Design and Trends 2019 1_Digital_Design_Color_Trends_2019 | Page 92

FINANCIAL
ADVICE
FROM
TAMARA
TKACHUK
INCENTIVE
WHAT IS THIS NEW FIRST TIME HOME
BUYER INCENTIVE (FTHBI)?
In September, the government introduced the
FTHBI, a program meant to help first time buy-
ers with their down payment. Participation in
this program can potentially decrease monthly
mortgage payments and lower your mortgage
default insurance premiums.
HOW IT WORKS You must be able to put
down at least 5% from your own resources
(savings, RRSP or gift from close relatives).
The FTHBI will add 5% to your down payment
if you are buying on the resale market, or 10%
if you are buying from a builder.
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Funds provided by FTHBI are registered as a
second mortgage with no interest or required
payments but it has to be paid when the mort-
gage matures in 25 years or when the property
is sold, whichever comes first.
DO YOU QUALIFY? Your total family income
cannot exceed $120,000 and the maximum
purchase price of your home with this program
is four times the income that you used to quali-
fy for this program.
POTENTIAL DOWNSIDES The FTHBI is an
equity sharing program which means repay-
ment will not just be the initial 5% contribution
but rather 5% of the current value of the prop-
erty. First time homebuyers who are planning
to sell the property within the first 3-5 years
will likely save money but if you are planning
to live in your house for a long period of time,
you will have to share the equity growth with
the government, paying back much more than
what you got through FTHBI.
The four time income rule shrinks your buying
power when compared to the regular CMHC
program where borrowers may qualify for a
larger mortgage.
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There are many tiny details that you have to
discuss with your broker. For example, di-
vorced people who used to own a house before
they split can also qualify for this program. The
FTHBI could be beneficial but due to complex-
ity, it is recommended that you review all pos-
sible scenarios with your broker to determine if
this program fits your income and plans. - Text by
Tamara Tkachuk, www.bayviewfs.com