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Are you a saver or a spender? How you answer that question could have a large bearing on whether or not you should apply for BC’s new interest-free, first-time home buyer loan. The Home Owner Mortgage and Equity Partnership program begins accepting applications today.

It is meant to help homebuyers with their first down payment, with the provincial government matching funds up to $37,500 — or up to 5 per cent of the purchase price — with a 25-year loan that is interest-free and payment-free for the first five years.

“Even if it’s just for five years, I think people who are smart about spending and saving could actually use this loan to their benefit,” says Romana King, senior editor and real estate specialist for MoneySense. “Instead of using the money to buy a more expensive home, how about buying the same home as before but using that money to get a bit of a boost. You won’t pay as much in Canada Mortgage and Housing fees, you can budget so you can throw a lot more money at your mortgage for the first five years and then you can allow yourself to pay off that debt — which is locked in a prime-plus — when you have to start making payments.”

If possible, King advises first-time buyers to place the money in an account that will allow them to make more money than it costs to borrow. “For the first five years it costs you nothing. Take that money out after five years and immediately pay back the loan and you might end up ahead.”

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About 91% of homes will be under the new threshold for the basic grant

The government of B.C. has increased its homeowner grant threshold from $1.2 million to $1.6 million - a 33 per cent increase. The province says the increase will ensure that most homeowners who received the grant in 2016 will qualify for it again in 2017. The government expects to spend $821 million on homeowner grants in 2017-18, compared to $809 million in 2016-17, according to a release from the province. 91 per cent of B.C. homes will remain below the new threshold despite recent steep increases in values from B.C. Assessment. The province says 83 per cent of Metro Vancouver homes are below the new threshold. 

The homeowner grant reduces property taxes on the owner's principal residence. The basic grant is worth up to $570, or up to $770 if the home is in a northern or rural area. Additional grants are available for seniors, people with disabilities, spouses of veterans and those who qualify as low income.

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