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Is the BC homebuyer loan right for you?

(iStock Photo)

VANCOUVER (NEWS1130) – Are you considering using the province’s new first-time homebuyer loan which rolls out next year?

The government will soon match your downpayment up to five percent, to a maximum of $37,500, if you meet certain criteria.

No interest or payments for five years.

Good deal, right?

Well, Senior Mortgage Development Manager Ryan McKinley with Vancity says it can be if you were already in the market for a home — but if you’re only considering buying based on this loan, take a breath.

“What people ask is, ‘how much can I qualify for?’ When the real question is, ‘how much can I really afford?’ So, while there is a buffer built into the qualification process with the changes that CMHC made some time ago as far as qualifying at a higher rate and what have you, it’s important to make sure that you can live with the payment and fit it into your lifestyle,” says McKinley.

“When people are looking to buy, I get them to figure out how much they want to spend, what that mortgage payment’s going to be, and live with it for a few months.

“If it’s not more than the rent and expenses they have now, then put that money aside, it can add to your downpayment, and make sure it’s affordable for your lifestyle.”

McKinley reminds you this program is still a loan, and you will eventually have to pay it back, suggesting you plan ahead for year six, when those payments begin.

“It’s important people look at this program as what it is, which is a loan, and that it’s part of their overall financial plan, and they don’t use this an excuse to go and purchase a place,” says McKinley.