GETTING STARTED
  You Need Representation
The single most important factor in buying Real Estate is to ensure you have a professional Realtor represent and protect you throughout the buying process. Whether its a brand new home from a developer or a home you happened to stumble in during an Open House, have me as your agent to represent your interests as a buyer.
  Buyer Agency
As a professional buyer's agent I guide you and protect you throughout the buying process. Once agreed to represent you as your agent your sole interests are always kept front and center. With you as my principle, I am legally bound to protect your interests throughout all negotiations.
  Fees
Representing you as a buyer's agent, I do not collect an upfront fee from you, but an agreement is made between yourself and I. My expertise, experience and services are offered provided you respect my commitment to you and understand that I am remunerated by a commission paid out by the seller upon the completion of your purchase. Once agreed upon, our working expectations are put in writing by way of a Buyers Contract and we begin a working relationship based on professionalism and mutual trust.

 

BEFORE YOU START SHOPPING
  Identify Your Financing Options
After ensuring you have a professional Realtor agree to represent and protect you, your next step is to clarify and decide on all your financing options.

People whom you should be contacting before you even start looking at homes should be either the Loans Manager of your current banking institution or a Mortgage Broker. Both these people can provide you with details as to what financing options will be offered to you. These preliminary services are at no cost to you as the Loans Manager works for the Bank and the Mortgage Broker will eventually earn a commission from the lender who finances your purchase.

  What the Loans Manager or Mortgage Broker can do for you.
  1. Calculate what dollar amount the banking institutions will be willing to lend to you based on:
    1. your size of down payment
    2. your current income earned
    3. the current interest rates
  2. Guarantee you the current interest rates and hold the rates for you over the next 60 to 90 days. Should the interest rates increase and you have been guaranteed the lower rates, you will than be allowed to take advantage of the lower rates up to the specified date to complete on a purchase. Should the interest rate decrease after you have been guaranteed rates, you will be entitled to take advantage of the new rates.
Types of Mortgages
Depending on the amount of your down payment, the property purchase price and use of the property (principle residence vs. secondary home vs. investment property) the mortgage will be termed as either an insurable or uninsurable mortgage.
  1. Insurable Mortgage - If you will be placing a down payment of less than 20% of the purchase price of the home then the balance of funds borrowed will need mortgage insurance to protect the lender.  The mortgage insurance will be an additional cost you to obtain the financing however insurable mortgages will generally qualify for the best interest rates for the buyer.  In some cases, lenders will use the issuance of mortage insurance on a purchase with more than 20% downpayment to obtain the lowest cost of mortage funds.
     
  2. Unsurable Mortgage - Mortgages that are “uninsurable” can include rental properties and second homes, switch mortgages that move to another lender, 30-year amortizations, refinance mortgages, mortgages over $1 million, and even some conventional 5-year mortgages.
     
Down Payment
This is the actual money that you have or will have to put towards the purchase of our property.
Mortgage
This is the balance of the purchase price borrowed from the bank minus your down payment. (Purchase price - Down payment = Mortgage)
 
Less Than 20% Down Payment / High-ratio Mortgage
If you are going to finance the purchase of your home with less than 20% down payment, also known as a high-ratio mortgage, there are a few factor and points to keep in mind. Click here for details on high ratio-ratio mortgages.
 
Using R.R.S.P's To Buy A Home
Under the "Government Home Buyers’ Plan", buyers are allowed to individually withdraw up to $25,000 from their Registered Retirement Savings Plans (RRSPs) tax free for the purchase of a new or resale home. These funds must be repaid to an RRSP in the future or you may become liable to pay tax on these funds.
Details:
  • The home must be a principle residence not later than 1 year after acquisition.
  • The plan is available to all buyers that have not owned a property within the past 5 years.
  • Couples/Partners can withdraw $25,000 each for a total of $50,000.
  • The amount borrowed from RRSPs must be repaid in annual installments within 15 years.
  • If you do not make the scheduled annual repayment in any year or if you decide to repay only part of it - the unpaid portion must be declared as income when you file your tax return.
  • Funds withdrawn must have been previously contributed or paid to the RRSP a minimum of 90 days from the date of the accepted Contract Of Purchase and Sale agreement.
  • The home cannot be previously owned by you or your spouse.
How to apply:
  • There must be in place a written purchase agreement prior to withdrawal of funds.
  • The necessary application forms should be available at your financial institution.
  • Withdrawal of the funds is usually straight forward and limited notice is needed by your financial institution, but if your RRSPs are with an investment broker, find out how long it will take to process your withdrawal request, as it could take up to a week.

 

COSTS OTHER THAN THE SELLING PRICE
  "Closing costs" are additional fees or costs that are associated with the purchase of property. You should keep these costs in mind and budget for them.
  • Property Transfer Tax (PTT) - Also know as property purchase tax. This tax is paid to the government and is at the rate of 1% on the first $200,000. plus 2% up to $2,000,000, then 3% up to $3,000,000, then 5% on the balance of $3,000,000. and above on the purchase price of the property.
    For the 1st time buyer there is a provision to rebate a portion or all of the property transfer tax. In order to qualify for this rebate the buyer must meet several criteria. A few of the conditions are that the property purchased must be under $475,000. (pro-rated rebate available between $475,000 and $500,000), the buyer must have never owned property as a principal residence, and must be a resident of British Columbia, Canada and be a Canadian citizen or pernanent resident.
    Property Transfer Tax is exexmpt for Canadian citizens or permanent residents on NEW homes for principle residence (cannot be for rental) up to $750,000, and there is a partial exemption for NEW homes between $750,000 to $800,000.
     
  • Foreign Buyer Tax -  An additional 20% foreign buyer tax will be added to the Property Transfer Tax for residential properties purchased in the Greater Vancouver Reginal District by foreign nationals (non-Canadian citizens or permenant residents) or foreign-controlled corporations.
     
  • Goods and Services Tax (GST) - GST is payable to the government on brand new properties at the rate of 5%. New home buyers may also be eligible for the federal GST new housing rebate of 36% on the 5% GST paid on the new home up to purchase price of $350,000. Above $350,000. the federal GST new housing rebate is gradually reduced up to the purchase price of $450,000 when the rebate is eliminated.
     
  • Lawyers Cost - A lawyer will be needed to convey the funds from you and the bank (if there is a mortgage) to the seller's lawyer. The lawyer will also search the title of the property to be certain that it is clear and free and register it under your name at land titles office. An adjustment sheet will also be prepared by your lawyer to calculate any additional funds that will need to be paid or is owed to you. Lawyers cost for a conveyance will vary, but usually will be approximately $1,000. to $1,500.
  • Mortgage appraisal - The bank or lending institution that you apply to for a mortgage will do an independent appraisal of the property before they issue a mortgage to you for the property. Fees for the mortgage appraisal varies from each lending institution, usually approximately $300. (some willing to forgo the charge to secure your business).
  • CMHC High Ratio Insurance - If you are taking out a high ratio mortgage, the lending institution needs to insure your mortgage with CMHC. The insurance charged is passed on to you from the bank, and is on a sliding scale depending on the amount of the mortgage. This insurance is often just added to the final amount of the mortgage.
  • Property Inspection Service - For most properties, an inspection by an independent property inspector is suggested. Inspection services usually charge a fee that varies from apartment to houses. Expect to pay $500 - $800 for an apartment and $800. to $1,200 for an average family home. Remember that inspectors are not hired to tell you that the property is in perfect condition, but to educate you with what to expect for maintenance or future work needed on the property. Often in the case of apartments and townhomes, minutes of the strata council meetings and the minutes of the annual general meeting of the strata will give you an overview of the maintenance and condition of the property.

 

WHEN YOU FIND YOUR DREAM HOME
  The Contract Of Purchase And Sale
Once you have found your dream home, you need to have a contract of purchase and sale drafted to negotiate the offering price you are prepared to pay for the property, and to outline all details, terms, and conditions for the sale. Remember that the contract is a legally binding document.

The following are factors and considerations to keep in mind when you are prepared to make an offer on a home.
  1. Deposit - Common Real Estate practice requires that the buyer puts down a deposit of approximately 5% of the purchase price or greater. This amount may vary from the general 5%, and under certain negotiations may need to be increased. This deposit will be held in a Trust Account, and if stated in the contract, will accrue interest to the buyers benefit. The deposit will form part of final down payment on the purchase of the property.
  2. Dates on the contract - Three dates to keep in mind.
    1. Completion Date - The actual day your Lawyer will transfer your funds (down payment = deposit/cash + mortgage) to the Sellers Lawyer, in exchange for clear title of the property and registered under your name at land titles office.
    2. Possession Date - The day that you receive the keys to your new home, usually 1 or 2 days after completion to allow for registration at land titles and confirmation of all transferred funds.
    3. Adjustment Date - From this day on, you will be responsible for any fees or costs associated with the property. Your lawyer will prepare an adjustment sheet, pro-rating your portion of the years taxes, monthly maintenance (if apartment or townhome), and any other costs that may have been already paid or owing.
  3. Items included or excluded - Items to be included in the final selling price, such as the appliances, must be written in the contract.

  4. Property Disclosure Statement - Also known as PDS in short. This completed form is available for all properties list through the Multiple Listing Service. The PDS form is completed by the seller and is designed to protect all persons involved in the real estate transaction. It provides a written record of representations made by the seller about the state and disclosure of the property. To make it enforceable, the PDS form must be signed and written into the contract.

  5. Tenancies - If the property is rented and you intent to move in yourself, the tenants must be given notice to vacate the property. Under the Residential Tenancy Act, the tenants (if renting month to month) must be a minimum of 2 months notice effective on the last day of a rental payment.

Call me at (604) 805-0825 (mobile), (604) 620-6788 (office) or
e-mail:
info@davidtung.com
www.DavidTung.com