ARE YOU A FIRST TIME HOME BUYER? DON’T WORRY, WE ARE HERE TO HELP!
Hello & happy Saturday!
Today we are going to talk about first time home buyers. With all the lending rule changes and high Vancouver prices, many first time purchasers are either afraid or convinced they can’t get into the market. Good news, you can. Especially with the continued low interest’s rates. Please see below for more information on navigating your first purchase in the Vancouver real estate market. As always, we’re here to help! Feel free to call our team anytime.
Buying your first home. Don’t be afraid!
So, you’re thinking of buying your first home. Everyone’s excited about the prospect, however, you read in the paper and hear on the news how hard it is to get into the Vancouver Real Estate Market. Well, fear not, there are many programs that can help you as a first-time home buyer.
The Home Buyers Plan or HBP is a program started by the government to help first time homebuyers. The program allows new buyers to access their RRSP’s for a down payment, it lets you withdraw from your RRSP’s (Registered Retirement Savings Plan) up to $25,000 or $50,000 per couple.
Another way to access funds is through the receiving part of your down payment as a gift. The gift, however, must come from an immediate relative (mother, father, brother, sister) and must be a real gift and not a loan. Banks require a gift letter from your immediate relative confirming the amount gifted. Keep in mind that often it is beneficial to come up with some of the down payment yourself to show the lender that you are a strong applicant, including good credit and solid employment.
What is not widely known, is that new buyers can access a down payment through the borrowing of funds. This would need to be in the dome of a loan or line of credit. Of course, the payments of the loan would be calculated into the overall debt servicing of the mortgage and applicants would have to qualify within the lending guidelines.
Another great program is the purchase plus improvement program. Meaning homebuyers can purchase a property at a lesser value that may need work. Improvements can be made over time and be reimbursed from the mortgage when the work is completed.
So, what about the down payment?
In Canada, lenders require a minimum down payment of 5%. This is a great way to get into the market however there is an insurance premium associated with any purchases under 20% and is based on a sliding scale.
Another advantage for first time homebuyers is a newer policy that allows you to avoid paying property transfer tax on the first $475,000. This used to be $425,000 and was increased to stay in line with rising home prices, particularity in the Vancouver and Toronto real estate markets. There is a break between $475,000 – $500,000
If you are thinking of getting into the Vancouver real estate market, here are the steps we recommend:
- We set up a meeting with you to discuss your goals, narrow down your locations, requirements from the property and strategies to help you achieve homeownership.
- You meet with your lender or we can recommend a highly skilled mortgage professional to start your mortgage pre-approval process.
- We go shopping! We work closely together to match you with properties that meet your criteria.
- Once found, we put in an offer and negotiate the best price and conditions on your behalf.
- Typically at this stage, a home inspection is conducted
If all subjects are satisfied and the home inspection is good, we accept the deal and sign all the paperwork.
- Now a deposit cheque is required. Usually 10% of the value of the home. This will be deducted off the purchase price at the time of closing.
- The property closes.
- We give you the keys.
- You are a proud new homeowner!
- We are here for you long after the purchase closes and will continue to answer any question you may have.
But wait, don’t forget about the first-time home buyers tax credits!
The first-time home buyers tax credit or FTHB was created in January 2009 to give relief to first time home buyers. It allows for an income tax credit that is nonrefundable. eligible first time home buyers with a qualified home can apply for up to $5,000 in credit income tax to a maximum of $750 in tax relief. When you’re a first-time homebuyer, every penny counts. So, make sure to take advantage.
To find out if you and your home are eligible, and for more information, please feel free to reach out to our team, we’re here to help.
Get in touch with us to discuss the best opportunities for you in this market. We are never too busy to find the right strategy for you.