The following are just a few of the questions you're bound to have at the beginning of your exciting journey to buying your first or your fifth home!
Simon Myara can provide the answers to your questions and walk you through the entire process, from viewing potential homes to making an offer to setting up mortgage financing.
Although buying your first home can seem overwhelming, Simon will be able to help you every step of the way. He can make buying a home simple and straightforward, free of confusion and doubt, allowing you to enjoy your home, worry-free.
How do we start looking for a home?What does it mean to be a First Time Buyer?
- There are special benefits to being a First Time Home Buyer. Your minimum down payment on your home can be 5%. If you are not a First Time Buyer, your minimum down payment must be 10%.
- Canada Mortgage and Housing Commission’s definition of a First Time Home Buyer is:
Anyone who has not owned a home as their principle residence either jointly of separately, in the past FIVE years. Where there is more than one buyer, only one person has to be a first time home buyer.
You may still be eligible with the following exceptions:
- A marital (or common law) break-up
- A change in geographical location for employment purposes, voluntary or involuntary
- A loss of equity has resulted from a previous sale
- Other hardship applications - case by case
This Plan is available for First Time Buyers.
- Maximum $20,000 tax free withdrawal for each participant from his/her own RRSP.
- Must be a first time buyer - not owned a home that has been used as a principle residence within the last five years.
- Must intend to occupy home as a principal residence within one year.
- Minimum repayment schedule is 15 equal annual installments. This schedule can be accelerated.
- The funds to be withdrawn must have been invested into the RRSP for a minimum of 90 days prior to withdrawal.
Before you start your hunt for a new home you need to know how much you can borrow. Simon Myara can gladly supply you with a list of mortgage brokers. Your own financial institution is able to assist you as well.
If your mortgage is for $100,000 at 7.5% for a 5-year term, 25-year amortization period, then your monthly payments will be $735.00. Don’t forget you’ll still have to pay property taxes, utilities and monthly maintenance fees if applicable.
In order to qualify for the sample mortgage above you will need to earn around $2,300.00 a month. This is gross earnings - before any deductions. Most banks and lending institutions take 30% to 33% of a purchaser’s income for qualifying.
If you have a down payment of 25% or more, you may qualify for a conventional mortgage loan, which does not require mortgage loan insurance.
A minimum down payment of 10% is required for a high-ratio mortgage. These types of mortgage loans - for any amount in excess of 75% of the selling price of the home - are required by law to be insured. Qualified first-time homebuyers may be able to put as little as 5% down,
(please see the section on First Time Home Buyers).
An excellent way to help you raise a larger down payment is through the HomeBuyers Plan for First Time Home Buyers. This federal government plan lets you withdraw up to $20,000 from your RRSP, without being taxed, if you purchase your first home.
There are several costs to consider. Some of the expenses related to buying a home are one-time costs, while others are continuing costs.
Your largest cost at the beginning is your down payment. As a first time buyer, this would likely represent 5 - 10% of the purchase price.
However, you should be prepared to pay for additional costs, such as:
- Legal Fees & Disbursements
- GST and PST (if applicable)
- Property or Land Transfer Tax
- Adjustments (reimbursed to the vendor)
- Property Taxes
- Utility Payments
- Strata or Condominium Fees
- Estoppel certificate fee
- Survey Fee
- Home Inspection Fee
- Water quality and quantity certificate
- Appraisal Fee
- Mortgage broker's fee (if applicable)
- Mortgage Loan Insurance Premium (if only 5% down)
- Mortgage Loan Insurance Application Fee (if only 5% down)
- Moving Expenses
- Renovations and repairs
- Furniture, paint, carpeting, window coverings, etc.
- Service and Utility Hook-up Fees
- Property/Condominium Insurance
- Mortgage Application Fee
- Deed and/or Mortgage Registration Fee
Additionally, once you have purchased your home, you will incur regular expenses on a monthly, quarterly or yearly basis. Some of these costs include:
- Mortgage Payment
- Water and/or Sewer Payments
- Electricity and Gas Services
- Cable and Telephone Services
- Property Taxes
- Strata or Condo Fees
- Repair/maintenance Expenses
- Homeowner's Insurance
Recent sales of Similar Properties:
The best indications of market value come from recent sales of properties that compare in terms of location, lot size, age, and condition of home. Recent sales indicate what people have been prepared to pay for similar properties in a given market.
Property Currently Listed on the Market:
To determine the value of your property it is important to know your what else in on the market. Your realtor is aware of properties similar to your home in age, property size, style, condition and location. Length of time on the market and price reductions are also indicators of the property’s perceived market value.
The following is an excerpt from the Canada Mortgage and Housing Corporation website under the topic of "Mortgage Loan Insurance":
Get into your home sooner. Mortgage Loan Insurance helps you do it. Put as little as 5% down.
When you need a mortgage loan that is more than 75% of the purchase price of your home, mortgage loan insurance is required. It protects the lender and, by law, most Canadian lending institutions require it.
Having mortgage loan insurance means that if you, the borrower; default on your mortgage, the lender is paid back by the insurer - CMHC or a private company1. With the risk of losing their money removed, lenders have the confidence to make mortgage loans of up to 95% of the purchase price of the home (subject to price ceilings).
That means your down payment can be as little as 5% of the house price. With mortgage loan insurance, many Canadians who might be unable to obtain a 25% down payment can still buy a home.
There are two components: an application fee and an insurance premium. The application fee typically ranges from $75.00 to $235.00 and mortgage loan insurance premiums range from 0.5%-3.75% of the amount of your loan (additional charges may apply), depending on the size of the loan and the value of your home.
The premium can be added to your mortgage loan and paid off as part of your regular mortgage payments, or paid off in a lump sum at the time of purchase to save interest charges on the premium itself.
See your lender, who can obtain mortgage loan insurance from CMHC or private insurer.
CMHC will insure mortgages of up to 95% of the home's purchase price or the market value of the property, whichever is less. (Restrictions may apply. Contact your local lender.)
Both new and resale homes are eligible. Here are some of the criteria that must be met:
The home must be in Canada and must be your principal residence. Housing payments, including principal, interest, property taxes, heating (P.I.T.H.), the annual site lease in the case of leasehold tenure and 50% of applicable condominium fees, can't be more than 32% of your gross household income (GDS ratio).
Your total debt load can't be more than 40% of your gross household income (TDS ratio). Other criteria apply and are subject to change. For details, please contact CMHC or your local lender.
Right now, 3 million Canadians own homes with insured mortgages.
Ruth and Sidney lived in a rented Revelstoke home for seven years. When the landlord decided to sell the home, he offered the couple the first opportunity to buy it. While his price was fair, Ruth and Sidney didn't have a 25% down payment saved, so they couldn't qualify for a conventional mortgage.
While looking for other options, they found they could be eligible for mortgage loan insurance that would allow them to buy with as little as 5% down.
* It should be noted that the protection provided to the lender by the insurer does not relieve the borrower(s) of the obligations under his/her mortgage contract.
- Mortgage term of at least one year.
- Mortgage financing must be 70% or greater of the Purchase Price. (Mortgage financing cannot be from family members).
- Maximum principle repaid during the first year, $11,000 for Greater Vancouver and the central Fraser Valley.
- Purchasers must be Canadian Citizens, and have resided in BC for 12 months.
- Maximum Purchase Price is $275,000 for Greater Vancouver and Fraser Valley.
- Property must be Owner Occupied (no rentals or investment properties).
Purchaser’s must begin occupancy with 1 year, and reside there for 1 year.
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Simon Myara Personal Real Estate Corporation
Sutton Group - West Coast Realty - Suite #301 1508 West Broadway
Vancouver BC, V6J 5K9 - Tel: 604.714.1700 Fax: 604.738.1888