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Frequently Asked Questions

About

FirstStep makes money by originating high quality mortgages (just like yours) and then bundling them together and selling them to financial institutions for a small premium. 

FirstStep works with home buyers to reduce initial down payments by up to 50 percent and lower monthly payments by up to 30 percent. We do this by funding ninety percent of your home purchase with a regular mortgage and an innovative payment structure.

FirstStep was incorporated in June 2016 by its founders, Steven Earle and Jason Bond, as a vehicle to help address the housing affordability-issue facing the young, the not-so-young, families and individuals in Vancouver.

We have partnered with some of the mortgage industry’s most recognized firms.

  • Provide financial or legal advice
  • Make decisions or speculations around services or products not provided by FirstStep like CMHC insurance or government programs
  • Provide financing for individuals who do not qualify for a traditional mortgage
  • Offer retail banking products or services (you won’t be getting a credit card from us in the mail!)
  • Work with people who are financing some part of the purchase price with a high-interest loan from an unregulated institution (no predatory lenders involved, please)

None more than with a traditional bank mortgage. In fact, we try to reduce our carbon footprint by having all our forms and processes available online.

We hope by creating affordable home financing that we enable communities to grow and to help house people who would not necessarily be able to do so under traditional mortgage lending.

We also believe that we are helping to free up some rental inventory by allowing buyers to make that important economic transition from renting to home ownership.

As we grow bigger over the next few years we intend to earmark a percentage of FirstStep’s profit for investment back into the community through a Giving Back campaign. You, the homeowner and community member, can actively have a choice in deciding which of our partners receives help.

We also actively continue to work on ways to reduce cost of home ownership for the community.

Our out the box thinking makes it possible to buy the house you want – and it makes it more affordable on a monthly basis. That means you have more money to spend on the other parts of your life that are important, like vacations, piano lessons, a safer car or an RRSP. And our process is safe, simple and hassle-free.

We chose this demographic for three reasons:

  1. FirstStep’s mission is to create a financial product that helps people buy homes in their preferred neighbourhoods. In Vancouver, in particular, the average price of a single-family home has surpassed $1.5 million, so we help homebuyers for whom this cost is just out of reach.
  2. We also believe that when high earners move into more expensive real estate that would otherwise be unoccupied or owned by foreign investors, it will free up property for median and lower-income earners.
  3. Government already focuses on median and lower-income earners for housing solutions. We are supplementing these efforts with a different approach.

How it Works

FirstStep fits seamlessly into the existing home-buying process. You get pre-approved for FirstStep financing either on our website, through your preferred mortgage broker or we can introduce to our broker partners. You then find your dream home using your realtor as you usually do, make an offer, complete the purchase with your ten percent down payment our 90% mortgage.

To get approved for the FirstStep Access90 Mortgage  have your mortgage advisor contact us, or you can reach out to us in person or directly on our website.

Yes! You can choose FirstStep for your mortgage refinancing too. Speak to you mortgage professional for more information.

No. FirstStep funding is only for primary residences where the owner is living full-time. We are trying to solve the home ownership and affordability problem, not make it easier for investors to buy multiple properties. 

Yes. In fact, we encourage this practice to help increase monthly income.

FirstStep charges a 1.5% “mortgage origination fee” which is added to your closing costs. This is quite a common practice with private lenders. As we are focused on driving down your borrowing costs we incur some other fees from service providers when preparing your mortgage. We slightly offset some of these costs with this fee. 

On a $900,000 mortgage for example the fee is $13,500. When you compare this to mortgage insurance cost of $27,900 that you would have to pay with a bank (remember, no mortgage insurance required with FirstStep) we think it’s quite reasonable.

  • 10% down payment on any purchase up to $2 million (subject to approval)
  • Lower monthly payments
  • No mortgage insurance required
  • Greater purchasing power

We know thousands of people are stretching their monthly earnings to the max just to make their mortgage payments.

This is unhealthy and unsustainable so we created a hybrid payment structure to allow you to buy your home but make lower monthly payments.

This is how it works:

  • Home Price: $1,000,000
  • Your down payment (10%) $100,000
  • FirstStep’s Access90 mortgage $900,000

You make one monthly mortgage payment to FirstStep which consists of both principal and interest (P+I).

We break our payments on the $900,000 mortgage into two components behind the scenes to create the savings:

  • 60% is pure interest-only
  • 30% is Principal + Interest

 

A traditional mortgage is made up of a full 90% P+I. With FirstStep you are paying down less principal so your mortgage amount after 5 years of payments will be lower but not low as it would be with a traditional mortgage but you will still have all the benefits of home price appreciation.

Eligibility & approval

  • Canadian Citizens and Permanent Residents
  • Must be pre-approved by bank/financial institution/FirstStep
  • The home must be your principal residence
  • Homes with a value between $500,000 and $2 million
  • Home must be a condo, townhouse or single-family property
  • Home must be in located in BC in a FirstStep approved suburb/city.

Ideally you will already be pre-approved for FirstStep financing before you make the offer. Just like a bank lender would, we work closely with your lawyer and realtor and can usually make a credit decision quite quickly.

Appreciation, Taxation & Billing

At FirstStep we believe the biggest cost to housing is the cost of waiting. 

For example, in 2010 the median priced single-family home in Vancouver was $800,000 and required a down payment of $80,000. In 2020 that same median priced home was $1.5 million requiring a down payment of $300,000. If you waited to buy in 2010 you would struggle to catch up. Missing out on buying in 2010 cost you $700,000 in home price appreciation and $220,000 in extra down payment savings required.

Again, imagine if at the beginning of the Pandemic in March 2020 you were ready to buy a $900,000 home with your $90,000 savings. You decide to wait and see what happens. Fast forward one year and that home is now $1.1 million and for a traditional mortgage you now need $220,000 in down payment.

There are no hidden fees related to FirstStep. A fee schedule will be provided and all fees will be disclosed up front.

You owe money to FirstStep. We’re just like the bank or credit union who lends you money to buy your home, except we’re a private lender and we borne from necessity. We think about home financing differently (someone had to).

considerations

Your Access90 Mortgage is irrevocable and remains on title no matter who owns title to the property. Insolvency or other action does not affect your rights your home exactly as it would work with a bank mortgage.

Same as a regular bank mortgage, we will give you a grace period to make the payments but ultimately if you go into arrears (three months or more of no payments) we could consider proceeding with the forced sale of your property. We would always encourage early dialogue between you (homeowner) and FirstStep if you are facing any problems with meeting your financing obligations.

Ultimately the decision to take out either five-year or 10-year financing is up to you. For 10-year financing you will most likely be paying a slightly higher fixed interest rate but will have the security and peace of mind knowing exactly what your obligations are for 10 years. If you choose five-year fixed financing, you will likely secure a lower rate but be subject to a change in interest rates at the five-year renewal. However, if you consider that for the first five-year term you would have paid down a considerable amount of principal, interest rates would have to have increased greater than 60 percent to make any difference to your monthly payments. As an example, a five-year term $900,000 mortgage fixed at 3.5 percent would cost $3,012/month. At year five the mortgage balance is $872,000. Financing this lower amount at 4.5 percent is $3,577/month.

Though over the last 40 years prices have never gone down over a 10 year period, it could happen. Just like a bank mortgage it does not necessarily matter until you want/ need to sell your home. If at renewal the market has gone up the appreciation is of course yours. If the market has gone down then your equity will be reduced.

CMHC

Access90 Mortgages are not covered by CMHC insurance. In fact, we do not require any costly mortgage insurance and pass the savings on to you!

How we stack up

No, our streamlined commitment to reduce inefficiencies coupled with large sales volume helps us to keep costs comparable with a traditional freehold transaction.

Renting does not require a down payment, but you may pay higher monthly rent to attain the same property. By renting, you accumulate zero equity in the property and have no benefit if the property market continues to go up. Also, rent may increase significantly, or you could be evicted. There is little control over housing when you rent.

On paper yes, you are most likely paying a slightly higher rate than you would with a traditional mortgage but our hybrid payment structure means that your monthly payments are actually lower, meaning you don’t have to struggle each month just to make ends meet.

Also, together with our lending partners we are actively working to secure the best rates of financing for you, we want you to have savings and tell all your friends just how good FirstStep is.