Buying A Home
Whether you're a first-time home buyer or an experienced investor, I'm committed to guiding you through the buying process
There are many important questions to consider when purchasing a home. Unexpected costs, not getting the right type of inspection or preparing an inadequate offer contract, could be all be disastrous. The best advice I can give to anyone looking to buy is to engage the services of a REALTOR early in the process. Don't wait until you find a property that you like. Chances are that someone else will like it too, so you don't want to waste valuable time searching for an agent when you should be writing an offer.
Are You Ready to Buy a Home?
First – do you have the financial resources? You should have at least five percent of the purchase price of the home for the down payment, but ideally even more. Are there other priorities in your life, for example, starting a new business, which requires your savings? If not, buying a home should be on your radar. Second – do you expect to stay in your new home for some time? Moving can be expensive, and you will want to build some equity before having to relocate. Your job and home life should be stable.
Here are some of the costs that may be associated with Buying a Home
Deposit: Depending on your location and the price of a home, you may need to put a deposit on a home as a security measure to ensure you don't lose it to another interested buyer. If you are required to pay a deposit, it will become part of your down payment once you have purchased the home.
Down Payment: In Canada, the minimum amount you need to put down on a home is 5%. While this is realistic for most first-time home buyers, having a down payment of 20% or more will help buyers avoid paying Mortgage Loan Insurance.
Property Transfer Tax: Homebuyers in BC pay a provincial Property Transfer Tax (PTT) when they buy a home. The tax is charged at a rate of 1% on the first $200,000 of the purchase price and 2% on the remainder up to and including $2 million. The PTT is 3% on amounts greater than $2 million. If the property is residential, a further 2% PTT is payable on the portion greater than $3 million. Qualifying first-time homebuyers may be exempt from paying the PTT if the purchase price of their home is priced up to $475,000. There is a proportional exemption for homes priced between $475,000 and $500,000. At $500,000 and above, the rebate is nil.
Qualifying buyers of new homes may be exempt if the purchase price of their home is priced up to $750,000. There is a proportional exemption for homes priced between $750,000 and $800,000. At $800,000 and above, there's no rebate.
Home Inspection: A home inspection is a necessary step in your home buying process and will typically cost an average of $300-$500 depending on the size, age, and condition of the home. This helps ensure there are no unexpected maintenance or home improvement costs upon purchasing the home.
Lawyer/Notary Fees: The fee your lawyer will charge you will vary depending on the person representing you and must be paid upon closing. Ask your real estate agent for advice as they likely have a preferred trusted lawyer they can refer you to.
Property taxes. Depending on the Contract of Purchase and Sale, a property buyer will likely be required to reimburse the seller for any prepaid property taxes. The lender may require the buyer to add property tax installments to monthly mortgage payments.
Utility bills. A buyer is typically required to reimburse the seller for any prepayments for municipal sewer and water fees.
Rent and security deposits. If there is a secondary suite or a laneway home rental and the tenancy continues, the buyer receives the security deposit from the seller with accrued interest because the buyer is responsible for reimbursement when the tenant leaves.
Appraisal Fee: Before your lender approves your mortgage, you may be required to have the property appraised. Sometimes your lender will cover this cost. If not, you're responsible. The fee ranges from $300 to $450 plus GST.
Land survey fees: Lenders may require a survey of the property. The fee ranges but is typically around $500 plus GST.
Property Insurance: While property insurance is likely already something you have factored into your budget, it's essential to do your research and find a reasonable quote that will ensure you are covered should anything unexpected happen.
Mortgage Insurance: Mortgage life insurance is designed to protect the repayment of a mortgage if anything were to happen to you. There is also mortgage loan insurance if your down payment is less than 20% of the total house cost. Premiums for this type of insurance range from 0.5% to 3% and increase if you are self-employed.
Title Insurance: Title insurance is a one-time fee that protects from losses related to the property's title or ownership. Learn more about what it is in this blog post.
Property Taxes: The cost for property taxes is expressed as a dollar rate for every $1,000 estimated to be the market value of your property.
Maintenance and Energy Costs: Potentially your most considerable ongoing homeowner expense, these costs include lawn care/ yard work, professional services, additions/upgrades and the cost of keeping the house running year-round. You can use our monthly home budget planner to help map out all of these costs.
Locks: New owners should always have door locks rekeyed. Costs depend on whether the locks are standard or electronic.
Strata maintenance fees: Typically paid on the first day of each month.
Moving Expenses: It's easy to forget about the small things when moving, but it's important to remember they can add up quickly! Consider the cost for internet, cable, electricity, and other utility installations and don't forget about movers, a moving truck and feeding your friends who are helping out!