Looking for a Home
The client’s (Buyer’s) real estate agent who has access to all listed homes will help you to find your favourite home. He/she would negotiate the price with seller’s real estate agent to agree on the price of the home. Once the offer is mutually agreed a “Contract of Purchase and Sale” is prepared which is called the accepted offer.

This contract has the price, deposit amount; in addition subject removal date, which is usually one week after the date of the contract. This date is important as the buyer has time to remove all conditions such as financing and inspection or review strata notes (where strata apply). The other important date is completion (closing) date which is the date money is advance by the bank and the buyer signs documents in the lawyer office. Possession date, which is the date the buyer takes the possession of the home. The contract also includes all details related to the home and what it includes such as fixtures and appliances.The buyer’s agent gets his/her fees as commission from the seller so there is no cost for the buyer.

To purchase a resale home there is no HST but if you purchase a new home/pre-construction there will be 12% (5% GST and 7% PST) added to your purchase price. Buyers of new homes will be eligible for a rebate of 71.43% of the provincial portion (7% of the HST’s 12%) of the HST paid on the new home up to a maximum rebate of $26,250. Homes prices at more than $525,000 will be eligible for a flat rebate of $26,250.

Financing
A mortgage broker can find you the best product and rate and terms of a mortgage from one of the major banks or a lender. He/she will choose the best bank with the best interest rate and term that you can be fit into. The services of a mortgage broker are free and he/she gets paid from the lender. One of the advantages of working with a mortgage broker is your credit is checked only once and can be presented to many banks. Your mortgage broker can help you in qualifying you for a mortgage which is usually called pre-approval. This way you know your affordability which makes you and your real estate agent comfortable in showing the homes at a range of affordable price for you. In order to get the mortgage approval/pre-approval you need to fill up a mortgage application. There are 3 essentials you need to get qualified for a mortgage: Income, down Payment and Credit. Based on the program used there are some exceptions. For example the new immigrants to Canada may have limited or no credit or the source of income could be from overseas. Once your offer is accepted your real estate agent can give the offer of contract of purchase and sales to the mortgage broker. The mortgage broker needs to provide you with a bank approval which is called Mortgage Commitment before your subject removal date, so then you can remove your financing subject.

There is a minimum of down payment required to purchase a home. Generally if you put 20% down payment the mortgage is called Conventional. However if you put less than 20% down payment your mortgage it is called Insured or high ratio. The minimum down payment for insured mortgage is 5% for Employees and 10% for Self Employed. The insurance companies are one of the three (CMHC, Genworth and Canada Guaranty). The insurance premium is added only once to your mortgage. The amount is a percentage of your mortgage amount and depends on how much down payment you put in. Is it portable and transferrable to your new mortgage/home. One of the good sources of down payment for First Time Home Buyers is RRSP. You can withdraw the RRSP without paying the tax. The eligible amount is 25K for each person and $50K for a couple. You need to collect the RRSP and let it get matured at least for 3 months prior to withdraw. The repayment is within 15 years to RRSP.

As an advice if you have not purchase (finance or lease) your car yet, you better off doing it after your home purchase. Any debt such as car loan, student loan and so on decreases your power in getting a bigger morgage.
Appraisal

Once you need to get a mortgage, the bank needs to evaluate the value of the property you are purchasing. This job is done by qualified appraisers. Usually every bank has a list of approved appraiser. Your mortgage broker orders the appraisal after the bank approval is received. The appraiser provides a report to the bank and your mortgage broker which includes the estimated price of the property. The criteria are usually comparison of the sold homes in the recent months. Usually the fees are paid by the buyer. The fees are in the range of $250-$350 depending on the property. In case your mortgage is insured the appraisal process is done by the insurer with a different method at no cost to you.

Inspection
After you have put your offer and it is accepted usually there is a condition of Inspection in your contract of purchase and sale. This is your responsibility and to your benefit to order the Inspection. There are qualified Inspectors that usually your real estate agent can recommend. You are responsible for the cost and average cost is $400.

Mortgage Insurance
Once you have a loan or debt banks need you to have Insurance. This insurance is usually life and disability insurance. The bank may offer you the mortgage/life insurance for the amount of your mortgage. You are also allowed to get life/disability insurance from an Insurance Broker/Agent. The fees are in the format of monthly premium paid in addition to your mortgage payment.

Closing/Completion
Your Lawyer/Notary Public is who receives the funds and manages it and in addition registers the home in your name. There are some costs involved in the purchase which is called the Closing Costs. These costs are not added to your mortgage and is payable at the lawyers in addition to your down payment.The major one is The Property Transfer Tax. It is calculated as 2% of Purchase Price minus $2000. For example for a $500,000 property becomes $8,000 (2% x $500,000 – $2,000). You are exempt of you this tax if you are first time home buyer and lived in BC for the last 12 months or who has filed two income tax returns as a BC within the last six years. The tax exemption is full if your purchase price is below $425K and you get partial exemption if it is between $425 and $450K.The other cost is Site Survey which the average cost is $1000 (the house may have the site survey already) or Title Insurance which the average cost is $250. Nowadays most banks require Title Insurance which can be used instead of site survey. It will insure the bank and also you can request the buyer’s protection as well. Basically it insures you against any fraud in title.The legal fee is the solicitor’s (Lawyer/Notary Public) fee. The average total cost is usually around $850 for the notary and $1000 for the lawyer. If you are eligible for any GST/HST rebate your lawyer can help you with the forms to fill in to be submitted to Revenue Canada for the refunds.

After The Purchase
The possession date is the date you receive the keys for your new home. You need to manage moving and also in case you purchase a condo you need to manage and book the elevator with the manager of the building.Other considerations are to manage hydro set up and phone/internet/TV Cable connections for your new place. Do not forget to change all your mailing address with all your banks, credit card companies, health care providers, driver’s license, all insurance companies including motor vehicle and Revenue Canada effecting on your possession date ahead of time. In case you are late you can ask the Canada Post to redirect your mails for a cost until your changes are done. However their service is not a guaranteed one. You need to set up with the strata management company for a pre-authorized payments of the monthly Strata Fee Payments. It can vary between $200-$300 range in most cases.You have to pay the Annual Property Tax to the municipality. In some cities it is billed once a year in July and in some other cities like Vancouver twice a year. You may be eligible for the grants. The most common one is Basic Grant which is $570 discount on your Annual Property Tax. In order to apply for the grant you need to fill up the statement or apply on line once you receive the statement. Usually the banks like to pay the property tax to the municipality on your behalf. So they collect 1/12 of your Annual Property Tax per month in addition to your mortgage.If you are in a strata property, you need to read Strata Minutes which often release by the Strata Counsel. In addition participate in strata meetings and also AGM (Annual Grand Meeting).

Monthly Cost:
1. Mortgage Payment
2. Strata fee
3. Property tax (1/12 annual property tax)

When purchasing your home remember to Budget! Budget! Budget!

For any questions please do not hesitate to contact me.