So you're ready to embark on the biggest shopping spree of your life. First of all congratulations for making such a wise decision and investing in one the greatest and safest assets you can acquire according to some of the most influential and affluent notables in the world.
There are a few perks to being a first time buyer depending on the price range you are buying in along with other criteria which I will outline below:
There are a few perks to being a first time buyer depending on the price range you are buying in along with other criteria which I will outline below:
If you are a permanent resident of BC and have been so for the past year, and if you have NEVER owned a home before anywhere in world (as far as I know there is no time limit where you can reset to a first time buyer), and if you are planning to make the home you are purchasing your principal residence for at least ONE YEAR then you will be exempt from the Property Transfer Tax.
Property Transfer Tax is paid to the Government when you gain an interest or purchase a property in BC.
This tax is calculated as follows:
1% on the first $200,000
2% on the balance up to $2 MIL
3% on the balance over $2 MIL
You can visit the Government website for an in depth overview of the different scenarios that may apply.
Next up... downpayment.
I still to this day get asked about the 5% down. This used to be reserved for first time homebuyers, but now it actually applies to anyone on a property valued up to $500,000.
Your downpayment amount is still subject to your lender's approval so if you have poor credit, or are self employed you may require more money down. The rules for the downpayment are as follows:
5% down up to $500,000
10% down for the portion of the purchase up to $999,999
20% on $1 MIL or more
On top of your downpayment you will also need to prepare for closing costs, which roughly amounts to 3% of your purchase price. These can be for things like appraisal costs, lawyer or notary fees to register the mortgage on the property and transfer the title to your name and a home inspection. Normally your lender will want to see this money in your account for a period of time to ensure you are able to cover these costs.
Deposit.
When you write an offer a deposit is given as a show of good faith and it's held as a stakeholder to the transaction. Rule of thumb is the deposit amount should be about 5% of the purchase price. This is not over and above money that you need to find, it's simply a portion of your downpayment that is held in trust and then applied to the purchase price at the time of title transfer. Your lawyer/notary will manage this.
The single most important step to take before you even start looking at homes is to get yourself pre-qualified with a mortgage broker. I cannot emphasize this enough! With the current market conditions we are experiencing it is so important to be prepared, strategic and have all hands on deck. By having a team of professionals in place (Mortgage Broker, Realtor, Inspector and Lawyer or Notary) you are setting yourself up for success.
If you are considering buying a home connect with me here and I will be happy to have a more in depth conversation with you to offer you guidance and education so that you feel empowered to take the next steps toward securing your next home.
