Property Virgins

Are You a Property Virgin?

Are you among the thousands of people who pay rent each month, knowing full well that you will never see that money again? For many, this need not be the case. Instead, why not take that money and build it into an investment that can last a lifetime? As a buyer you don’t pay the real estate commission, the Seller does, so working with a Buyer’s Agent is free to you! Team Clarke has 2 full time Buyer’s Agents, Brooke Clarke & Adriano Cusano, that are dedicated to finding buyers the home they are looking for. As a first time home buyer, our agents can be a source of information for you and will guide you through the home buying process, step by step. For more information on our Buyer’s Agents click here or call Team Clarke today to speak to a Realtor, 604-220-2020.

What kind of home do you need and want? Buying a home is a balance of many requirements such as family size, location, income and lifestyle. REALTORS® are excellent sources of advice and help in these matters. Not only do they have the experience and knowledge to make sure the choice you make will be the right one, but with access to the Multiple Listing Service® (MLS®), they can seek out suitable properties for you and provide you with a customized list of homes that meet your needs, wants and budget. Ask yourself exactly what you need in a home. How many bedrooms? How close to schools or shopping centres? Do you plan to have children? Do you need a garage or a finished basement? Next decide on a preferred location. While the North Shore is a sought after location, some areas within North and West Vancouver are more popular, and thus more expensive, than others.

What are you looking for in your home’s location – is it close proximity to transportation, amenities or recreation; top schools; quiet neighbourhood or something more urban; waterfront or view? For more information on North Vancouver’s neighbourhoods click here. Land on the Vancouver’s North Shore is at a premium as we are bordered by the mountains on one side and the ocean on the other. In order to construct new homes, in most cases, people and builders must tear down older homes. Historically, single family detached home ownership has performed the best as an investment in North and West Vancouver. However, Vancouver is one of the most expensive places to live (and consistently voted the BEST place to live!), making the dream of a house with a picket fence out of the reach of many. Townhomes and condos are ideal for particular lifestyles or budgets. Townhome or condo living offers convenience and often means sharing common areas such as parking, hallways and landscaping. For more information on strata ownership click here.

What can you afford? Once you have determined what it is you want and need, you’ll have to find out what you can afford. A REALTOR® or your financial institution can help you determine the amount of the mortgage you can carry by calculating your debt-service ratio. The rule of thumb is that the sum of all your current loan payments (car, personal, credit card, etc.) plus your mortgage should not exceed 40 per cent of your gross income. In addition, mortgage payments and property taxes should not be more than 30 per cent of gross income. Recently, Vancouver displaced Sydney as second most-expensive housing market after Hong Kong. For many, home ownership in Vancouver means a much higher portion of your gross income being allocated to your mortgage. In 2011, The Globe and Mail wrote that “Housing costs for the average two-storey home in Vancouver today eat up the equivalent of 80 per cent of a typical family’s annual pretax income, according to new research, putting ownership out of reach for most.”

How do buyers afford these prices? There are several different ways of becoming home owners in Vancouver. Many buyers start with a condo and take gradual steps buying and selling more expensive homes that have appreciated in value while they have owned them. Others take advantage of having tax free gains over time on their primary residence, or putting some “sweat equity” into an older home and selling it once renovated can have a substantial profit. Many buyers are able to get approved to buy a house with the contingency that they must have a rental suite in their house to supplement their mortgage. For more information on secondary suites click here (link to secondary suites page). Most of the buyers we work with find that they have to make sacrifices in their lifestyle in order to afford the home they want, or else make sacrifices on the home they want in order to afford their lifestyle.

FREQUENTLY ASKED QUESTIONS BY FIRST TIME HOME BUYERS

When do I have to pay GST? You pay GST on the purchase of a new construction property.

How much is a typical deposit? 5% is average, though a higher deposit can be attractive to the sellers in certain situations

When is the deposit due & how is it payable? Your deposit is due usually within 24 or 48 hours of subject removal and payable to the Buyer’s realtor’s brokerage’s trust account; however, these can both vary depending on what is written in the contract. Team Clarke writes all of our contracts with deposits payable by bank draft and they are payable to RE/Max Crest In Trust.

How long is a typical subject period? Anywhere from 5-7 days

What is FINTRAC?The Financial Transactions and Reports Analysis Centre of Canada For more information click here.

Does the property have an oil tank? If the home owner has not removed an oil tank (with documentation), the only way to know whether or not the property has an oil tank is to have the property scanned by a professional oil tank removal company. If the seller has not done this (with proof in writing) then it is advisable to have any property built before the mid 1970’s scanned. For more information on oil tanks click here.

What is a Subject to Sale Offer? An offer that is subject to the buyer selling their home before removing all subjects on their purchase to buy your home.

What is a Subject to Sale Offer? An offer that is subject to the buyer selling their home before removing all subjects on their purchase to buy your home.

What items are included with the sale of a home? Any fixture is included with the sale of a home unless otherwise specified in writing on the contract of purchase and sale. A fixture is something securely fixed in place. Typically buyers will ask sellers to include the appliances and window coverings in the contract. If you want anything else included you must tell your Realtor® and have them write it in the contract.

What are the Completion, Adjustment and Possession dates?

  • Completion Date: this is the date when the Buyer’s money is transferred to the Seller and ownership of the property transfers to the Buyer.
  • Adjustment Date: this the date which a lawyer or notary will use to adjust the property taxes paid and owing between the buyer and seller. It is usually the same date as the Possession Date.
  • Possession Date: the Possession day is move in day! This is date when the Buyer is officially allowed to move in. This date is often day or a couple of days after the Completion Date, but it can be any date the Buyer and Seller agree on. Most of the time the Buyer takes possession of the property at 12 Noon, but this is negotiable.

When should I call a mortgage broker? It is best to call a mortgage broker as soon as you decide to purchase a property.

What is a Working With A Realtor form? It is a form that is used to explain the relationship between you and a realtor and of the collection, and use and disclosure of personal information.

What is CMHC Mortgage Loan Insurance? Mortgage loan insurance is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price. Mortgage loan insurance helps protect lenders against mortgage default, and enables consumers to purchase homes with a minimum down payment starting at 5%* — with interest rates comparable to those with a 20% down payment. To obtain mortgage loan insurance, lenders pay an insurance premium. Typically, your lender will pass this cost on to you. The premium payable is based on a percentage of the home’s purchase price that is financed by a mortgage. The premium can be paid in a single lump sum or it can be added to your mortgage and included in your monthly payments. Mortgage loan insurance is not to be confused with mortgage life insurance which guarantees that your remaining mortgage at the time of your death will not be a burden to your estate. * The minimum down payment requirement for mortgage loan insurance depends on the purchase price of the home. For a purchase price of $500,000 or less, the minimum down payment is 5%. When the purchase price is above $500,000, the minimum down payment is 5% for the first $500,000 and 10% for the remaining portion. Mortgage loan insurance is available only for properties with a purchase price or as-improved/renovated value below $1,000,000.

MORTGAGES

Noun: The charging of real (or personal) property by a debtor to a creditor as security for a debt (esp. one incurred by the purchase of the property), on the condition that it shall be returned on payment of the debt within a certain period.

Bi-weekly and Weekly Payments Most mortgages have the option to allow payments to be made on a weekly or bi-weekly basis. This option may be desirable for two reasons. The first is it can save you money as you can expect to pay off your mortgage about four years sooner. This can save you dramatically over the life of your mortgage. The other reason why these options are so popular is that if your employer pays you on a weekly or bi-weekly basis, you can simplify your budgeting by making the payment line up with the way you are paid. Making Extra Payments Paying extra amounts on your mortgage can make a big interest saving over time. When you select a mortgage company, privilege payments options are something to look for. A 20% privilege payment will allow you to pay off up to $20,000 per year on a $100 000 mortgage. It is important that the privilege payment also be flexible to allow you to pay smaller payments on the mortgage and as often as you wish. An extra $1000 periodically paid on a mortgage can help you become mortgage free faster. Reducing the CMHC Fees on Your Purchase When you require a mortgage for more than 75% of the purchase price of a property, that mortgage must be insured by Canada Mortgage and Housing (CMHC) or GE Mortgage insurance. The premium charged by these company’s decreases as the down payment increases. When you finance your property at 95%, a premium of 2.75% is added to the mortgage. By increasing the down payment to 10% of the purchase price the premium can be reduced to 2.5%. If you can put down 20%*, you can avoid any additional insurance fee. Depending on your situation there are ways that you can structure this financing to avoid the CMHC or GE insurance premium.

Advantages of Bigger Down Payments As mentioned above, when you put a 20%* down payment on your purchase you can avoid the CMHC premium. More importantly the larger the down payment, the lower the amount of interest you will pay over the life of your mortgage. It is important to note that it may not be wise to stretch yourself to increase your down payment and end up borrowing on credit cards or a line of credit at a higher rate.

Short Term Rates vs. Long Term RatesThe options for mortgages available can be very confusing for most mortgage shoppers. Terms for mortgages vary between variable and fixed rate, six-month terms to 10 year terms. Taking a variable or floating rate mortgage can have savings. Typically the shorter the term or guarantee of the rate, the lower the rate will be. This does not always happen, depending on the market place and the economy, but history has shown that short-term rates tend to be lower than long-term rates. The up side of variable rate is the strong potential for interest rate savings. The down side is the fact that you are accepting the interest rate risk without a guarantee. If you are considering a variable rate mortgage you need to look at your own risk tolerance, and your cash flow available to deal with potential increased payment. Considering projections of rates and where we see interest rates heading can also be important in this decision. Make sure you talk to an expert when you are making this decision. *Based on 25 year amortization. Premiums charged on amortization over 25 years.

 

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