Dedicated to Finding Your Unique Property
"My philosophy is simple: help buyers every step of the way, from first phone call through move in."
Next Step? Contact me at 604.764.1496 or email me at info@chrissavage.ca
"There's nothing quite like owning your own home - getting to know your neighbours, decorating your home and creating a place that you can call your own.Gathering relevant information is your first step to home ownership. How much can you afford? What's a comfortable mortgage payment for you? And what kind of home are you looking for? You'll find all the information you need here"
How Much Can I Really Afford?
Buying a house really comes down to 2 key commitments:
- 1. The amount you can afford as a down payment
- 2. The mortgage payments you can happily carry while still enjoying life
There's a general rule of thumb for calculating how much of your household income should go to household expenses, as well as mortgage payments. Normally, household expenses should not exceed 32% of your gross income (i.e. your total household income prior to any tax or other deductions).
How Much Downpayment? Do I Need?
While it is achievable to buy a home with as little as 5% down, the amount of your down payment will decide whether you'll have a conventional mortgage or an insured, high-ratio mortgage.
What's the difference?
- Conventional mortgage: means your downpayment is at least 20% of the purchase price.
- High-ratio mortgage: means your downpayment is less than 20% of the purchase price.
High ratio mortgages must be insured by a third party such as the Canada Mortgage and Housing Corporation (CMHC)
The insurance premium:
- Can vary with the amount you are boring and how much of a downpayment you are putting down. (typically the premium is up to 2.75% of your total mortgage amount)
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This can also financed and included in your mortgage and paid for over the time of your mortgage contract.
Will I need to pay any additional costs?
While your downpayment and mortgage will cover the purchase price of your home, it's prudent to consider the other expenses involved in buying a home.
You'll pay some costs at the beginning of the home-buying process and others, known as closing costs or disbursements, when your home purchase is finalized.
Hidden costs that could add up when you buy your first home
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Appraisal fee |
$150-$200 |
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Home inspection fees (may not apply if it's a new home) |
$300 |
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Property survey |
$750-$1000 |
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Land transfer tax (PTT) 1% on the first $200,000 and 2% on the balance. (BC) exemptions may apply see link. http://www.sbr.gov.bc.ca/individuals/property_taxes/Property_Transfer_Tax/ptt.ht |
$2000+ |
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Legal fees |
$1300-$2500 |
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GST (sometimes included in sale price) |
5% (GST) |
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Title Insurasnce |
$250 |
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Intrest adjustments |
$100-$1,000 |
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Prepaid property tax and utility adjustments |
$400-500 |
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Home insurance |
$450/year |
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Mortgage life insurance |
variable |
Don't forget to think about general expenses such as moving, upgrades, and home decorating costs as well.
Understanding Mortgages
Closed
This type of mortgage must typically stay unchanged for whatever term you agree to. Prepayment costs will apply if you payout, renegotiate, or refinance before the end of term.
How it benefits you:
Provides lower rates than open or convertible mortgages. Allows you to make an annual prepayment of up to 10-15% of your original mortgage amount.
Open
This kind of mortgage may be repaid, in part or in full, at any time during the term without any prepayment costs.
How it benefits you:
Provides flexibility until you are ready to lock into a closed term.
Allows you to pay off any or the entire mortgage without prepayment costs
Convertible
This is a mortgage which offers the identical security as a closed mortgage, but which can be converted to a longer, closed mortgage at any time without prepayment costs. Typically associated with fixed rate mortgages.
How it benefits you:
Provides security and flexibility allowing you to convert into a longer closed term mortgage without prepayment costs, if you think rates will rise. Allows you to make an annual prepayment of up to 10% of your original mortgage amount.
Fixed
An interest rate that does not change during the entire mortgage term.
How it benefits you:
You can take advantage of the same interest rate for the full term with a regular payment that stays the same. You will have the security of knowing exactly how much your payments are and how much of your mortgage will be paid off at the end of your term.
Variable
An interest rate that will vary with the prevailing market prime rate during the mortgage term.
How it benefits you:
In the past, variable rates have been lower than fixed rates and could save you more money.If rates go down, a larger portion of your payment goes towards principal, helping you pay off your mortgage faster. Your regular payment stays the same even if rates change.
Get a Pre-Approved Mortgage
Before you fall in love with a home, you'll want to know that your financing has already been arranged. Get a Pre-Approved Mortgage and shop for your first house with confidence. Many banks will guarantee you a rate for 90 days
When you have mortgage financing arrangements in place indicates to prospective vendors that you are a serious buyer. It gives you the security of negotiating a house price that falls comfortably within your budget.
What Should I Look for in a Home?
Some people spend more time picking out shoes than picking a home. Take the time necessary to think through what's important to you now and in the future.
Important questions to ask yourself:
Is this home the right size? Are there enough bedrooms and bathrooms?
- Is the yard big enough? Does it have a finished basement?
- Is it in your general price range?
- What is the condition of the home? How old is the furnace and wiring? Take a look at the roof and the foundation.
- Take a look at the neighbourhood. What's the condition of other homes in the area? Does the community appeal to you?
- Is there good access to public transit and major roads? Are there good public facilities like schools, hospitals, shopping and recreation facilities in the area?
- Is this an older, more established neighbourhood or a new development?
- How do the municipal taxes compare to those in other areas? Are there any development plans that will affect the neighbourhood?
- Are there any zoning bylaws that might affect you - such as your ability to have a home office in your house?
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Does the property have the potential to increase in value?
Making the Offer
Alas, the perfect home. Now it's time to make an offer. Now this is where my expertise can help you navigate this critical juncture.
Formerly accepted, an Offer to Purchase is a legally binding agreement between you and the vendor. Beside your mortgage agreement, this is one of the most important documents you'll sign. This is where I can advise you on the very best way to proceed.
Checklist: What to include in your offer
- Your proposed purchase price.
- A list of items in the house (called chattels) to be included in the purchase price. For example, appliances, window coverings, and certain furniture items might be negotiated into the purchase price.
- Amount of your deposit. Since the vendor will hold your deposit until the purchase closes, you will want to be paid interest on that money.
- Financial details. For example, how the balance of the purchase price will be paid.
- Closing date. This is the date you will take possession of the house (usually 30 or 60 days from the date of the agreement).
- Time period for which the offer is valid.
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Conditions of the offer. You might want to make your offer conditional on arranging for financing, a building inspection, or the results of a survey. Make sure the offer can be cancelled if any of your conditions are not met and always put a time limit on the conditions. Keep in mind that a firm offer - one with no conditions - is usually more attractive to the vendor. But remember that you need to feel comfortable with the offer yourself.
Your offer is accepted!
Finalizing Your Purchase
Now that your offer has been accepted, you need now to remove the conditions of your offer. Financing, insurance, home inspection, etc. Book the home inspection as quick as possible, giving time for unforeseen things that may be uncovered during the inspection process. This will give you extra time to go back to your realtor and address these with vendor. Remember to be flexible here; you don't what to undue an otherwise perfect decision for relatively minor deficiencies. Make sure the inspection service is properly licensed.
Contact your lender and finalize your mortgage agreement. The lender will give you a list of documents to prepare for the meeting, employment T4's list of assets and liabilities, copy of the purchase contract, etc. Remember again, this can always take longer than anticipated, regardless of being pre approved or not. Act quickly you will be happy you did.
Top 19 Grants & Rebates for Property Buyers
1. Home Buyers Plan
Qualifying home buyers can withdraw up to $25,000 (couples can withdraw up to $50,000) from their RRSPs for a down payment. Homebuyers who have repaid their RRSP may be eligible to use the program a second time. (Go to http://www.cra-arc.gc.ca "Home Buyers' Plan" in the search box or, phone 1.800.959.8287.) enter
2. GST Rebate on New Homes
New home buyers can apply for a rebate of the federal portion of the HST (the 5% GST) if the purchase price is less than $350,000. The rebate is up to 36% of the GST to a maximum rebate of $6,300. There is a proportional GST rebate for new homes costing between $350,000 and $450,000. (Go to http://www.cra-arc.gc.ca enter "RC4028" in the search box or, call 1.800.959.8287.)
3. BC New Housing Rebate (HST)
Buyers of new or substantially renovated homes priced up to $525,000 are eligible for a rebate of 71.43% of the provincial portion (7% of the 12% HST) paid to a maximum rebate of $26,250. Homes priced at $525,000+ are eligible for a flat rebate of $26,250. (Go to http://hst.blog.gov.bc.ca/faqs/new-housing-rebate or, call 1.800.959.8287)
4. BC New Rental Housing Rebate (HST)
Landlords buying new or substantially renovated homes are eligible for a rebate of 71.43% of the provincial portion of the HST, up to $26,250 per unit. (Go to http://hst.blog.gov.bc.ca/faqs/new-housing-rebate or, call 1.800. 959.8287.)
5. Property Transfer Tax (PTT) (HBTC)
Qualifying first-time buyers may be exempt from paying the PIT of 1 % on the first $200/000 and 2% on the remainder of the purchase price of a home priced up to $425,000. There is a proportional exemption for homes priced up to $450,000. (Go to http://www.sbr.gov.bc.ca/individuals/Property_Taxes/property_taxes.htm call 250.387.0604.)
6. First-time Home Buyers Tax Credit (HBTC)
This is a non-refundable income tax credit for qualifying buyers of detached, attached, apartment condominiums, mobile homes or shares in a cooperative housing corporation. It's calculated by multiplying the lowest personal income tax rate for the year (15% in 2009) by $5,000. For 2009, the maximum credit was $750. (Go to http://www.cra-arc.gc.ca/hbtc/ or, call 1.800.959.8281.)
7. BC Home Owner Grant
For 2010, the basic grant is reduced by $5 for each $1,000 of value over $1,050,000, and eliminated on homes assessed at $1,164,000+. An additional grant reduces property tax by a further $275 for a total of $845 for seniors, veterans and the disabled. This is reduced by $5 for each $1,000 of assessed value over $1,050,000 and eliminated on homes assessed at $1,219,000+. (Go to http://www.sbr.gov.bc.ca/individuals/Property_Taxes/Home_Owner_Grant/hog.htm or your municipal tax office.)
8. BC Property Tax Deferment Program
Property Tax Deferment program for seniors home owners aged 55+ may be eligible to defer property taxes.
Financial Hardship Property Tax Deferment Program. Qualifying low income home owners may be eligible to defer property taxes.
Property Tax Deferment program Families with Children Qualifying low income home owners who financially support children under age 18 may be eligible to defer property taxes. (Go to http://www.fin.gov.bc.ca/rev.htm "Property tax deferment" In the search box or, call your municipal tax office.) enter
9. Canada Mortgage and Housing (CMHC) Residential Rehabilitation Assistance Program (RRAP) Grants
This federal program provides financial aid to qualifying low Income homeowners to repair substandard housing. Eligible repairs include heating, structural, electrical, plumbing and fire safety. Grants are available for seniors, persons with disabilities, owners of rental properties and for the creation of secondary and garden suites. (Go to http://www.cmhc-schl.gc.ca/en/co/prfinas/prfinas_001.cfm, or, call 1.800.668.2642 or 604.873.7408.)
10. CMHC Mortgage Loan Insurance Premium Refund
Provides homebuyers with CMHC mortgage insurance, a 10% premium refund and possible extended amortization without surcharge when buyers purchase an energy efficient home or make energy savings renovations. (Go to http://www.cmhc.ca/en/co/moloin/moloin_OOS.cfm#reno or, call 604.731.5733.)
11. LiveSmart BC; Efficiency Incentive Program
Homeowners improving the energy efficiency of their homes who hire a certified energy advisor may qualify for cash incentives through this provincial program provided in partnership with Terasen Gas, BC Hydro, and FortisBC.(Go to http://www.livesmartbc.ca/homes/h_rebates.html or, call 1.866.430.8765.)
12. BC Residential Energy Credit
Homeowners and residential landlords buying heating fuel receive a BC government point-of-sale rebate on utility bills equal to the provincial component of the HST. (Go to http://hst.blog.gov.bc.ca/faqs/energy-credit or, call 604.660.4524.)
13. BC Hydro Appliance Rebate
Mail-in rebates of $25-$50 for purchasers of ENERGY STAR'M clothes washers, refrigerators, dishwashers, or freezers between June 1, 2010 and March 31, 2011, or when funding is exhausted. (Go to www.bchydro.com/rebates_savings/appliance_rebates.html or. call 1.800.224.9376.)
14. BC Hydro Fridge But-Back Program (different from Appliance rebate)
This ongoing program rebates BC Hydro customers $30 to turn in spare fridges measuring 10-24 cubic feet in working condition. (Go to www.bchydro.com/rebates_savings/fridge_buy_back.html or call 604.881.4357.)
15. BC Hydro Mail-in Rebates/Savings Coupons
BC Hydro offers rebates including 10% off an ENERGY STAR™ cordless phone; 50% off an E2TM dual-flush toilet; $15 off clothes drying rack; and 50% off Earth Massage showerheads. Check for deadlines. (Go to www.bchydro.com/rebates_savings/coupons.html or. call 1.800.224.9376.)
16. Terasen Gas Rebate Program
Rebates for homeowners include a $25 gift cards for furnace servicing; $50 rebates for upgrading a water heater; $150 rebate on an EnerCholce fireplace; $1,000 rebate for switching to natural gas and installing an ENERGY STAR heating system. (Go to www.terasengas.com/homes/offers/lowermainlandsquamish.html or. call 1.888.224.2710.)
17. SolarBC Incentives
Contractors will provide homeowners buying a solar hot water system with a $2,000 discount at the point of sale until December 31, 2010. (Go to www.solarbc.ca/learn/incentives-costs or, call 1.866.650.6527.)
18. RBC Energy Saver Mortgage
Homeowners who have a home energy efficient audit within 90 days of receiving an RBC Energy Saver™ Mortgage may qualify for a $300 rebate credited to their RBC account. (Go to www.rbcroyalbank.com/products/mortgages/energy-saver-mortgage.html or. call 1.800.769.2511.)
19. Vancity Green Building Grant
In partnership with the Real Estate Foundation of BC, Vancity grants up to $50,000 each to qualifying charities, notprofit organizations and co-operatives for building renovations/retrofits, regulatory changes to advance green building development, and education to increase the use of green building strategies. (Go to www.vancity.com/mycommunity/notforprofit/ grants/ actingonclimatechange/ greenbuildinggrant or, call 1.800.224.9376.)
Let Revenue Canada finance your move! |
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THIS IS TO BE USED AS A GUIDE ONLY. READERS SHOULD CONSULT A PROFESSIONAL ADVISOR BEFORE ACTING ON THE ABOVE
