1) What's the minimum down payment?
5% is the minimum required for high ratio mortgage and 25% of the purchase price is usually required for a conventional mortgage.
2) What is mortgage loan insurance?
With a high ratio mortgage (by definition, anything less than a mortgage with 20% downpayment) you'll be required by the bank to purchase mortgage loan insurance. There are 3 companies that offer this insurance: CMHC (Canada Mortgage and Housing Corporation), Genworth Canada, and Canada Guaranty. They charge on a sliding scale depending on the downpayment and mortgage amount. This payment gets rolled into your mortgage so don't worry, you don't need to come up with any extra cash for this.
3) Where is the info for help with purchasing if it's my first time?
4) How much is Property Transfer Tax and do I qualify for an exemption? Property Transfer Tax applies to all properties purchased in BC. The tax rate is 1% on the first $100k of purchase price and 2% on the balance. If you're a first time buyer and purchasing under $475,000 in the Central Okanagan, you'll be exempt from this tax.
5) How much do I need for "Closing Costs" and what do they cover?
There are costs associated with buying and as a general rule if you set aside 2% of your purchase price, that should cover off miscellaneous items such as
- a) Property Transfer Tax
- b) Adjustment for annual Property Tax and Utilities
- b) Bank appraisal and any application fees
- c) Property Insurance
- d) Legal fees and disbursements (+ GST)
- e) Survey or Title Insurance
6) If I back out of a deal, do I lose my deposit?
Short answer is BEWARE! If you do not remove your subjects in good faith due to something going wrong during your due diligence process, then your deposit is not in jeopardy. If you remove subjects and the SOLD sign goes up and you decide to back out, you'll have an extremely difficult time getting your deposit back. Contracts are designed to be binding, so be sure to read all the fine print, complete all your due diligence on your offer, and be sure that when you remove your subjects you're next step is to start packing!
7) Do I need a REALTOR® to buy a home?
No, you can purchase a home without the expertise of a REALTOR®. Of course if you feel that you may need some experience, knowledge and killer negotiating skills behind you for the biggest financial commitment of your life, that involves an extremely complex and detail oriented process you may want to enlist the help of a professional REALTOR®
8) How does a REALTOR® get paid?
That's a good question that a lot of people are afraid to ask. Typically REALTOR® are paid from the proceeds of sale. A seller signs a listing agreement that accounts for both the listing and selling real estate fees. On closing the fees come from the proceeds of sale to pay both REALTORS®.
9) When is GST applicable?
GST can be a moving target and if you have specific questions or are a GST registrant, be sure to get legal and financial advice from your lawyer and/or accountant. As a general rule of thumb GST, currently 5%, is applicable on new housing and certain other real estate such as short term rental property or most commercial property that's associated with a business of some sort. On new housing that is going to be your principal residence, there is a rebate on this 5% that amounts to a net amount being paid of approximately 3.5%. Remember, you'll pay GST on your legal fees at closing.