If just the thought alone about buying your first home may seem intimidating or daunting, you’re not alone. Each year, millions of Canadians enter the housing market by buying their first house or condominium. Most buyers turn to their family members first for advice on where to start, some start with their bank and others with their realtor. Whichever way you start the home buying process, here are some tips to help you with your journey towards owning your first home:
1. Budget
You will need to budget for your down payment, most lenders today require a minimum of 5% of the purchase price for down payment plus an additional 1.5% of the purchase price to cover closing costs, no matter the purchase price. The down payment can come from various sources including from savings, an RRSP, a gift from a family member or even borrowed from a line of credit. Once you have established your down payment and closing costs, the next step would be to determine how much you will be able to qualify for if you need financing to purchase your first home.
2. Purchase Price
To find out how much of a mortgage you will qualify for, contact your Mortgage Broker. Your Mortgage Broker will calculate your Debt Servicing Ratios based on your income, down payment and current liabilities along with approximate expenses with the property you plan to purchase ie. Strata Fees, Property Taxes, Heat etc. Once you get pre-approved, you can start shopping!
3. Realtor
Now that you have the financing and down payment ready, contact your local Realtor or “Buyer Agent” to help you purchase your new home. Most Buyer Agents, work for the buyer and do not charge fees to the buyer therefore, they’re services are FREE to the average buyer. Once you have set your mind on a specific neighborhood or area, contact your local Realtor to help you find that dream home.
4. Inspection
Once your offer to purchase the home has been accepted by the buyer, it may be a good idea to get the property inspected by a professional. The Home Inspector will do an in depth inspection of the property from floor to ceiling, roof to foundation and provide you a detailed report with their findings. We highly recommend it..
5. Lawyer/Notary Public
Before the completion date of your purchase, you will need to hire a Lawyer or Notary Public to assist with registering you as the new owner of the property and discharging the existing owner. The lawyer will also handle the conveyancing, registration of the mortgage and help you with any legal questions or concerns with your real estate purchase.
6. Perks
As a First Time Buyer in BC, there are a few perks! First, you are able to withdraw up to $25,000 from your RRSP account without any tax implications. You will have a grace period of 1 year then will have to re-contribute a minimum of 1/15th of the RRSP back for the next 15 years. Another benefit of being a First Time Home Buyer in BC is that you will be fully exempt from the Property Purchase Transfer Tax up to a maximum purchase price of $475,000. The Property Purchase Transfer Tax is calculated at 1% of the first $200K and 2% of the remainder of the purchase price. A property purchased at $475,000 will have a Property Purchase Transfer Tax amount of $7,500. That’s a huge savings!
For more information on how to purchase your first home, please contact us!
We’re here to help!
