Looking at buying a new home, or your first home? There may be some programs, grants or incentives you should know about. Here are a few currently available options and what they might mean for you.
First-Time Home Buyers Incentive
This is an incentive program specifically for first-time home buyers who have the minimum down payment amount available for an insured mortgage. It allows the buyer to apply to the Government of Canada for financing of a portion of their purchase through a repayable grant. This repayable grant allows the government to finance a portion of the mortgage to help make it more affordable, but it is required to be paid back upon the sale of the property and based on the value at the time of sale. For instance, if 5% of the home value is used under this incentive to purchase the home, at the sale of the property in the future, 5% of the value at the time of sale is required as repayment. This means that if the house appreciates in value, the amount returned to the government when it is sold also increases. Conversely, if the property value decreases at the time of sale, the repayment amount also decreases.
Home Buyers Plan
This plan allows you to access up to $35,000 from your RRSPs in order to buy or build your home. It requires you to be a first-time home buyer, a resident of Canada and be planning to live in that home. You will have up to 15 years to repay the borrowed amount. Other exceptions apply, so always speak with your mortgage broker when considering options such as the Home Buyers Plan.
Metis Nation First-Time Homebuyers Program
This program is available to eligible Métis citizens and allows them access to up to $15,000 towards the down payment for their first home. An additional $2,500 is also available to help cover closing costs. This one-time-only offer is not required to be repaid as long as the home is occupied by the purchasers for more than 5 years, otherwise the amount becomes due immediately upon sale if less than 5 years.
Cash Back Mortgages
Some lenders will consider what is called a cash back mortgage. In simple terms, it means that a small percentage of the value of the principal mortgage is advanced back to you by the lender at closing. This amount can help cover costs of repairs, renovations, upgrades and more. There are certain requirements for this type of incentive and you should be aware of all the terms for the advancement before signing. It is always a good idea to speak with your mortgage broker about these types of incentives before proceeding to make sure you understand all the terms, conditions and costs involved.
Although there are many more programs and incentives available, and these options are always changing, it is a good idea to speak with your mortgage broker to see what mortgage products are right for you now and in your future. Not only can your mortgage broker help save you time and money, they can help you better understand what your options are and how they will work for you in the long run.