First Time Homebuyers in Chatham, London and Surrounding Areas
There are unique programs available to first time homebuyers that can make buying your first home easier and more affordable.
The Home Buyers’ Plan (HBP) is an effective way to help first time home buyers access funds for a down payment. The plan allows for withdrawals of up to $25,000 per person (or $50,000 per couple) from registered retirement savings plans (RRSP’s) to aid in buying or building a qualifying home.
5% Down Payment Mortgages
The objective of 5% Down Payment Mortgages are to assist those with good credit and steady incomes to purchase a home. The 5% down payment mortgages can be ideal for:
• Current renters who often worry they won’t be able to afford a home or save enough money for a down payment
• Professionals starting their careers or may have large student loans
These mortgages can go as high as a 25-year amortization.
Down Payment from a Gift (Non-Borrowed Funds)
All or part of the minimum equity requirement (5% for down payment plus 1.5% for closing costs) may be provided by way of a financial gift as long as all of the following conditions are met:
• The lender has verified that the funds are in the recipient’s possession at least
15 days prior to closing
• The lender is satisfied that the money is a genuine gift
• The gifter is an immediate relative of the recipient
Homebuyers can receive down payment from borrowed sources that include:
• Personal loans or lines of credit secured or unsecured
Note: When using a borrowed down payment there are higher credit criteria and also increased insurance premiums.
Borrowed Down Payment
Homebuyers can get their down payment from borrowed sources that include lender cash back incentives, personal loans, lines of credit, credit cards or unsubstantiated gifts. However, when using a borrowed down payment, there are higher credit criteria and also increased insurance premiums.
Purchase Plus Improvements Program
This program is ideal for homebuyers who want to make improvements to their new property and are comfortable being reimbursed when the work has been completed.
• Up to 20% increase of the purchase price/appraised value by a maximum of $40,000
• Owner occupied only – House/Townhome/Condo
Downpayment: The downpayment is based on the total value of the property plus the value of the improvements.
• Conventional – 20% or more
• Insured – 5% or more (insurance premiums apply and will be added to the mortgage)
• Same rules for down payment history
• Amortization – 25 years for insured; 30 years for conventional
Examples of Property Improvements
• New roof/patio/deck
• Update kitchen/bathroom
• Energy efficient windows/doors
• Flooring (carpet, laminate, hardwood)
• Finish or renovate basement
Exclusions – anything that can be moved (i.e. appliances – fridge, stove, washer/dryer)
1. Submit a list of improvements and contractor quotes with the application.
2. The mortgage will be approved for the purchase price plus the cost of the improvements.
3. When the purchase completes, the funds for the improvements are held in trust at the lawyer’s office.
4. Borrower’s initial funds are used to complete the work.
5. Confirmation that the work has been completed is required (paid invoices, inspection or appraisal may be required).
6. Funds are released to the borrower thru the lawyer.