Key Questions to Get you Started:
What is your maximum budget? Do you have a preferred budget?
What areas of Vancouver would you consider?
Do you prefer new-ish, brand new, or older?
Would you be open to updating or renovating?
What is the approximate size you would like: specifically, the number of bedrooms and the number of bathrooms?
Is outdoor space important to you?
Is the directional exposure important to you (for example, having morning sunlight or evening sunlight in certain parts of the home or property)?
What are our high priority features (i.e. Fireplace? In-suite laundry? Pool?)
How close would you like to be to transit, schools, shopping/grocery, hospitals?
What other types of rooms to you need? (i.e. Den? Formal dining area/space?)
Do you require a garage or extra parking spaces?
Do you require storage?
Getting Pre-approved for a Mortgage
Being pre-approved for a mortgage before you begin your search for a property is very important as it:
- Saves you time as we will only look at properties you can afford;
- Provides you with a negotiating tool because sellers will know that you are a strong, capable buyer;
- Provides you with certainty as online calculators and other tools are not enough (recent mortgage rule changes make a formal pre-approval the only way to be certain that you know exactly what you are capable of buying);
- Can save you money through rate guarantees of mortgage terms; and
- Reduces stress throughout the process, as you will know you are ready and capable of buying a home for a specific price.
Banks Vs. Mobile Mortgage Specialists Vs. Mortgage Brokers
In order to get a mortgage, you may work with a lender directly (either using an in-branch mortgage representative or a mobile mortgage specialist) or use a mortgage broker. Below are various ways in which they differ:
Effective mortgage brokers are able to shop around to many lenders, both the big banks and other smaller lenders.
Mortgage brokers may get special deals because many bring high volumes of business to various lenders.
Mortgage brokers & mobile mortgage specialists tend to be faster, more responsive, and available outside of the standard “bankers’ hours”, as they are paid solely or partially on commission.
If you have a long term relationship with your bank, your banks may give you a preferred rate that will be difficult for a broker to match, and may also make certain exceptions (for example, approving financing with a credit score lower than its usual threshold).
Steps to Get Pre-Approved
Talk to your lender or a mortgage broker.
Complete and submit your application. This will include personal and financial information and you will undergo a credit check.
Gather all the necessary documents required by the lender or broker.
They will verify your details.
Obtain a copy of your pre-approval.
The Right Vancouver Property
Approach the home buying process objectively and strategically:
The “perfect home”, as prospective buyers conceive of it, does not exist; at least one compromise must almost always be made.
Well-priced, good deals tend to go very quickly – you must be aggressive.
“List price” does not equal “sale price”: in a buyer’s market, it is often possible to get a property for under the list price. In a seller’s market properties often sell for over the list price.
After viewing each property, ask yourself five important questions:
What did I like/dislike about the property?
What would I have to change about the home in order for it to work for me?
If the price were right, could I see myself living in this property? If so, what is that price?
Did the home feel ‘right’ to me?
Overall, trust your instinct.
Subjects / Conditions And the Deposit
Once your offer has been accepted, you need to work to satisfy the conditions (or subjects), if any were included in the offer. Common subjects include:
• A home inspection
• Reviewing the title search results
• Reviewing the Property Disclosure Statement
• Reviewing the strata documents (if applicable)
• Reviewing the strata plan or survey
• Performing an underground oil tank search (older detached houses)
When it is time to remove subjects, a deposit is also due by the way of bank draft or wire transfer. The deposit amount is approximately 5% of the sale price.
• This deposit is held in the trust account of the buyer’s Realtor’s brokerage before being transferred to your chosen lawyer or notary’s trust account, where it is held until the Completion date at which point it goes towards your down payment.
5% vs. 20%
The minimum allowable down payment for primary residences purchased in Canada is 5% of the purchase price (up to a $500,000 purchase price). If the purchase price is between $500,000 – $999,999, a higher down payment is required: it will be a 5% of the first $500,000, and the 10% of the remaining amount of the purchase price. Mortgage default insurance is not available on homes purchased for more than $1 million, which means that a 20% down payment is required on these homes.
A borrower with a down payment under 20% is considered a “high ratio borrower”. In Canada, high ratio borrowers are required to get insurance through Canada Mortgage and Housing Corporation (CMHC), Canada Guaranty, or Genworth Financial. The default insurance premium is calculated as a percentage of the loan and is based on the size of your down payment. Mortgage default insurance protects lenders in the event of a borrower stops making payments and defaults on their mortgage loan. Mortgage default insurance typically costs homebuyers between 2.8 – 4% f their total mortgage amount.
Closing Costs for Buyers
Funds to cover your down payment and closing costs will most likely have to be in the form of a bank draft or wire transfer to your lawyer’s trust account. Your lawyer will detail the exact amounts required, but be prepared for these common closing costs:
• The balance of the down payment remaining after the initial deposit was made at subject removal.
• Property Transfer Tax (if applicable)
– 1% on the first $200,000 of the fair market value,
– 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000,
– 3% on the portion of the fair market value greater than $2,000,000 and
– if the property is residential, a further 2% on the portion of the fair market value greater than $3,000,000 (effective February 21, 2018).
• Legal fees plus various other fees that lawyers and notaries tend to include on a single invoice, which may total approximately $1,500 – 2,000:
– Mortgage loan administration or appraisal fees (if applicable),
– Credit report fees,
– Title registration fee,
– Title insurance policy premiums,
– Survey expense (if applicable),
– Pro-rated amounts for your share of any pre-paid costs such as property taxes or utilities,
– Default insurance premium (if applicable).