In my opinion, there’s something fundamentally wrong with real estate affordability in Canada (or at least in Toronto) and the government hasn’t really done any real measures to fix this problem. Yes, not even with this First Time Homebuyer Incentive (FTHBI) introduced by the Liberal Government in their 2019 budget .
In this article shared with me by a prospective homebuyer, I have trouble appreciating the use of the term 'help' in describing what the program essentially is when such help actually comes in the form of a loan that homebuyers still need to repay. While it says that the loan is non interest bearing, the fact that the repayment is based on the fair market value of the property makes the borrowing even more expensive. To me, FTHBI is more of a benefit to the government than to the homebuyer because for a minimal disbursement of 5% (or 10%), the government can invest or share on the appreciation of the homeowner’s property. Nowadays, an ordinary wage earner would need way more than 5% of a financial help in order to afford one of the typically overpriced homes in Toronto. But regardless of whether that 5% actually helps the prospective homebuyer to afford a home, he or she needs to think twice whether it's really worth giving the government access to the equity of his or her home for a remuneration as meager as 5%. Perhaps it would be better to wait a little while and just save up.
Having said all these, one may be in a situation where he or she would use this option as a last resort. If this is the case, I would suggest that he or she uses the program to his or her advantage by paying off the incentive in full as soon as possible --- in order to minimize or avoid paying a premium arising from the appreciation of the property.
It would be nice though if the government can be just sincere in helping these young prospective homeowners by giving them financial support in the form of a non repayable grant instead of a loan.