At a glance, the home buying process can feel like a daunting or challenging experience, especially for a first-timer. The West Haven Group is here to simplify the process and provide you with a step-by-step guide for becoming a homeowner!
In the video below, Alec Abbott breaks down the 9 steps to becoming a first time home buyer in Vancouver.
First Time Home Buyer Process – Getting Started
Step 1 – Choosing Your Realtor
There is no shortage of real estate agents in Vancouver, but finding the right one is very important. You want an experienced agent who listens to you and knows how to navigate the local market. By the end, you will be working hand in hand with this person so find someone you can build a relationship with and trust. A couple of simple ways to ensure you find the perfect agent are:
Ask a friend, family, or colleagues to see if they’ve worked with someone they liked and would recommend.
Spend some time researching and looking for reviews online. Some places to start are Google and REW.
Once you’ve narrowed it down to some potential options, we encourage you to meet and interview each agent separately to assess which Vancouver realtor you’d like to work with.
Step 2 – Choosing your mortgage broker
Similar to finding a realtor, finding the right mortgage broker will ensure you will be taken care of and will be provided with the best financial guidance and advice. One additional benefit of working with a mortgage broker versus a bank is the ability to be able to search across lenders for the best rate.
If you need mortgage broker recommendations, feel free to reach out to us and we can connect you with some local mortgage brokers we’ve worked with.
Step 3 – Analyze your wants and needs
Pinpointing what you would ideally want in your future home can seem like a daunting task. Simply start by creating a list of all your wants, needs, and non-negotiable items. As an example, include things like ideal locations, whether having a patio is a must and if having a gas stove is a ‘nice to have’. Starting this list at the beginning of your home buying process will be very helpful for you and your agent as you start touring properties.
First Time Home Buyer Process – Shopping Time
Step 4 – Touring Properties
This is the most exciting part of the entire process so make sure to enjoy it and approach it with an open mind. Some will find their home after the first viewing and for others, it might take a bit longer.
With every home you view, you are getting closer to finding the right one! Lean into your realtor’s expertise, ask questions and stay positive.
Step 5 – Choosing Your Price
After you’ve found a property that you’d like to submit an offer on, your realtor will do a market analysis of sold comparable in the area and the building. After taking a few factors into consideration like renovations or days listed, you will discuss your strategy.
Step 6 – Presenting Your Offer
Depending on your personal needs and the state of the market, this step can vary. Regardless, your realtor will include clauses that will protect you and keep your best interests.
When writing an offer, it can include subjects like:
Subject to inspection
Subject to financing
Subject to reading the strata documents.
With every offer you make, you will also have to set a completion date and a possession date. The completion date is when the title shifts from the seller to the buyer and the possession date is when you officially get your keys and can move in.
First Time Home Buyer Process – Closing The Deal
Step 7 – Negotiation Phase
Once your offer has been submitted, your agent will negotiate on your behalf on things like price or subjects. If your offer is accepted, you will enter into the subject removal phase. Based on your subjects and what was stipulated in your contract, this time is set to complete things like:
Performing an Inspection
Finalizing your financing
Reading through strata docs
On the last day of your subject removal day, you have the option to put down a 5% deposit to hold the property.
Step 8 – Post Subject Removal
Once your subjects have been removed, this is the time to start looking for a lawyer or a notary to help you with the closing of the deal. This person will handle all of the transfer of funds and any legal matters that need to take care of. Around 7 -10 days closer to the possession date, you will need to sign and complete the deal.
If you need notary or lawyer recommendations, feel free to reach out to us and we can connect you with some local mortgage brokers we’ve worked with.
Step 9 – Move To Your New Home
On possession day, you will do a walk-through with your realtor to ensure the property is clean and if you had stipulated something had to be fixed, this is your chance to double-check. Once this is all completed, you will be handed the keys, and congratulations, you are a new homeowner!
Are you ready to buy a property in Vancouver?
As complex as the home buying process may seem, you are now one step closer to the purchase of your home! As a team of top 1% realtors in Greater Vancouver, the West Haven Group is here to support you through every step of the way. Get in touch with us and we’d be happy to answer all of your questions.
Purchasing a pre-sale or ‘off-the-plan’ property in Vancouver gives you the opportunity to purchase property that has not been built yet. It can give you more time and flexibility to finance the purchase, may reduce some taxes, and allows you to make customisations to your property before it is even built! However purchasing pre-sale comes with its own set of risks to understand, and here’s what you need to know.
What Does Pre-sale Mean in Real Estate?
Pre-sales are a common component of the Vancouver Real Estate market. In its simplest form, you are pre-purchasing a property that is yet to be built (or in some cases in the early stages of construction).
For a lot of prospective buyers, a pre-sale condo is the most cost-effective way to enter the property market, as there are a number of advantages offered:
More time to accrue/obtain finance. When purchasing pre-sale, you only need to have your downpayment available. Depending on the contract there may be other smaller payments along the way, based on the schedule of construction. Generally, however, the entire payment is not due until the building is completed, which may provide a few extra years to save, and lower your mortgage amount to boot.
Depending on the state of the property market in Vancouver, your property may appreciate over the time that it is built.
Your downpayment and deposits are held in a lawyer’s trust account. This restricts the developer from accessing the funds until the building is complete.
New properties are subject to mandatory home warranties and insurance. This gives you a minimum of two years on the labour and materials, five years on the building envelope, and ten years on the structure of the building itself. By comparison, purchasing an existing property may not come with these warranties, which could increase the overall cost if you needed to rectify an issue.
You get a brand new home! Being involved from the start may give you the opportunity to customise the layout, finishes, colour scheme and more to make sure the property you move into is the one you want, from day 1.
What Are the Risks With Pre-Sale Property in Vancouver?
As with any investment or large financial purchase, there are inherent risks. When it comes to pre-sale property, however, there are a unique set of risks to understand.
Purchasing a pre-sale property as an investment is highly speculative. As these buildings can take years to complete, you are taking on the assumption that the property market will continue to appreciate, which may not be the case.
Even though the property market may change, you are usually purchasing your pre-sale condo at a premium to those currently available. This is because most pre-sale developments price their condo’s on the assumption that property prices will increase, not decrease. As a result, you may pay up to 30% more for pre-sale than you would for an already completed property.
Most pre-sale developments end up taking longer than expected. These delays can range from a few months up to 1-2 years. Regardless of whether the scheduling delays are caused by the developer or some external reason, there are usually clauses in the contract of sale which heavily favour the developer in these instances. This can make it difficult to plan a move-in date, and delay your own plans for your new property.
If a developer needs to make changes to the floor plan, materials or other design elements to comply with building codes they usually reserve the right to make these changes without notifying you. As such, the purchase you agree to in a showroom 3 years prior to the finished product can be different from the property you actually receive.
Your personal finances may change between signing the contract and the building’s completion. If you lose your job or something else impacts your income, you may not be able to access finance when the property is ready and lose your downpayment.
Delays in construction are common, and can be an inherent risk when purchasing a pre-sale condo
Can I Reduce My Tax by Purchasing Pre-Sale?
The property transfer tax (PTT) is one closing cost that often catches home buyers off-guard. It is based on the sale price of a property, at 1% of the first $200k, and a further 2% of the sale price from $200k-$2 million. As a first home-buyer, you may be entitled to a PTT concession, but only if the property is valued at less than $475,000, which isn’t very common in Metro Vancouver these days.
Purchasing a pre-sale property, however, can exempt the sale from the property transfer tax, provided the property is priced at $750,000 or less.
Whilst that is a win for the home-buyer, newly built properties are instead subject to 5% GST. This expense is usually in addition to the sale price of the property and should be accounted for when assessing your own finances.
If the property is to be used as your primary residence, there are opportunities to reduce your taxable capital gains in the future. However, this would be based on price appreciation, among other things.
How Do I Know I’m Purchasing the Right Pre-Sale Property?
Whilst there are never zero risks, there are a few things you can do to reduce the risks associated with a pre-sale property purchase:
Do your homework. Is the developer established and reputable? Do they have a good track record and happy clients? Is the property being built in an up and coming neighbourhood? Will there be access to services and other essentials? It’s important to look at the development as a whole and what it can offer you, not just the condo you wish to purchase.
Use a buyers agent! The best way to understand the property and neighbourhood is to use a licensed Realtor. They should be very aware of the area itself and new developments, including the positive and negative features of the development, and offer you industry-specific insights and advice.
In the same manner that you would assess the developer and development, choosing the right agent can make all the difference to your pre-sale property purchase in Vancouver.
It’s also important to keep in mind that a buyer’s agent does not cost you anything! Rather, a buyer’s agent is paid by the seller upon settlement of the property, so you have nothing to lose by letting the professionals help you.
If you’re interested in a pre-sale property, or another home purchase in Vancouver, the West Haven Group is here to help. Simply reach out to our professional team to schedule an obligation-free meeting.
The recent property bull market in Vancouver has been great for home-owners. It has however created a gap in housing affordability and attainability for the next generation. As it stands, many millennials are struggling to make it onto the first rung of the property ladder, and the bank of Mom and Dad is quickly becoming the only option for financing availability. There are a number of options available that can help you to guarantee a mortgage for your child, however, they do have inherent risks and considerations to take into account.
I Want to Help My Kids Buy a Home- What Are My Options?
With higher property prices and restricted rates of lending, obtaining a first home can be an arduous task. Many parents wish to help their children through the process, whether that is through financing, lending, or using their own funds/liquidity to finance a purchase.
When it comes to securing a mortgage for your child, you have a number of options available to you. Some may be more suitable for your circumstances, and all of the options have their own pros and cons, which we’ll cover in more detail.
1. Loan Your Child the Money
The first and probably most obvious option to help your kids purchase their first home is to loan them the money.
A loan agreement with your child can be as simple as a conversation over the dining table, however, depending on the reliability of your children, it may serve better to have the agreement formalized in some way.
In doing so you are able to set an interest rate (this figure is up to you) and clearly stipulate the terms of your loan and agreement.
It’s important to understand that if you formalize the loan, you would have to declare any interest on your tax return. Moreover, depending upon the size of the loan, it is likely that your child would have to pay mortgage lenders insurance, as part or all of the downpayment has been borrowed.
Furthermore, although this may be the most accessible option to help your children, it is also creating another debt load, which may work against them if they need to apply for a mortgage for the remainder of the property value. If you have the liquidity available to finance the entire purchase, however, giving your children a loan to help guarantee a mortgage for them could become a viable option- provided you trust them enough to pay you back!
2. Gift Your Child the Money, or the Property
This is probably the easiest and cleanest way you can finance a property purchase for your children. Although it may not be an option to gift the entire amount, for most situations gifting the money often makes the most sense from a:
Tax perspective There are no tax consequences for gifting the money. If you are providing the 20% downpayment (or more) it will guarantee your child a mortgage whilst avoiding mortgage lenders insurance. In addition, gifting the money to your children can help to avoid probate fees, if you planned to hand it over upon your passing anyway.
Legal perspective Once gifted, that money is no longer your property, nor can you be held liable for anything it is used for.
Gifting a property in and of itself is also an option, however, you may incur a capital gain if the properties fair value at the time of the ‘gift’ is more than what you paid for it.
3. Co-Sign or Guarantee a Mortgage
Both of these options will see you accept some form of liability on behalf of your children.
Becoming a co-signer to the mortgage adds your name to the title of the property, meaning that you are also a co-owner. As a co-owner of the property, you are equally liable to ensure that repayments take place. This could also put your financial future at risk should you need a loan of your own, as you may now be considered a higher risk.
It can, however, become a good investment opportunity for both you and your child, if the property value appreciates over time.
Becoming a guarantor means you are guaranteeing payment of the mortgage in the event that your child cannot. In most cases, this will use your own property equity, or take into account your other financial instruments or assets, as collateral. This also means, however, that any default will negatively affect your own credit scores too.
So Can I Guarantee a Mortgage for My Child?
The short answer is yes. The methodology for guaranteeing your child’s mortgage, however, will be dependant upon your family circumstances.
Loaning your child money, whether it is formally or informally, can open their access to financing that may otherwise be unavailable.
Gifting a downpayment may allow your child to avoid mortgage lenders insurance, claim the first homebuyers grant, and claim the primary residence exemption (freeing them from future capital gains on the property).
Co-signing or becoming the guarantor means you assume some liability and responsibility for the property, and access to finance will take into account your own financial situation.
Before committing to any of these options, however, it’s also important to ask yourself some of the tough questions:
If your child hasn’t saved enough for a downpayment, will they be able to make their mortgage repayments?
Will their debt-to-income ratio allow them to access finance for the remainder of the purchase?
Are you over-extending yourself by co-signing the mortgage, or guaranteeing the loan?
Will money become a point of contention?
If you have accounted for these potentialities and are looking for the most appropriate way to guarantee a mortgage for your child, speaking with a licensed Realtor can help you to understand the property risks and state of the market, and put you in touch with their network of brokers. For more information about financing, or helping your kids to find the right property, reach out and connect with us!
