Are you a first time home buyer? If so, here’s a useful list of questions to consider before looking for your new home.
How’s the neighbourhood?
One of the first and most important things when looking for a home is considering the neighborhood it comes in. Before settling in, you should consider doing some research on different areas that interest you. It’s important to have a good understanding of your environment and a realtor who knows key information that can help you make a decision in choosing the perfect place. Things to consider would be community crime statistics, nearby hospitals, school catchments and their ratings, homeowners association rules (if applicable), and any additional amenities, such as local grocery stores, gyms, restaurants, and how busy traffic is in the area.
How many days has the home been on the market?
Take note of how long the house has been on the market. The seller’s motivation to sell the house most often increases the longer their home has been on the market. This will allow for more flexibility in negotiating the price, contingencies, credits on closing costs and other terms.
Are there any defects?
Having a home inspection done is crucial before purchasing and moving into your new home. Having one done by a professional is key in avoiding any major issues later down the road. The inspection report highlights the home’s overall structural condition and health and safety hazards (such as lead paint, radon, mold, etc.). Once you’ve received these details, it will help you later on in negotiating for concessions with the seller. Be sure to ask for repairs or seller-paid credits before closing the deal!
What are additional expenses? How much will I pay?
In addition to the down payment, on closing day, you will also be responsible for paying closing costs. These typically include third-party fees for processing paperwork and other administrative work that has been done. Expect to pay anywhere between 2-5% of the home price in closing costs, but note that this can differ depending on the neighbourhood you’ve chosen. Also be sure that you receive the closing disclosure from your lender who should provide you with a detailed account of your loan fees and how much you will need to close.
Legal fees approximately $1500
Inspection Cost $500-$1000
Strata Move-in Fees $50-300
GST 5% for new construction only
How much will Property Transfer Taxes Cost?
When a residence is purchased, you pay a one time property transfer tax on the total purchase amount:. 1% on the first $200,000; 2% on the portion of the price greater than $200,000 to and including $2,000,000; 3% on the portion of the price greater than $2,000,000 and up to and including $3,000,0000; 5% on the portion of the price greater than $3,000,0000.
If your purchase price is $800,000, the property transfer tax will equal $14,000 on the Completion Date.
If your purchase price is $1,000,000, PPT will be $18,000; $2,000,000 = PPT $38,000 and so on.
First-time Buyer Annual Expenses:
Annual Property Tax: You can find this information on the property details sheet on MLS.
When you own, lease or gain an interest in a property located in B.C. you must pay property taxes annually. Tax rates and your property assessment determine how much property tax you pay.
Claim Your Home Owner Grant: The home owner grant reduces the amount of property tax you pay for your principal residence.
The regular grant amount is $570 for properties located in the Capital Regional District, the Metro Vancouver Regional District and the Fraser Valley Regional District. For all other areas of the province the amount is $770.
• Up to $845 for homeowners who are 65 years or older, or the homeowner is a person with a disability.
• Up to $1,045 for homeowners who are 65 years or older, or the homeowner is a person with a disability if the home is in a northern or rural area.
If your property is assessed at $1,625,000 or less and you meet certain requirements, you will receive the full regular grant amount. Properties assessed over that amount may receive a partial grant (learn about the grant threshold).
To avoid penalty, claim your Home Owner Grant by the property tax payment deadline. To receive the grant you must qualify and complete the application at www.gov.bc.ca/homeownergrant.
Strata Fees (Condos & Townhouses):
Your monthly strata fee is money that the strata corporation uses to pay the common expenses of the development. Your individual fee is assessed by taking the total cost of the strata’s expenses and dividing that by the unit entitlement of your strata lot. This means the larger the square footage of your home, the bigger your fee. Strata fees are usually paid monthly.
Strata fees vary greatly from area to area and building to building. In 2021, condo strata fees in Metro Vancouver are $0.50 on average. Strata fees have risen over the last few years due to higher insurance deductibles on buildings.
Home Insurance
You will need to get your own home insurance, typically starts at $800-$1000/year
Are there government programs that help first-time buyers?
If you are a first-time home buyer, you are exempt from paying Property Transfer Tax as long as you meet the following criteria:
• You must be a Canadian citizen or a permanent resident.
• You must have lived in BC for 12 consecutive months immediately before the date you register the property and have filed 2 income tax returns as a BC resident.
• You must not have owned a principal residence anywhere in the world at any time. • You have never received a first-time home buyer’s exemption or refund.
Property Requirements:
• The fair market value of the property must not be more than $500,000. • The property will be used as your principal residence.
Learn more about BC’s grants, rebates, and tax credit measures in place for first-time buyers who are eligible for exemption from property transfer tax.
Looking for your Havn? I am here to help. Feel free to text or call me anytime at 604-500-5838.
