NHAP mortgage requirement ‘large departure’ from original program: NHC
Nunavut Housing Corp. plans to meet with northern banks to discuss accessibility of new homeownership program
HAP C, at 1,330 square feet, was a two-storey option from the original homeownership program catalogue. HAP clients could choose to have the bathroom upstairs or downstairs. (Screenshot via the NWT Housing Corp.’s 1989 HAP Catalogue)
The mortgage requirement for the new Nunavut Homeownership Assistance Program “is really quite a large departure from the old-style HAP,” says Jimmy Main, vice-president of operations for Nunavut Housing Corp.
Regarded as “HAP 2.0,” the housing corporation launched NHAP in August as part of the territorial government’s Nunavut 3000 initiative to build 3,000 homes across the territory by 2030.
NHAP offers candidates a $250,000 loan, forgivable over 10 years, to purchase a materials package to construct the home.
The original homeownership program, started in 1983, allowed people to choose a house design from a catalogue, receive materials at no cost and build their home by themselves, or with the help of family or a contractor. The initiative lasted for about a decade.
Today’s iteration expects applicants to cover — most likely through a mortgage — the land lease, foundation, subcontractors, and any other additional costs associated with the build.
“We’re just in a different era,” said Main. “If we wanted to cover 100 per cent of the costs for each of these clients, we’d probably be approving two or three or four, as opposed to 10 to 15 this year.”
The original program led to about 1,100 HAP houses. But the government felt the client pool had dwindled, with few having the necessary skills by the mid-1990s to participate.
But the program was widely considered a success. HAP was cost-effective, took pressure off social housing, and instilled a sense of pride among residents.
The housing corporation intends for clients to still provide sweat equity, Main said, but most will require hired help, at least for plumbing and electrical.
He recognizes many Nunavummiut face barriers to getting mortgages. In the past, the corporation has had to start its own internal lending programs.
The primary issues, according to Main, are that Nunavut homeowners don’t own the land their house sits on and lenders don’t offer construction financing.
“They don’t really want to take much risk up here,” he said of banks, adding he plans to meet with RBC, CIBC, and First Nations Bank to find a solution. “If not, we’ll probably be having to bring back our internal financing program.”
RBC declined an interview request. CIBC also declined, but confirmed it is reviewing NHAP.
Maddie Cheung, media manager at the Canadian Bankers Association, said its members don’t have “a different risk appetite” for Nunavut clients.
“Each situation is unique, and banks make lending decisions based on the risk of the borrower and the property,” she wrote in an email.
In an interview, First Nations Bank manager Kathleen Gomes said the biggest barriers people face are saving for a down payment and inflated prices — the former because Nunavut is expensive, and the latter because her branch lends based on appraised values, not the often-higher purchase prices.
She said her bank offers construction financing, but it releases money based on the percentage of completed work: “If you’ve got nothing built on the site, then I can’t advance anything.”
Even if Nunavummiut can attain mortgages, or the housing corporation devises a different loan scheme, some believe the cost will deter applicants.
In an interview, Kugaaruk Mayor Teddy Apsaktaun said NHAP isn’t as accessible as the old program.
“Back in the ’80s … they built it themselves,” he said. “There was no long mortgage to pay.”
He said most people in his community don’t make enough money to afford the additional cost of the program, so he doesn’t suspect many NHAP units will go up there.
“I don’t know if anyone will apply,” Apsaktaun said. “Some probably will. But most people probably won’t get approved because it’s quite a bit.”
The original HAP program was a flop. Most of the HAP houses in my community were either turned back to the local housing association or were sold by the owner at a huge profit after the residency requirement had been satisfied. Why would a person opt to pay for heat and electricity, property taxes, insurance and maintenance when that burden could be handed to the Canadian taxpayer?
That said, most Canadians would kill to be gifted a $250,000 FORGIVEABLE loan to have a home of their own.
Outside of Iqaluit, homeownership is not worth it. All the skilled trades people work for housing Corp because so there’s no support to homeowners. Have fun flying in a technician to fix your boiler when it breaks and it’s -40 out.
However, BHC has several programs available to help current homeowners.
*NHC*
why bother when rent is safer, cheaper and prices are protected, have not increased and homeowners cover all cost and all increases.
I , too have thought of applying for our KMHB self house program, but like you said, why pay for heating , electricity property taxes, etc, when all you have to do is pay your rent . I pay $832.00 /month , no worries.
Here is some considerations on the pros and cons of homeownership.
The average rent in Nunavut is $2,800 per month. That is $33,600 per year, or just over $1M over 30 years to put a roof over you and yours throughout your adult life. Most rental agreements in Nunavut require the tenant to pay some additional costs, and sometimes, even all the utilities also.
If you rent, you will never see a dime of that money back. If you rent, you still are on the hook for some utility bills. If you rent, you are at the mercy of your landlord as to when and if they choose to repair your unit. If you rent, you have little to no control over potential future rent increases.
If you buy or build, say, a house that may have a value of $1M, you can get $250,000 from NHC, and have to front $750,000 of your own money. You will need a minimum down payment of $100,000 (10%), which leaves you a mortgage of $650,000 at perhaps 4.7% interest.
You end up paying $3,300 per month on a 30 year mortgage, and a total of $562,747.70 in interest.
When you get a mortgage, you are building your personal equity that helps you financially in other ways. When you buy, you run the most efficient house you can to save costs. When you have your own house, you gain pride in having a well maintained thing, just as you would for a vehicle, on the land equipment, or traditional clothing.
So, what do you think is better; Option A -paying (at least) $1M and getting nothing at the end, or Option B- paying $1.2M (firm) over the same period, and ending up owning a $1M house in the end?
If you do not believe in delayed gratification, if you are willing to live with uncertainty, and are willing to put your personal welfare in the hands of others when you are retired, by all means, choose Option A.
Insurance has skyrocketed in NU, home insurance for many is coming in at 6-10K annually, R&M / upkeep is absurd currently due to material and labour rates with no decline in sight, most rentals being staff housing across NU except Iqaluit and none of those or majority absolutely the tenant does not pay heating fuel which for a 3 bedroom home of 1200-1500 square feet is easily going to run you 6K plus per year with prices ever-increasing as taxes and other costs such as freight rise on heating fuel. This is only the tip of the iceberg in NU when it comes to homeownership these days, unfortunately.
Its just simply not feasible for the mass majority to carry that mortgage with NU O&M costs and the increased living costs of food. As a home owner, its absurd now to the point where its difficult to just pay O&M on a moderately sized home. If you don’t have two breadwinners, good luck.
There’s definitely good things about owning your own home, pride, not having to worry come retirement that you are married to your job for housing meaning you cant retire unless you get on the housing list and for that matter just not being married to your job throughout employment so you have options.
But on the other-side of the coin, not ever having to worry about a repair in a place where repairs cost a fortune, there are benefits to that as well especially in our smaller Hamlets. There’s no private business in most of them. You cant get things fixed unless you’re in a gov’t home or social housing because the only company in town to fix things in the LHO. People always think of Iqaluit or Rankin Inlet. Reality is private business does not even exist to support private housing in most Hamlets, you end up relying on the goodwill of the LHO to try to help you out.
Financially, if you actually put it all out on paper, take excess amounts from not paying O&M and dump it into a moderate risk index fund, honestly homeownership even with the extra 250K, its a hard-sell.
Really does not need to be said, but NU housing is just not in a good place.
All you say is true.
What is also true is that 20 to 30 years ago, building and owning a house was even tougher, there were even fewer trades and property management services in the communities than today, and getting a mortgage back then meant you were paying double or triple the interest of today.
That extra interest was an order of magnitude more of a financial burden than say, double an insurance premium every year today. I even remember a time when banks would not even issue mortgages for houses on leased land, which is to say, everywhere in Nunavut. But somehow, that was solved.
Yet, some Nunavummuit became homeowners, and are now the core of our little upper or middle class in our territory. This stable and productive group of people is the foundation of a healthy society. We desperately need this section of society to grow.
At some point, people have to make choices. I see double income younger couples and families regularly buying things like brand new vehicles and boats for the same price as a down payment on a house. These are poor financial choices. These assets depreciate by a quarter the second they are offloaded from the ship.
It is any wonder if these same couples see any adversity, they move south, change jobs or quit, and forego the chance to progress themselves through stable employment for an employer that will invest in them. There is nothing to keep them here besides selling what is parked in their yard.
What we see in Nunavut homeownership is simply an indication of broader trends in our society. Our younger generation is the fully evolved product of a coddling welfare state and balks at individual challenges and problem solving.
All that could be fine and good. However, if we continue to focus on creating a population of renters up here, and making excuses for people not to grow roots in their own community, this does not bode well at all for the future of our territory.
Got$ 40 grand saved up for a SUV on the first ship. I work hard and saved the money , which , would you go for Toyota or Ford ?
My opinion of you hinges entirely on whether you are renting on the private market, or if you have subsidized staff housing. If the latter, you are part of the problem.
(if the former you are making your own choices and not expecting others to foot the bill, so fill your boots)
When it comes to mortgage rates homes were also vastly less expensive. By a significant multiple. People will then respond with, well people were paid less too but that’s totally debunked when you look at actual real wage to home price data and realize that home prices have gone up from a 3.4 price to income ratio in 1990 to a 7.6 in 2023 making Canada one of the worst markets in the first world so the whole, we had to pay 18% interest thing just does not fly. You could rapidly pay down a mortgage in a few years back in the 80s and 90s because the ratio of annual wage to housing cost was so much lower.
Not only that wages to annual living costs have not kept pace either in Canada.
And yes, i agree there’s nothing keeping them here but that’s what young people want. Look statistically it’s the most transient generation, people don’t care about growing up and staying near mom and dad. Renting offers that. Is it a poor financial decision to purchase new vehicles and finance boats, etc. Yes obviously, but renting while wanting to be transient, that’s what a lot of young people want, especially in NU.
Stats show NU is growing slower than anticipated due to the amount of outmigration. You don’t just have the issue of housing to contend with to keep young people satisfied in NU. Outside Iqaluit you have massive schooling issues, limited total opportunity, etc. etc.
Who wants to have a giant anchor that cost them more than market value if they tried to sell it AND it prevents them from enjoying their lifestyle now AND you can if financially savvy invest your money given the rental rate is significantly less than homeownership so you can still have a good nest egg later in life.
If you’re well off enough to take on that 750K+ mortgage I feel outside of some basic qualitative things like not being married to a job, a home being a forced savings program and having additional stability, there’s not much of a case that’s going to intrigue younger people.
With that said, I think its different in Iqaluit because at-least there you have a chance to offload that anchor if you decide to leave, and you might be able to get close to breakeven.
Hope to be proved wrong, hopefully there’s uptake across NU and its successful and its not just an Iqaluit only build program essentially. I do think times have changed though and younger generations coming up in NU wont want that anchor, different times and even if you and I don’t like it there’s very different attitudes from 80s and 90s.
Hey, thanks for breaking that down. Question: can you use the money from NHAP to pay your down payment?
Hopefully a few houses do land on the market but lets be honest, most if not all will probably be in Iqaluit or Rankin Inlet. This is not to crap all over initiatives, doing something is better than nothing but problems should be looked at.
Lets examine barriers in smaller towns.
1) The obvious, money. The majority of NU towns have little to no economic activity, with some pushing over 75% social security rates among those who actually live here and are not transient workers.
Home building outside Iqaluit and Rankin Inlet is now pushing over $1,000 per square foot if you’re not doing the bulk of work yourself (see issue 2 for problems with this). Who can afford the extra 750K + difference for a 1M dollar small home. Very few can afford that and here’s the catch, the majority that can afford it, already have jobs or skills that land them in jobs that will offer them heavily subsidized housing meaning there’s no incentive to build anyway.
2) Construction code. Code has changed significantly since the 80s. Mechanical, electrical ,etc. Its more expensive to comply and it results in people not being able to pump as much as NHC is calling it “sweat equity” into these builds they think people are going to build themselves and magically comply with building standards of today. Or maybe the plan was just to close our eyes on inspection of these units?
3) Land availability, I know in our little town we have exactly ZERO lots available, with none on the horizon. NU3000 ate the few we had up and the Hamlet has no capacity to build more. Lots might exist in Iqaluit where they pump money into building subdivisions, Rankin and Cam Bay, but most of our little Hamlets have nothing left and the ones that appear vacant have a land lease on them already to NCC or another.
4) It’s alarming that the GN would take Tax Payer money and finance those risky clients that lending institutions would not remotely touch. We’re not talking peanuts when smaller homes cost 1M to build now. That’s a significant amount of money to be lending to risky clients with the collateral being a house in progress that could be botched, left to the elements, etc.
5) As the bank noted, build costs are in excess of market rate value. Meaning you cant get a mortgage for the build cost of your home, or even close at this point which means the bank cant property use it as collateral because they cant recover the total mortgage value via re-sale in the market. That means you wont get a full mortgage and you will have to bridge the gap. This will be a major issue in small communities where house values are nothing. Less of an issue in Iqaluit and Rankin where market prices are higher.
Those are just some holes I never saw addressed by NHC. Sort of looks like they didn’t even examine them though based on this article since now they’re trying to find solutions for what should have been an obvious problem coming.
Does Rankin have any lots available for this initiative?
Honestly I could be mistaken at this point if Rankin does, perhaps those have all be gobbled up as well by now, but what Rankin has shown is that it does have capacity at least to develop lots in a semi-timely manner while other Hamlets may take years, don’t have the working equipment, etc. Rankin by far has a decent amount of infrastructure and support compared to other Hamlets. Not Iqaluit levels but still a step up from most.
I can hardly afford food and clothing with subsidized rent and power on today’s world, imagine paying on top property taxes, insurance, maintenance, Home appliances, higher power bills and contractors all with interest rates, plus you’ll just suffer waiting to get into public housing when you retire like every other elder in Nunavut 🙁
People in Kugaaruk at least have enough money to spend $300 on a 12-pack of pepsi when the town runs out.
WOW !!!! $300 for a 12 pack , talk about addiction .
They should also look at existing home owners that are in need of upgrading of Heating and Plumbing and exterior repairs Doors, windows, roofs siding, see so many that could use a partial or complete reno.
They already have this and have had it for a very long time. It’s called HRP – Home Renovation Program.
Prior to addressing other matters, the NHC should direct attention to the issue of local housing association board members misusing their authority by disregarding the point rating system when assigning units to individuals or transferring tenants to units that exceed their spatial requirements. Additionally, there are concerns regarding the competence of managers and staff overseeing housing office operations and issues related to absenteeism and a lack of professionalism.
If you got a gov job or a job with NTI or QIA, you probably get staff housing. If you don’t work, you probably get public housing. Public housing and staff housing are both supported by housing office and their maintainers
How many people with jobs would want to leave the comfort of having support from housing to being responsible for their own house? Until the luxuries of staff housing and public housing are taken away I have a hard time believing anyone would bother with this new program.
As I stated earlier in another comment NHC has a number of programs available to help existing homeowners with R & M
This sounds like an excellent new program to help young families build their own house, it is too bad that there is so much negativity in these comments.
Baker Lake currently has around 60 residential building lots ready to go and there are are some young family men capable of building a house (with some technical help) that are currently in public housing here that would be good candidates for this program. So hopefully some of that funding will come here.
If we can encourage more home ownership less Nunavummiut will be reliant on public housing which is currently costing around $40,000 per year/per unit…. $250,000 forgiven over ten year doesn’t seem like such a bad idea.
Hopefully NHC is stepping in with financing as they did in the past HAP programs because as mentioned, the banks don’t like the construction mortgages up here.
Sweat equity. Who supplies that? All the qualified trades men work for housing.
Oh now I understand. A housing maintainers only qualification. Is they must be able to drive a pick up. Drink coffee and spend time at the co op.
They don’t need to have to have any work ethic. Or know anything about the building trades. Is that the reason so many public housing units are empty.
Fixing and maintaining the existing public housing stock. Would be a step forward. With the housing shortage in Nunavut.
Maybe it’s time staff housing and public housing rent go up. Cost of everything else is going up, GN salaries just jumped 9% for no reason, but for some reason rent in Nunavut (outside of iqaluit) is cheaper than anywhere else in canada. Go figure?
Not true, the raise 9% was because of the cost of living going up over the last 10-15 years and the wages didn’t go up as high. If you didn’t already know, the higher level managers and directors got 11%, not 9%. Us lowly minions got the 9% lol
Incorrect: Senior Managers got 9%.
NHC should just enter into, supply, ship, and build contracts with local contractors so there are no issues and 10 different hands in the project. Once complete turn around and sell the house at a $250,000 discount to a resident.
Why does NHC think of these complicated schemes that end up not working that create headaches for everyone?
Remember the 2007 MAP disaster, this seems to be very similar in my opinion.
Why because its too complicated for some people? Suck it up and learn something and stop expecting someone else to do it for you ffs.
I speak from experiance, I was awarded a MAP house in 2007
1. Did you know Canadian Banks will not issue a mortgage to an individual for an house that is not built? CMHC will not insure such mortgage either making the financing a nightmare. Either a contractor will have to finance it and if their pockets are not deep enough will have to reach out to a bank or NHC for a loan to build it, the local contractor we hired had to go though NHC for a construction loan as the bank would not issue one to their small company.
2. Most contractors in Nunavut are not interested in building single family units for private individuals the risk reward is not there,
3. Working on getting inspections done in a timely manner was a nightmare which created delays and cost over runs that a construction mortgage will not cover and the contractor has to recoup their costs from somewhere, maybe the cost over runs end up being so great the ones who got preapproval for a mortgage can not longert afford it which will leave a contactor with a property they really cannot do anything with as NHC owes $250,000 of the property.
You need the nightmares, the headaches
KEEP it Simple Stupid. NHC should build them, and sell them on the open market at a discount to increase private housing supply the average joe/jane has no idea what they are getting into. Basically NHC will have to hold their hand all the way,
In reference to #1, yes you can it is called a builders mortgage. They are a little harder to get as many builds go over budget, but you can certainty get one. Lots of middle class people build new homes.
Great point.
Unfortunately the housing market is not there in Nunavut, maybe Rankin Inlet and Iqaluit….maybe.
The minimum to build a 1000 sq foot house in Nunavut will be $750,000 and that is at a rate of $750 per square foot or 25% less than the current construction rate of a 1$000 sq/ft. This property in many communities will only apprise at $300,0000 when said and done if that.
Who in their right mind would lend $500,000 to an individual so they can build/purchase a property that is valued at $300,000 after the subsidy?
How would you pitch this proposal to investors (the bank) to get them to issue financing? Waiting for your pitch.
If the individual defaults in the first 10 years the bank will stands to lost $200,0000 automatically.
This is what I went though with the Banks and CMHC and the reason why NHC ended up financing the build in the end.
It is oblivious NHC does not learn from past mistakes.
Where else in the world would you get $250,000 forgivable load over 10 years and the people complain about it and not want to do it?
People in the south would give their left nut to have that opportunity.
Left nut = 250k. Yahoo where do I sign up.
Lets get real
Fact: It costs $1000/sq foot to build in Nunavut and that is the minimum today, the housing market dictates resale value in the smaller communities is about $150/sq foot while in Iqaluit and Rankin Inlet it can go as much as $750/sq foot.
The fact is this housing model/market does not make economic sense.
Good luck to all those who get approved you will be in for a rude awakening.
Keep on giving, 250k , whereas anywhere else in the world you must work. How will anyone learn if they are given. While at it ensure you have 3 kids so you can get 1,500 from Jordan principle