amortized over 25 years at a 5-year fixed term of 5.34%, the below table compares the financial impact of a 5% down payment versus a 15% down payment with the First-Time Home Buyers Incentive.
Disclaimer: Rates are subject to change without notice. This is for illustrative purposes only. This is not a commitment to lend,
pre-approval or approval. Always seek professional advice prior to making any financial decisions.
As you can see, by taking advantage of the incentive, you could increase your down payment by 10% and reduce your mortgage amount, resulting in lower monthly mortgage payments and less interest paid overtime. By increasing your down payment to 15%, you could potentially save over $46,870 in interest over the life of your mortgage.
Why should you consider purchasing a new construction property like Thompson Landing in Kamloops, BC?
If you're a first-time homebuyer looking to take advantage of this incentive under the First-Time Home Buyers Incentive, purchasing a new construction property like Thompson Landing on Royal in Kamloops, BC, could be a smart choice.
Purchasing a new construction property offers several advantages, such as energy efficiency, warranties, and modern features that can save you money on maintenance and utility bills. Additionally, it lessens the risk of immediate improvements such as repairs or renovations, providing long-term savings and reducing stress.
Thompson Landing on Royal in Kamloops, BC, presents a fantastic opportunity for first-time homebuyers seeking a brand-new home. This development offers contemporary townhouses with spacious layouts, modern finishes, and energy-efficient elements. Its prime location near shopping, dining, and recreational amenities caters to families, young professionals, and retirees alike.
To sum up, the First-Time Home Buyers Incentive is worthwhile to explore for those entering the housing market. By utilizing the incentive, eligible buyers can boost their down payment, lower mortgage payments, and save a substantial amount over the loan term. If you're considering purchasing a new construction property like Thompson Landing on Royal in Kamloops, BC, now is an ideal time with pre-sale pricing for a limited time. With its stylish design, energy efficiency, and convenient location, Thompson Landing on Royal provides an ideal place to call home.
Written by: Sarah Mathieu with MortgageTech.ca
*Disclaimer: Information contained in this article is from sources deemed reliable and should not be relied upon without independent legal and/or accounting advice.
For inquires and pricing contact:
Brendan Shaw
250 319 4737 or 778 471 1498
brendan@bsre.ca
Comments