Yukon North Of Ordinary

News archive for March 6, 2013

Program to offer loans of up to $18,000

A new Yukon Housing Corp. program could help first-time home buyers come up with a down payment.

photo

Photo by Vince Fedoroff

HELPING FINANCE DOWN PAYMENTS – Scott Kent, the minister responsible for the Yukon Housing Corp., explains the new down payment loan program at Tuesday afternoon’s news conference. Looking on is Pam Hine, the corporation’s president.

A new Yukon Housing Corp. program could help first-time home buyers come up with a down payment.

NDP housing critic Kate White, however, says it doesn’t go far enough in addressing the housing issues facing the territory.

Scott Kent, the minister responsible for the housing corporation, announced the Down Payment Assistance Program on Tuesday afternoon.

It will provide those approved for a mortgage with up to $18,000 for a down payment on a home. On a $365,000 acquisition, the $18,000 would represent five per cent of the purchase price.

The program is available to those with an annual income of up to $90,000.

Applicants must also provide a minimum 2.5 per cent of the purchase price and meet with a housing corporation mortgage advisor to discuss the responsibilities of home ownership and budgets.

On a $365,000 home, the minimum 2.5 per cent would be $9,125, for a total downpayment of $27,125.

Applicants are able to use the national program where they can borrow against their RRSPs provided they pay back that amount in 15 years.

The loan from the housing corporation would also be for up to 15 years with a more flexible payback program of interest-only payments for the first five years. It would be registered as a second mortgage on the property, Kent said.

During a press conference held Tuesday, he said the program’s goal is to assist those who are unable to save up for a full down payment because of the amount of rent they’re paying.

“Saving for a down payment is one of the key barriers to home ownership,” Kent said.

“Helping people move into their own homes will also create more available units in the rental market.”

The new program is being introduced after the housing corporation had a consultant look at the housing market last year. The $365,000 price tag was determined to be the range that would enable residents to stay within the existing prices.

Housing corporation president Pam Hine said the education component of the program will see the applicant meet with a Yukon Housing mortgage advisor.

That’s aimed at ensuring prospective homeowners know what they are getting into so there are no defaults on the loan.

“We, obviously, want our clients to be successful,” Hine said, noting the mortgage funding will have to be approved before the loan is made.

The banks will also factor in the amount of the loan when calculating how much mortgage an applicant will be eligible for. That equation looks at how much debt load a person may carry.

Anyone borrowing under the program who may decide to sell in the future must pay out the principal and interest owed on the loan.

Hine said officials have worked closely with banks on the program.

A total of $1 million has been earmarked for the program, Hine said. Both she and Kent noted Yukoners’ uptake will be monitored and budgets adjusted accordingly after the first year.

White, meanwhile, said Tuesday afternoon she is pleased to see the government taking an idea originally proposed by the Yukon Anti-Poverty Coalition, then adopted by the NDP for its 2011 election campaign.

However, she said, the government appears to be taking an ad-hoc approach to the whole housing issue.

The government is arguing there may be a trickle-down effect in that more rental units will be opened up as those renting homes opt to buy.

However, issues remain around the Landlord and Tenant Act even after last year’s changes to it, White said.

The new regulations, for example, still allow for eviction without cause, she pointed out.

Val Smith, the president of the Yukon Real Estate Association, said today that while the new venture’s effect remains to be seen, it appears to be a beneficial program.

“It’s not a give-away,” she said, noting that was her initial concern with it.

As she pointed out the applicants must still qualify for a bank mortgage and show they can meet the 2.5 per cent obligation.

There are a number of people, she said, who are essentially paying more than a mortgage with their rent. Those obligations make it difficult to save up a full down payment of at least five per cent of the purchase price.

And while the $365,000 won’t get a buyer a new single-family home, she said there are options out there in that price range.

Those choices in Whitehorse typically range from older single family homes (which may need work) in established neighbourhoods to attached homes like townhouses and condominiums in newer, higher-density neighbourhoods which have smaller lots.

“I think this is a really good step,” Smith said.

“The Yukon Housing Corporation is in place to support the housing needs of Yukoners,” said board chair Claire Derome.

“We will continue to identify and implement innovative housing solutions that work for Yukon people.”

Program information is available online at http://www.housing.yk.ca/; by phone at 667-5759 or, for those outside Whitehorse, 1-800-661-0408 extension 5759; or at the housing corporation’s offices at 410 Jarvis St.

CommentsAdd a comment

flyingfur

Mar 6, 2013 at 4:24 pm

So if I have this right:  if you buy a house for $350,000 you get $17,500 at 2% interest as long as you can put up the other $8750 yourself.  I guess my questions are:  can I apply for this retro-actively and if not why am I now struggling to pay off my mortage and my tax dollars are going towards supporting these other home-owners who came into the fray just months after me?

Answer:  Yukon Government dragged their feet on this for years and we pay the price.  That is not news.

Yukoner

Mar 6, 2013 at 5:20 pm

The reason for the mandatory down payments was to stop people from getting in over their heads on their mortgages, now the government is just helping them get there on our dime. People need to learn to live within their means.

?

Mar 6, 2013 at 5:41 pm

This is baloney. The down payment is not the issue, and YHC has extensive research in hand from a consultant and others to indicate that fact. The deputy and the minister were advised that this program is not necessary - the key barrier is the debt people are carrying.

How do you like the fact that taxpayers dollars are funding the down payments for folks who have boats, skidoos and new trucks in their driveway?

J

Mar 6, 2013 at 6:29 pm

This is a solution but not the right one. This will help people purchase a home but may not necessarily keep it.

Right solution is to find ways to help people but a home at a reasonable price. Providing a loan to buy a home at a unreasonable price doesn’t seem like the best idea.

Wayne

Mar 6, 2013 at 7:26 pm

What is the interest rate for the Yukon Housing down-payment loan?  This is taxpayer’s money.

Joel

Mar 6, 2013 at 8:02 pm

So one government will give you a loan to qualify for another loan.  And then only allow you to pay interest on the loan for the first 5 years, at which point the person should be making more money and be better able to pay back both loans.

Sounds very much like what got everyone in the United States in trouble in the first place.

If you can’t afford a house, you probably shouldn’t be buying a house.  This loan makes the math that much worse for the people that would use it.

Brian

Mar 6, 2013 at 8:32 pm

This is a ridiculous waste of tax payers money. If you can’t save up enough for a down payment then you should not be entering home ownership.

Dr. S. Cooper

Mar 7, 2013 at 4:15 pm

It’s difficult to save 20-30 grand while paying $1500 a month rent in the yukon.

Dustin

Mar 7, 2013 at 4:38 pm

This is a quick perusal of known rental units.

Average Monthly Rental rate for a house = $1800

Mortgage on a $324,900 home that is currently listed on MLS.ca with a 30k down payment = 1515.23 with a 4% interest rate over 25 yrs.

Way I see it this program is targeted at the people who could afford to own a home but have had trouble scraping the downpayment together.

Remember these people still have to qualify at the bank for a set mortgage rate. CMHC is just assisting them getting into a home sooner than they otherwise could which will free up rental units for other…

Sure you could see some abusing the system but isn’t that always the case with a government program…

Sylvia

Mar 8, 2013 at 3:31 pm

The CMHC is just assisting them getting into a home sooner than they otherwise would which will free up rental units for other ??  if you look in the paper there are dozens of houses for rent in that range that are just sitting and there will be many more soon, perhaps because the housing boom is over!  I would suggest that someone making $90,000 should be able to come up the down payment themselves.

north_of_60

Mar 9, 2013 at 6:12 pm

Another flagrant waste of taxpayers money.
Don’t help people to get even deeper into debt they can’t repay.
Those who can’t save enough for a down payment won’t be able to afford the loan and mortgage payments.

Steve E

Mar 11, 2013 at 9:17 pm

This program should be a great helping hand to the real estate industry in Whitehorse.

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