First Time Home Buyer
     Step by Step Buyers Guide

It may seem like buying a home is an impossible task, especially here in Vancouver. As a buyer you should not have to deal with the stress and complications of the home buying purchase. Your years of work to save up the deposit necessary to make the leap into the home owners world was hard enough, it's time to reap the rewards and enjoy the largest purchase of your life. Whether you're starting a family, moving out from the parents’ house or making the jump from the rental world this experience is made easy and fun with the right Realtor and friend by your side. 

In this Step-by-Step guide to buying your first home I will show that this seemingly impossible task is certainly reachable and hopefully douse any of your first time buyer fears. When you’re convinced that you are ready to make the first step please Contact Us and we will start by meeting at my office, or your local coffee shop, for an introduction with me and if needed, my mortgage broker, to start your life as a home owner!

 

Step 1 - Getting Pre-Approved

Down Payment & Mortgage Financing

Like purchasing anything in life, prior to purchasing your first home you must know how much money you can afford to spend. This process begins with your bank or financial institution and my recommendations. 

 

As you may know already and what your bank will tell you is that the larger down payment you have the better. Do you have 5%, 20% or more to put down? If you have a 20% downpayment or more you will exempt yourself from needing High-Ratio Mortgage Insurance, typically offered by C.M.H.C or Genworth. Remember that the deposit always forms part of the purchase price and is given and held In Trust at with my Brokerage Century 21 Realty. A Bank Draft for the total amount of the deposit, is given the day after your Subject Removal and held until the purchase completes, when it then gets forwarded onto the Seller.

 

In British Columbia, mortgage insurance is mandatory on purchases with greater than 80% financing, relating to down payments smaller than 20%.

Once you are comfortable with your Down payment level (ideally between 10% – 20%, but no less than 5%) I recommend contacting me regarding my Bank/Financial Institution recommendations. I always recommend speaking to your own Bank first and seeing what sort of Mortgage details they will offer you, most importantly what interest rate they are willing to achieve you.

I have all of Today's Lowest Mortgage Rates posted on my site here, this does not mean you will qualify for the 'lowest rate' but it will give you a good idea of what the current market interest rate is.

 

Once you have the given interest rate from your bank I will be happy to introduce you to some of my competitive mortgage brokers and, as a team, we will work to get you the lowest rate you can qualify for, saving you the most money. After selecting the financial source which is best for you it is time to get your official Mortgage Pre-Approval. This process will check your credit rating, outstanding loans, leases etc to gauge how much of a credit risk you are to the financial institution. They will gauge your Debt-Service-Ratio by how much income you make compared to the size of loan that is realistic to offer you. From all of these details they will finally give you a maximum loan amount that they are willing to offer you.

 

After receiving the maximum loan amount you have been Pre-approved for, gauge the financial responsibility you are comfortable making. This does not mean you should spend the full amount. I feel the best and easiest way to gauge a comfortable amount for you would be to use My Mortgage Calculator to find what your monthly payments will be. Cater your search and purchase price to what you want your monthly expenses to look like, not what the bank has per-approved you for.

Keep in mind, you will additionally be paying monthly for Strata Fees & Property Taxes (a yearly expense broken down monthly) utilities and life in addition to your mortgage payments.

Expected Purchasing Costs

Property Transfer Tax (P.T.T)
The full Property Transfer Tax Rebate is only applicable to you as a First Time Home Buyer if you purchase a property with a total purchase price under $425,000. There is additionally a sliding scale rebate between $425,001 – $450,000. There is no rebate applicable on purchases above $450,000. Please see the attached Property Transfer Tax Rebate sliding scale chart linked below.
Property Transfer Tax (exemption chart) 

The amount of tax you pay is based on the fair market value of the land and improvements (e.g. buildings) on the date of registration unless you purchase a pre-sold strata unit. The tax is charged at a rate of 1% for the first $200,000 and 2% for the portion of the fair market value that is greater than $200,000.

 

H.S.T / Purchase Tax
This is a 5% tax only payable on newly constructed homes and is often included in the quoted sales price.
- New home buyers of properties costing $350,000 or less can apply for a partial rebate of the 5% GST applicable on the purchase price as long as the home is going to be the purchaser's primary place of residence. The rebate is up to 36% of the GST to a maximum rebate of $6,300. 
- For new homes priced between $350,000 and $450,000 before GST, the GST rebate reduces proportionately. 
- New homes priced $450,000 before GST or higher do not receive a rebate. 
There is no GST on resale housing unless the home has been substantially renovated, and then the tax is applied as if it were a new home.

 

Legal Fees
Once the purchase is complete you will need a legal entity (Notary/Lawyer) to complete the conveyancing of your transaction. Your notary or lawyer, which I can offer reputable recommendations for, will be dealing with the Land Titles office & the Sellers Lawyer directly. Prior to the Completion of your purchase you will sit down with your Notary/Lawyer and go through the Statement of Adjustments. This is the document clarifying everything that you will be paying for.
- Lawyer/ Notary Fees
- The pro-rated cost of the months Strata Fees
- The pro-rated cost of the years Property Tax (typically paid yearly)

 

Appraisal Fee
The Bank/Financial Institution may want to send an appraiser into the home prior to Subject Removal (discussed later) and check to see the current condition of the home. If the Bank decided they want to complete an appraisal, the cost is your responsibility. This cost typically runs at about $300 – $350. 

 

Home Inspection
A Home Inspection is something I would always recommend no matter how old the property is. The home Inspection is an un-invasive review of the home and building to get a better understanding of any flaws or upcoming issues to expect in the future. The home inspection is not grounds to re-negotiate the purchase price unless there is serious cause. The main intent of the inspection is to clarify that everything in the home/building is working properly and to introduce you to the complete working system of the building itself. The Home Inspection typically costs $350 – $500. Again, I will be helping you every step of the way and will be able to provide you with a few reliable inspectors to complete your inspection. 

Step 2 - Finding Your Perfect Property

Needs Vs. Wants Analysis

 

The first step to finding your next property is to evaluate your 'Needs' and 'Wants'. You must decide the property characteristics of your new home that are necessary to feeling content and happy after your property purchase. It's always a good idea to write this down. Secondly, decide the additional property characteristics or luxuries that would make a nice home into you 'Perfect Property' (Fill out this form and I will personally select a few current properties that most closely meet your needs and wants).

Don't limit yourself; add in as many luxuries as you want. We are good at what we do and I'm confident I can find your next perfect property without sacrifices. Once we start viewing a few properties you may realize that what you thought you wanted may not fit your needs and start to favour different options, it's all part of the fun. This process is in most cases quickly clarified once you actually begin the search and see what is available in the market. Try to be open to adjustments and keep an open mind with each property… but be clear what you do and don't like.

Neighbourhood Analysis


Where do you want to live? Where can you afford to live? What property type do you want to live in? The best thing to do when searching is to see what properties you can afford in your first neighbourhood of choice, then spread the search from there. This can be a complicated process, if you are set on a specific neighborhood which is stretching your budget your may be forced to cut some of your 'wants' to find a property within your budget scope. What I would NOT suggest is cutting your needs to be in a desired neighborhood. There are so many amazing and developing neigborhoods in the Lower Mainland that you can generally find an area that will get you ALL your needs and wants with only a slight change in location. We are neighborhood experts, this is where we excel.

View Qualified Properties

 

This is the fun part of the process. Once you know what you are looking for and have your property search criteria set, TOGETHER, we will begin the search process. When applicable properties come on the market I will know immediately. If I am convinced a property will not disappoint you, I will email you the details with pictures. To give you an idea of what I need to see from a property to consider it worthy to pass onto one of my clients I will evaluate it by a few criteria:

  • Recent and upcoming assesments

  • Strata activity and building reputation

  • Investment potential (I'm not going to show you a property you are likely to loss money on)

  • Development and contrsruction in the area

  • Inclusion of clients 'needs' and 'wants'

 

Once we have collected a list of properties that fit your criteria, we will pick a day to set up a private showing tour, the sooner the better. It is beneficial to have a tour set to get a better comparison of the applicable properties on our list. Being able to directly view multiple properties together will help us compare details like build quality and layout types that would be otherwise lost on a multi-day tour.

 

Through this search process we can easily eliminate the less desirable properties and get a concrete understanding of your buyer expectatons. After narrowing your search to one or two properties it's time to take the most exciting step to the First Time Home Buying process, THE OFFER.

Step 3 - Placing an Offer

Drafting the Offer

When drafting the “Contract of Purchase & Sale” we are putting together all of the legal details to outline the price and terms of your Offer.

  • Our Initial Offer Price - I will search active comparable listings and resently sold comparable listings to come up with the properties market value.

  • Our Ideal Dates - For subject removal, completion, possession and adjustments. These are the dates the transaction will legally take place as well as the time and day you receive the property keys. Money from your account and deposit from the trust account will be given to the Seller in exchange for your name on the property title.

  • Our desired Inclusions - Any additional items in the home that you would like to include in the sale of the property. The seller has the right to take anything that isn't bolted down, so it's a good idea to make clear here what you want. Everything is negotiable.

  • Our desired Subjects - There are some typical Subjects that will generally be used such as Subject to; Financing, Strata Doc, PDS and Inspection, among others. We typically request a minimum of a full week to go through all of the Subjects in detail before removing them.

Once these are decided we submit the initial offer.

 

Response to the Offer

All offers have an expiry date and time that the seller must ideally respond by. There are three things that the Seller can do from that point:

  • Accept the Offer - If the offer is accepted we then move through to the process of removing our Subjects within the time frame of we have outlined in the Contract of Purchase and Sale.

  • Counter the Offer - This is the typical response. Once we get a counter offer we use the details we have at our disposal to accurately negotiate you the best terms and price. Negotiation is one of my strongest attribute; I'll bring us out on top!

  • Ignore the Offer - The Seller of course does not have to sell his/her property. If they get an offer that they are not satisfied with, most of the time they will counter but if they feel the offer is offensively low they may just let the offer expire without response.

Whatever response we get, we will move forward from there.

Subject Removal

Assuming we get an accepted offer, we then take the appropriate steps to remove the subjects we included in the Contract of Purchase and Sale. As soon as the offer is accepted the Subject Removal period begins. The Sellers Agent will order all of the Strata Paperwork that we will thoroughly inspect. These documents include;

  • Min. 2 years of strata minutes

  • Property Title / Registered Strata Plan / Parking & Storage Delegation / Form B

  • Current Rules / Bylaws / Financial Statements of the strata

  • Property Disclosure Statement (P.D.S)

  • A completed depreciation report and engineers reports

If there are any additional questions need to be answered during this step we can touch base with the management company for clarity. Once these questions and points of reference on the building have all been satisfied we can remove the Subject to 'Paperwork'. Once your Bank or Financial Institution has clarified that they are satisfied with the building, the Subject to Financing can be removed. And finally once the Building Inspector has been through the property, outlining their opinion on the current state of the building systems and you as the buyer is happy with the outcome, the Subject to Inspection can be removed.

Paying for your Property

 

Once all Subjects are removed the next step, typically within 24hrs of Subject removal, is to get a Bank Draft for the amount of the down-payment (deposit). This will be held in trust by Century 21 Realty, until it is handed over to the seller at completion. From this point, you simply start booking your movers and wait for your agreed completion and possession days to receive your new homes keys and move in to the world of home ownership!

Congratulations.

 


 

Please Contact Us - We will reply to you immediately