If you buy a home...
In this we introduce you important
* What payments to expect if you buy a property
* What to pay your attention, if you are in a `home hunting' or home selling period
Payments to expect to the real estate Buyers
Please, be advised that prices constantly go up and this is an example as of 2017
for an average home. There is single payment category and annual payments to expect to pay at a completion.
One-time payments to the real estate Buyers
Nowadays it is possible to make a purchase of real estate even with zero % down-payment, it might exist in special circumstances, but practically the minimum is 5 % to Canadian residents for the property under 1mln. If it is more then $1mln - 5% down payment is over: it must be $20% down payment.
However, in order to be able to do that, you would need to purchase an additional insurance to the mortgage, for CMHC (Canadian Mortgage Home Coverage), Canada Guaranty or Genworth, which is referred to as “High Ratio Financing.”
CHMC (could be Canada Guaranty or Genworth). The cost of this insurance before March 17/2017 was between 1% and 4.15% of the total credit amount and depends on the loan term. Approximate, the sums of CHMC are: 5% down - 4%for this insurance, 10% down - 3.1%...35%% down - 0%! The insurance then is added to your total credit sum, which slightly increases your monthly payments. From March 17/2017 these additional costs can be avoided if you are able to make a down payment of about 35% of the total.
From March 17/2017 for the Self Employed CMHC is the floowing:
Loan-to-Value Ratio Down payment% *New CMHC%
Up to and including 65% 35%
Up to and including 75% 25%
Up to and including 80% 20%
Up to and including 85% 15%
Up to and including 90% 10%
Up to and including 95% 5%
90.01% to 95% Non-Traditional Down Payment less then 5%
Property Transfer Tax
According to the law, when buying real estate one needs to pay the government an additional tax - the “Property Transfer Tax”.
It is calculated as a sum of 1% of the first $200,000 and 2% of the remaining purchase price for the Canadian residents.
For example, when you buy a house for $500,000, your tax will be $8,000: the first $2,000 derived from 1% of the first $200,000 and the additional 2% =$6,000 from the remaining $300,000. The total is $8000.
It is important to know that for the first-time property buyers it is possible to be the above-mentioned tax through the “First Home Buyers Exemption”. To obtain this exemption you will need to satisfy a set of conditions as well as to complete a special application form when signing the contract for purchase with your lawyer or notary.
The main conditions in addition to being a first-time property buyer are:
- the total purchase price should not exceed $475,000 (although, one may be partially exempt from the tax if the purchase price is below $500,000)
- the buyer has to be a Canadian Citizen or a Permanent Resident
- the buyer should have lived in BC for at least 12 months to the day of purchase
- the buyer(s) should reside in the purchased property for at least a year after the purchase day
As a first time you can obtain complete information about this exemption, pertinent to your individual situation, from your Notary or city hall websites.
Some changes to the Property transfer tax (PTT) effective August 2nd/2016.
PTT is increased for the following Buyers:
- A foreign national is a one who is not a Canadian citizen or permanent resident. If it is company that is purchasing, a foreign company is one that is not incorporated in Canada, or incorporated in Canada but controlled in whole or in part by a foreign national or other foreign corporation;
- The increased tax only applies to properties in the Greater Vancouver Regional District, and does not apply elsewhere in the Province, or the Tsawwassen First Nations Lands;
- The tax only applies to residential properties, not commercial;
- This is in addition to the regular PTT to be paid, and is paid on closing;
- The increased tax is effective August 2, 2016, regardless of when the contract is signed. Even if the contract was signed weeks ago, if it completes after August 2, 2016 there is a higher tax;
- We need to confirm the clients SIN number and compare it to an official government document, such as a passport or SIN card. Prepare your clients to have such ID;
- The additional tax is payable even if there would normally be an exemption available. Transfers between related individuals, transmission to surviving joint tenant and other such items now attract the additional tax.
Foreigners have to pay additional 15% of the purchase price on the top of PTT. Now a new party is talking about 30% but it is not yet.
In its 2018 Budget, the provincial government announced a number of measures that will impact the real estate industry. Among the measures announced on February 20, 2018:
Changes to the Property Transfer Tax rate: the tax rate on residential properties above $3 million has increased from 3% to 5%, effective February 21, 2018.
Increase and Expansion of Additional Property Transfer Tax: also known as the foreign buyer tax, this tax applies to properties purchased by foreign nationals. Properties registered on or after February 21, 2018 are taxable at 20% of the fair market value, in the following areas:
- Capital Region District
- Fraser Valley Regional District
- Greater Vancouver Regional District
- Regional District of Central Okanagan
- Regional District of Nanaimo
Transitional rules apply to property transfers subject to written agreements dated on or before February 20, 2018 in the Capital, Fraser Valley, Central Okanagan and Nanaimo regional districts. Additional property transfer tax may not be required until May 18, 2018. For full information on the transitional rules see Additional Property Transfer Tax for Foreign Entities & Taxable Trustees
I advise clients whose transactions may be affected by the changes to the Property Transfer Tax to seek independent professional advice.
Once we receive further details we will do our best to keep you posted. Any further questions should be directed to your accountant or lawyer.
Information provided by:
(GST - Goods and Services Tax) when buying a new home.
As soon as you buy real estate directly from the developer and become the first official owner of a unit, this tax is added to the purchase price. As of January 1, 2008 this tax is 5%. If your estate costs less than $500,000 and if you are going to live in the place that you are purchasing (as opposed to renting it out), then you are entitled to receive a “New Housing Rebate” on the tax that you have paid. For example, if your estate costs below $350,000 the rebate will be at a maximum discount rate and it will return You 36% of the money paid for GST. A special formula is used to calculate GST for purchases between $350,000 and $450,000 where the amount of the rebate proportionally decreases as the purchase price grows.
The new change is: Canadian residents have an exemption from PTT if the buy a new construction up to $750000.
Your lawyer or Notary will provide you with the exact amount of your on the day of completion of a sale. Moreover, you have the right to file an application for a rebate within two years of the completion of a sale.
Paying for a conveyance (Lawyer / Notary services).
The amount varies.
The Buyer has to choose their own Notary or Lawyer to complete the
purchase and register the property to their name in the Land Title
Registry. The cost of these services varies slightly and can be around
$400-$700. But there will be a separate fee for the transfers,
creation/verification of necessary documents on
the top of conveyance` service fee ( an average is around $400 - 1400)
if it is a regular
transaction. Make sure that you put aside $1000 to $2000 if in your
particular situation, it will be necessary to draft, verify more than a
standard quantity of documents.
Sometime, you might must to
pay strata fees for 2 month in an advance, sometime you want to make a
Power of attorney document or so. In the short words, it is obvious, that additional documents need additional payments.
It is recommended that you explain your situation to the conveyance in advance and find out ahead of a time the cost
of these services as well as the details. Very often the initial price quoted does not include
additional expenses so it will take some research and diligence to
determine the total cost. Sorry for the inconveniences: I can not give explanations regarding it.
b. Title Insurance.
It is important to know, that Title Insurance has two important parts: Title
Insurance for a bank( lender) that gave you a Mortgage and Title
Insurance for your own ownership protection. Your notary will explain these nuances to you and then you choose. For a home less than $500t it
might be about $200-400 for this Insurance as a one time lump sum payment.
Paying the real estate Agent
In Canada, there are Provincial Real Estate Boards that manage all Real Estate Agencies and Realtors. The Sellers pay to the the both sides: to the selling agency for the selling and to the buying agency for the buying process at the end of a completed transaction. The selling Agency is not getting payment during the process: it is getting payments from the seller for the both sides only if a deal is completed. The remuneration (traditionally but not always) has to be split between the Selling and the Buying agency at the official level. The Buyers agency remuneration is advertised at a listing`s realtors remarks.
It looks like that in BC, the real estate service is
legally literally `free` for prospective Buyers because the payment
usually is coming from the Sellers side. Anyway, the Buyer should know,
that the Buyer actually hires a Realtor to work for a him, but fortunately, a somebody
else is paying to his Realtor instead of the Buyer.
BC the selling agency supposed to pay to the Buyers Realtor. Because of
that - sometimes Buyers think that they have no obligation to the
Realtor that was working with them within a searching/buying process. It is not exactly correct.
If a someone works for you - the job should be
paid. Realtors are not volunteers - they have obligations to their family, they have bill payments like anyone, and they expect to earn the remuneration at a completion for their work. Also you should know that in Canada, the only one
Realtor is getting commissions for a supervising a buying property process to a client. If
you are asking many Realtors for a help in the same real estate search - you know
already that you harmfully cheat with them and these Realtors will not
be paid. In this case, it is not appropriate to use several Agents at
the same time by the same Buyer. Withal, it is a Buyer`s
responsibility to make sure that his Realtor will be paid for his time, suggestions, efforts, for the sharing his intellectual knowledge /private experience and for taking the liability and more.
Realtor gets their commission from the Seller for marketing, for
finding a client, filling out all necessary documents and preparing the
registration of the property under the name of the Buyer and more. Realtor is
checking the offers and prevents his client from mistakes and
unnecessarily loses. As much better the marketing plan is and as much the
accurate market price is indicated - as much more better chances you have to
sell your property.
The main remuneration
(commissions) for selling or buying a property Realtors are getting for
their knowledge, `advocate duties` and the responsibilities that they are taking for
your deal. Liability is the most expensive part of Realtor`s payment.
Here is a wise
logic applies: make sure, that you do not hire a poor - service Realtor, Doctor, Builder... for your
expensive high risk deal. Cheap service could cost too much later. Traditionally the reward reflects the efforts.
From Lara: Please note that Realtors must act in the best interest of their Buyers
and Sellers all the time, and even the remuneration for a some reason is less than my expected charges are, by my human moral, I work in my best anyway to save your deal .
Prices vary according to the property the size and a type. Average :$250 to $950. Ecological environmental inspection is more money, depends on a specific case. Weekends and Holidays are more expensive too.
The mortgage cost will be included your mortgage amount so you will not` feel` it. The Mortgage Broker can explain you - how much it is going to be for your particular case. Sometime the Mortgage Broker has separate charges for paperwork and for the lending money. If this amount is not included to a mortgage - you should be prepared and have this amount. Talk to your Mortgage Broker how your mortgage is set up. Very often the mortgage Lender (bank, credit union, private lending investor...) orders an appraisal to your chosen unit.The average house appraisal by a lending company could be about up to $250 - $550 but often they do it for free. Talk to your Broker.
Strata `move in` Fee (if applies)
The move in fee is a non-refundable single payment that strata management charges for the covering elevators in a building for a moving time, for opening and watch the entrance doors, for holding an elevator for your moving time and other. Might be Around $100- $300
Some people need to sell their home before to buy another one. If you have a mortgage and you breach the term of it by selling your current property - you pay penalty to the Lender (Bank).
The amount in the most cases is 3-month interest fee, but it could be much more - depends on your Mortgage Contract. For example, when we sold our house for $650000 - we paid $25000 as a penalty. In 2009 it was too high mortgage rate anyway - so we got two times less an interest percentage for a new house - which was good too as at the time. Now mortgage rates go up, so be careful. Usually, your Mortgage Broker explains these small prints at the beginning when you are getting the mortgage, but do not forget to ask.
Annual and monthly expenses for real estate maintenance
(as an approximate amounts example)
Annual Property Tax.
As soon as you buy a property, you start paying the annual property tax. The amount you can see on the listing page. When you buy - you pay your annual PT (Property tax) since your completion date.
In the spring, you will receive a letter from the municipality with the Property Tax Notice stating the exact amount of the tax. Usually, the deadline to pay your yearly tax is
July 1st.If you buy before July 1st - you receive a credit from the Seller up to your completion date. If you buy after July 1st - you give a credit to the seller, because he paid this Property tax already for the whole year.
Keep in mind that the British Columbia government offers a “Home Owner Grant” for those who use their property to live in it. This Grant is either $570 or $845 (if one of the owners is over 65 years old or other conditions). This, you need to pay this tax according to one of the following options:
Column A – No Grant, if you are renting out your property and do not reside in the premises
Column B – Basic Grant: tax is decreased by $570, if you live in the property
Column C – Additional Grant: tax is decreased by $845 if one of the owners is over 65 years of age r other conditions.
Please be aware of the fact that if in the first year you do not own the property for the full 12 months but only for a part of the time, the size of the tax will be calculated accordingly. For example, if you bought a house on the 1st of July, you will only have to pay a half of the yearly tax. The other half will be collected from the previous owner.
The Tax amount shale be calculated on your adjustment date by your Lawyer and you will have to pay your part from the completion date...
For the foreign Buyers there are additional conditions, specially for the vacant homes.
Annual Utility Fee.
At the very beginning of the year you will receive another letter from the municipality – Utility Statement (cost for water, garbage pick up, sewer use). The payment for your city utilities (water, sewer, garbage removal...) depends of the each Municipality`s policy: It could be counted four times per a year, once a year or other. The deadline to pay this bill is usually in March. On average, this bill for an average home is between $500 and $1500 depends on the location and other facts. In some area you have to pay three-four times per a year. In Strata it could be included to maintenance fee, could be not.
In certain municipalities the “Annual Utility Fee” is calculated at the same time as the “Annual Property Tax” which means they will have to be paid at the same time ( in some cities they call it` included` to the property tax) for the house, and in a Strata the payment date depends on the Strata members decision.
The each participating party of the selling-buying process eventually pays only his part from an adjustment date. It is the same scenario as for Property tax: the participants reimburse the money to each other depends of the date of the purchase and of the date when the Municipality established the payment date.
Gas and Hydro
Charges are vary. We often make it as a subject to check these amounts. Talk to your Realtor, sometime it is possible to find the information for a past year.
Strata Maintenance fee
For the Strata residents only, the charges are wary. Some Strata requires to pay at a completion for two month in advance. Usually, you can see the Maintenance fee amount at the listing page.
Some lenders will not give you money if you do not have a home insurance. Prices are variable from $30 per a month for a small apartment to $250 for an average home, or even more. It depends on the type of the home (apartment, house with acreage, house with a mortgage helper and other reasons... )
* Now you know what to expect. Usually, I count all the expenses ahead - so check out your abilities and choose the price range of the property that you are going to get!
Now let us start your `home hunting`. Good luck!
This article of Martha Uniacke Breen will be interesting to the `HOME HUNTERS`:
Check out our guide on how to make all the right decisions when buying a home.
With all the doom and gloom we've been hearing lately about the softening real estate market, one important fact is being overlooked: it's a great time to buy. Housing prices in many Canadian cities are flat or actually lower than they were this time last year, houses are staying on the market longer, and the supply of available homes is increasing, making sellers more willing to negotiate. The heady days of the real estate boom -- characterized by multiple offers, bidding wars and having to move fast or risk losing out -- are, by most estimates, over.
Thankfully, Canadians have, for the most part, escaped the carnage that has hit the American and Canadian housing market. Sub-prime mortgages are relatively unheard of up here and riskier mortgage products, such as zero-down and 435-year amortization, are being phased out. Mind you, most analysts predict that Canadian lenders will not escape the downturn unscathed, and that one of the most obvious effects for consumers will be that credit won't be as easy to obtain as it once was. But if you're in a financial position to buy a new home, there's no reason to wait. Real estate continues to be an excellent investment, and there's great value for money out there.
Advice for home Buyers
"First of all, get an agent; most people don't realize that when you're buying, the agent doesn't cost you a thing -- her commission is paid by the seller. She knows the market, can help you find good houses and steer you clear of bad ones." Word of mouth is one of the best ways to find a good agent, or visit a few open houses and "shop" the agents to find one you're simpatico with.
How much can you afford?
Early on, you need to figure out how much house you can afford. Make an appointment at your bank to get per-qualified, a no-obligation process that will determine the maximum mortgage you can afford, which, added to your down payment, will give you a target (or maximum) price range. However, keep in mind there are a number of additional fixed costs to factor in: most crucially, many provinces and cities now levy Land Transfer Taxes, which vary depending on the province and town but together work out to about 3 to 4% of the price; there are also closing costs, lawyers' fees, moving fees, and perhaps a budget for redecorating and painting or renovating once you move in. Call Larisa for details.
Make a wish list
Call your Realtor to find out more about the search criteria.
What neighborhoods do you like? How many bedrooms? Do you want a garden or low-maintenance landscaping? Parking? An older home or a new one? A condo? Fully renovated or ready for transformation? Locker? Do you prefer to be near good schools, shopping, transit, or have good highway access? It is all about you now!
Once you've toured a few houses with your agent, eventually you may find a promising prospect. Don't let emotion go too much to your head; there are some important points to consider before making an offer.
Take a second look
The simplest is to go back for a second look. A house that seems idyllic on a Sunday morning may be dark and dreary on Monday evening. Ask about the neighbors. Are they considerate? Are there any buildings or other things in the area that could be turnoffs (a noisy high school down the street, bars or other attractions that could make street parking difficult on weekends)?
Look closely for things you might have missed the first time: the roof, the general state of repair, the size of the rooms. If you're still serious, consider a house inspection, which can cost from $250 -$550 or more, but will tell you in exacting detail what work needs to be done. (The cost of repairs uncovered by an inspection can sometimes be negotiated between buyer and seller.)
Meanwhile, your agent should investigate the prices of comparable properties on the street and help you come up with a reasonable offer. Ask for CMA (comparable market analysis). Assuming there are no other offers in play, there may be a bit of bargaining between buyer and seller before a price that's acceptable to both is reached and the final offer is accepted.
Congratulations! The home is yours!
25 INSIDER CONDO BUYING TIPS
I encourage you to read this Article By Kathy Monahan (of course it has my modifications too):
As real estate prices soar, many Canadians are rediscovering the joys of urban living and buying condos. Before you take a leap, check out 25 tips for smart buying.
Condo sales are at an all-time high. In cities like Toronto and Vancouver, people are rediscovering the joys of living downtown again, along with the low-maintenance, easy lifestyle that goes with having your very own castle in the clouds. And with housing real estate prices at truly stratospheric levels across the country, a condo is an affordable way into the market, especially for young people.
Before you start
1 Hire a professional Realtor to help with the buying process. It costs you nothing, since the seller pays the commissions, but with a professional you avoid wrong steps.
2 Make sure you have a good Lawyer.
3 Seek financial qualification, to determine how much mortgage you can afford.
4 Crunch the numbers with your financial backer; you’ll need extra money for closing costs, moving, land transfer tax and lawyers’ fees.
On the hunt
5 Be prepared to see a variety of styles: low-rise, high-rise, with or without amenities such as doormen or gym facilities.
6 Purchase the largest suite you can afford. Studios and one-bedrooms are more difficult to re-sell.
7 Visit the neighborhood at different times of the day and evening. Does it suit you?
8 Choose a handsome view. Not only will it make day-to-day life more appealing, but it helps with resale later.
9 Bear in mind that a southern exposure, although bright and sunny, may also be hot in the summer.
Depends what do you like and how can you take it in our short Vancouver summer..
10 Avoid a layout that looks out over the garbage pick-up area. It could have bad smell.
11 Avoid a suite that overlooks the garage entrance and the coming and going of vehicle traffic.
12 Avoid a suite beside or across from the elevator. It could be noisy.
13 A parking space is highly recommended. Even if you don’t drive, you can always rent it out.
14 A locker is also highly recommended. There is rarely if ever enough storage space in a condo.
15 Find out about visitor parking. How many spaces are available? Ask for a dash pass.
16 With a resale condo, examine the appliances and wear and tear on the suite closely.
17 Note the condition -- and aroma -- of the lobby and common areas such as hallways and stairwells.
18 Find out who the occupants of the building are: mostly owners or tenants? Owners are preferable.
19 Find out the monthly condo maintenance fees and what exactly they include (and don’t include).
20 What are the property taxes? Are they included in the maintenance fees?
21 Chat with other owners and ask about their experience in the building.
22 Visit the suite at least twice, if you can, before making your offer.
23 Know what comparable suites in the building and in the area have sold for.
24 As for offer price, listen to and discuss with your agent.
25 When you are made an offer, make it conditional on your Realtor or Lawyer reviewing the Condominium Documents and Status Certificate. Your Realtor usually does it for free, Layers might charge you. If you are not experienced in Strata details - be very caution, specially if it is a new construction.
How much should I make to buy a home?
The eligibility to buy real estate depends many factors: your credit score, your loans, your down payment, your working status, the quantity of credit cards you have, your yearly income and other factors. To find out a better I suggestion I recommend you to start a consultation with a professional Mortgage Broker who was trained to help you in a financing. It is much better if you were sent to him by a friend. The referral is important because in some cases where to provide a mortgage or not to give it to you is 50:50. In this case a Mortgage Broker might help more if he is confident in you.
( The chart is under development )
Vancouver is desirable and it is pricey. When your financial maximum ability is established - Realtor know where to look for your purchase. Just for fun you can look to my Facebook page `Lara Bezglasna` where I posted the prices for Vancouver`s the most expensive view properties and call me after that.
I will find you much better priced home because I know: there is the one unique home that is waiting specially for you: YOUR.