FIRST TIME HOME BUYER
Purchasing and owning a home for the first time
Tired of renting? Do you want to own real estate? Let a Mortgage Advantage Professional show you the way to purchase your dream home even with 0% down. Interested? Call us today 604-988-5608 or toll free at 1-888-988-5608.
First-Time Buyers: Don't Forget the Home Buyers Plan
It's an easy and affordable way to increase your downpayment and lower interest costs and it is available to all first time home buyers.
Click here for details.
At The Mortgage Advantage, we strive to make this purchase as affordable and easy to understand as possible. Your Mortgage Advantage Consultant is here to give you peace-of-mind during what may be the largest and most important investment you will ever make.
Buying a Home
There is no reason to rush the purchase of your first home — remember, it is also an investment in your life and lifestyle.
Is it a Good Investment?
Ask any homeowner, a house is solid investment that is difficult to match. Why?
Capital Gains Are Tax Free — Any capital gains that accrue and are realized on the sale of a principal residence are tax free — your money, 100%!!
To match even a small appreciation of 6%, the return on a fixed-income investment such as a GIC would have to be as much as 12%.
A realtor will help you screen available properties, identify those that most closely meet your requirements and arrange to view them with you. Your realtor is more than a sales agent; he or she serves as a resource person who can provide valuable advice and help you make an informed purchase decision. In helping you negotiate the terms and conditions of your purchase with the seller's agent or with the seller directly (if a private seller or their own listing), your realtor will arrange to get information and fulfill certain conditions as agreed with you — i.e. survey, home inspection report, etc.
Your realtor's commissions are paid by the seller from the proceeds of the sale. Usually it is a split between the buyer's agent and the seller's agent, if both agents are involved.
When you buy property you are not just buying the land and building, you are also buying the legal rights of ownership so you need to be certain that no other party has a claim to them. Your lawyer will confirm that there are no legal obstacles to your purchase and help it proceed smoothly.
- Conducts a title search to ensure that the seller is the true owner of the property, and makes sure that the current or proposed occupancy usage conforms to local by-laws.
- Obtains all necessary documentation including: a compliance letter acknowledging that no outstanding liens (legal claims) or work orders are in effect, and a Tax Department release verifying that property taxes are up to date
- Handles the transfer of ownership from seller to buyer and the registration of the mortgage on title
- Ensures arrangements are in place for funds to be available for closing
- Coordinates with lenders the setup of legal documents for any mortgage security
- Ensures that all mortgage terms and conditions are met, and that title is clear in order to make undertakings to the lender(s). (May obtain title insurance on your behalf if there is any issue surrounding title that may cause a claim or work order of some kind in the future.)
- Arranges with you the signing of legal documents and submission of remaining funds not provided by the Mortgage Lender(s)
- Coordinates closing of the purchase transaction with the lawyer(s) for the seller of the property.
In today's mortgage market it pays to shop around because there are many lenders and different financing options available. Save yourself the time and trouble. Sit back and let a Mortgage Advantage - Mortgage Consultant find a lender who will give you the best rate for the best product to suit your financing needs.
When you require financing for the purchase of a property, it is necessary for the lender to be satisfied that the price reflects the property's true market value. An appraiser is an officially accredited valuator who is hired to conduct an inspection of the property for the lender to assess and certify its market value.
If you are buying a resale home, it's always advisable to have it checked by a Home Inspector as a condition of purchase. This individual (not requiring provincial licensing in most cases) will inspect the property for major deficiencies, which may not always be apparent. The results are presented in a written Home Inspection Report.
The Home Inspector:
- Identifies the soundness of the structure and any improvements that have been made.
- Notes any specific deficiencies and their impact on the value of the property.
- Estimates the cost to correct any identified deficiencies.
Should you decide to purchase a newly constructed home from a Builder, then you will probably deal with a builder's representative who arranges the sale of new homes to the buying public.
The builder's representative:
- Provides information to buyers on house models, lots, costs of purchasing, municipal procedures and requirements, New Home Warranty programs, and all other related features of the property.
Note: Although Builder's Representatives are governed by regular consumer law, their duty is to the builder and they are in fact the Seller's Agent.
Purchase Price Checklist
Buying a home costs more than the offer you make. There are numerous other expenses that will add to the amount that you'll need to spend. This purchase price checklist outlines all the costs you can expect. Please note that they can vary by province and are subject to change.
The starting point in your calculation... if you're like most first-time home buyers, you'll need a mortgage for the majority of this!
Property Purchase Tax
A tax payable to the Provincial Government by the purchaser upon the transfer of title from a seller. In B.C. this tax is calculated as: 1% of the first $200,000 and 2% of the balance. As a first time home buyer however, this can be waived if certain conditions are met. Here are a few of the basic conditions:
(a) Purchase price cannot exceed $325,000 if the property is within the boundaries of the Capital Regional District, the Greater Vancouver Regional District, or the Fraser Valley Regional District. If the property is located outside the districts mentioned above, its fair market value cannot exceed $265,000 to be eligible for the full exemption.
(b) Financing must be 70% or greater of the purchase price, with a term of 1 year or greater. If you take a 6 month term, you may pay the tax up front, and then if you lock in to a longer term, you can apply to have the tax refunded back to you.
(c) You must not have previously owned real estate at any time
(d) You must have resided in BC for the period 12 months before the date of purchase, and be a Canadian citizen, or landed immigrant
Fees vary considerably, and including disbursements it can cost you up to $1,500 depending upon whether you are re-mortgaging your existing home or buying a new one. You should ask for a quote for fees & disbursements for conveyance & mortgage.
Registration Fees and other Disbursements
Fees paid to the provincial government for recording a title transfer, mortgage registration or other instrument such as an Assignment or Lien with the local authorities.
CMHC/GE Insurance Premium (can be included in the mortgage)
This premium is calculated according to the following:
(a) for 75.1%-80.0% financing, 1.00% of the mortgage amount
(b) for 80.1%-85.0% financing, 1.75% of the mortgage amount
(c) for 85.1%-90.0% financing, 2.00% of the mortgage amount
(d) for 90.1%-95.0% financing, 3.25% of the mortgage amount
(e) for 100% financing, 3.40% of the mortgage amount
CMHC/GE Application Fee
$165 standard fee to be paid at the lawyer’s.
An appraisal will cost between $200 - $300 depending on the lender.
You may or may not decide to make your purchase subject to an inspection. A qualified home inspector will go through your new home with you for several hours and then afterwards provide a written analysis of the structure of the home. This cost is approximately $375.
Land Survey or Title Insurance
For conventional mortgages, the land survey may or may not be necessary – depending on the mortgage lender. A legal written and/or mapped description of the location and dimensions of your land. The survey should also show the dimensions and placement on the lot of any structure, including additions such as pools, sheds and fences. The cost is approximately $350, or title insurance as an alternative for $200 may suffice. Your realtor may be able to obtain an existing land survey from the vendor(s) to save you money. Title insurance can be purchased by home buyers to protect against potential deficiencies in a number of areas, such as the land survey. Consult your lawyer.
A standard cost of moving. Some local utility companies (hydro, gas, oil) charge a fee on closing to connect new buyers up to their service. More common, however, is an extra charge on the first billing.
Property Tax and Prepaid Utilities Adjustments
Depending on what time of the year your purchase completes, you may have to re-imburse the vendor for any property taxes and/or utilities that they pre-paid past the date of completion.
Interest Adjustments (IA)
If you arrange to make your mortgage payments monthly on the first day of the month, and your transaction closes after the first day of the month, your lender will charge you interest on closing to the next interest date, called the Interest Adjustment Date (IAD), from which your payment cycle will commence. This can be a sizeable amount, but it is the correct interest you should pay. For example, close on June 15th, pay 15 days interest up to July 1st on closing, and start payments on August 1st.
Obtained by your lawyer at the time of sale to confirm that local taxes have been paid up to date. If they are not up to date, the seller is required to pay them from the proceeds of the sale. If there are insufficient proceeds, then you may be legally required to pay the outstanding taxes. If, on the other hand, taxes have been prepaid, you may have to compensate the seller for them.
Financing a Home
After you've made the big decision about the type of home you wish to purchase, the next step is to contact a Mortgage Advantage - Mortgage Consultant to determine how much you can afford to spend and be pre-qualified for in terms of a mortgage. Contact your Mortgage Advantage-Mortgage Consultant at 604-988-5608 or toll free at 1-888-988-5608 today!
Using your RRSP
First Time Home Buyer? Don't forget about the RRSP Home Buyers' Plan.
It can be all or part of your down payment. The rules have changed in recent years, so if you think you know them, double check and click here!
- You cannot have owned your principal residence in the last 5 years, nor have lived in a home owned by your current spouse within the past four years
- Each purchaser may withdraw up to $20,000 from their RRSP
- You must make repayments to your RRSP of at least 1/15th the amount you withdrew over the next 15 years
- If a minimum of 1/15th the borrowed amount is not repaid in a year, that year’s amount will be taken into income and taxed
- The home must be intended to be your principal residence
- The funds must be in your RRSP for at least 90 days prior to withdrawal
Buying With As Little As 5% Down or "0" Down
Don't have the usual 25% down payment?
No worries — This new consumer-oriented program makes the dream of home ownership a reality for more Canadians than ever before!
The 5% downpayment can come from any source, such as borrowed funds or lender incentives, provided the funds are arm’s length to and not tied to the purchase or sale of the property.
Fixed, or capped variable interest loans with a term as little as six months are allowed under this program.
contact us at 604-988-5608 or toll-free at 1-888-988-5608 to speak to your Mortgage Advantage-Mortgage Consultant for more details!