Steps to Buying Your Next Home

• This is a tricky question and will often come down to factors pertaining to your situation, the current market, what sort of back-up plan you have in place, and your overall needs.
• Where there is no right answer here, selling your home first will be the safer option. Selling your home before making your next purchase will give you a better understanding of your overall budget. Selling first will also allow you to use the proceeds from your sale towards the purchase of your new home. On the other hand, the risk of selling your home first means you may not be able to find a new home and complete on that purchase with the same closing dates as your current sale.
• Alternatively, purchasing your next home first will give you the reassurance that you found the home of your dreams, but it comes with the risk that you may not sell your home at the expected price you were hoping for as you are much more motivated to sell now. In this case, you may also not be able to align the closing date of your home sale with your new home purchase. Even more worrisome, you may not be able to sell at all if there are any major changes to the market during this time.
• If you find yourself in a position where you can’t close on your new purchase because your current home won’t sell, it’s not just your deposit that you will likely forfeit, but you may find yourself in a legal dispute.
• Because there are many moving parts to your next real estate purchase, speak with one of our trusted advisors and we can ensure that you are making the right decisions for you and your family.

• If your down payment is stuck in the equity of your home without any secondary source of funds to put towards your purchase deposit, then deposit financing might be for you.
• A deposit is different from a down payment and demonstrates the buyer’s good faith to close on their purchase agreement. If you find yourself needing these temporary funds, there are options available.
• How Does Deposit Financing Work?
• A firm sale contract for your current home must be provided.
• The funds leant are secured against your current home.
• The amount borrowed for your deposit on your new home must be paid back in full once the sale of your correct home completes.
• It’s important to note, if the completion date of your current home falls after the completion of your newly purchased home, you may also require bridge financing to help bridge the gap of your required down payment between closing dates.

Not necessarily!

• Ideally, you would want to close on the sale of your existing home before the completion of your new purchase as this allows you to receive the funds from the sale of your home to put towards the down payment on your new purchase.
• In cases where the sale of your current home takes place after the completion of your new purchase and your down payment is coming from your sale, bridge financing will be an option that helps you bridge the gap of your down payment between purchase and sale closing dates.

Let’s take a quick look at the typical costs associated with buying your new home:

• Land Transfer Tax
  In the province of B.C., when ownership transfers title, the buyers are faced with a land transfer tax, also referred to as property transfer tax

• + 1% on first $200,000
• + 2% on balance up to $2,000,000
• + 3% on the balance over $2,000,000
• + 2% on balance over $3,000,000 **If Residential**

Please note that there are some exemptions from this tax for first time home buyers, and new built properties.

• Legal Fees

• As the final stage of your home buying process, your legal team (lawyer or notary), are responsible for legalizing your transaction, including registering your mortgage and transferring title. This estimated cost is between $1,500 & $2,500.

• Appraisal Costs

• Your lender may ask you to order a home appraisal as part of your conditions to confirm the value of your home. In many cases with a down payment of less than 20%, we can have this appraisal completed at no cost to you. However, if required, this cost may vary depending on property value, property location, and whether there is a rush on the report; however, we typically recommend a budget of $300 - $500.

• Home Inspection Cost

• A home inspection is optional in most circumstances. This cost may vary depending on the uniqueness of the property and if there is a rush on the report, but we typically recommend budgeting between $500 - $800

• Other typical costs may include a home insurance policy, GST, adjustment costs, title insurance, your down payment, & moving fees.

• Realtor Fees

• Realtor fees are typically paid by the seller of a real estate transaction in Canada and will be based on the terms you and your realtor set forth.

• Legal fees

• Just like when buying your new home, your legal team (lawyer or notary), will be responsible for legalizing your real estate transaction. This estimated cost is between $1,500 & $2,500.

• Mortgage Penalty Fees

• This penalty is the number one cost when moving from one home to the next and takes place when you are selling a home that has an existing mortgage in place.
• Depending on the mortgage product you are in, this penalty can range from 0.5% to upwards of 8%-10% of your mortgage balance. To minimize this cost, we always recommend taking advantage of your pre-payment privileges that otherwise reduce your overall penalty.
• For this reason alone, we ensure all our clients are set up with the maximum amount of mortgage flexibility from day one of your mortgage. This helps protect your greatest asset so that you have the tools and resources to succeed given any changes that come along in life.

• Other typical costs may include bridge financing fees, moving costs, taxes, staging fees, & disbursement fees.

The minimum down payment on your next purchase is a very common question in today’s market so let’s break that down.

• The minimum down payment requirements are:

• 5% on the first $500,000.
• 10% on the next $500,000, up to $1,000,000.
• 20% on any purchase over $1,000,000.

• 20% will also be required when you:

• Purchase a rental property
• Take a 30-year amortization
• Refinance your mortgage
• Purchase over $1,000,000
• Utilize alternative financing options

• Examples of some down payment sources may include:

• Personal savings
• A gift from an immediate family member
• RRSP’s or TFSA’s
• Investment accounts
• Borrowed money in some cases

• If you’re using the equity in your home for the down payment on your next home, this may seem complicated at first glance. We will work with you to help calculate the total remaining equity in your home after all expenses are accounted for.
• We will then put a detailed plan in place to help you qualify and set you up in a mortgage product that offers you optimal flexibility with a payment you’re most comfortable with.

• With all our clients, our main goal is to save you as much money as possible whilst setting you up in a mortgage that helps you succeed.
• That means our first step is always to look at the portability of your current mortgage over to your new home. In some cases, this is a great option where your rate may be lower than market rates and we can set you up with your same lender. In other cases, there may be more competitive rates and mortgage solutions available to you.
• Because the market is always evolving, we make it our priority to maintain our close ties with our lending partners to ensure you’re seeing the maximum exposure to market rates, options, and available products.

The first step to buying a home is to assess your financial readiness. This involves reviewing your savings, income, and credit score to determine how much you can afford to spend on a home. It's also important to consider your long-term financial goals and lifestyle preferences when defining your home buying criteria, such as location, size, and amenities. Once you have a clear understanding of your budget and needs, you can start researching neighbourhoods and properties that align with your criteria.

The amount you need for a down payment depends on several factors, including the purchase price of the home and your mortgage lender's requirements. In Canada, a minimum down payment is typically 5% of the purchase price for homes valued up to $500,000. For homes priced between $500,000 and $1 million, the down payment increases to 10% on the portion exceeding $500,000. Homes priced over $1 million require a down payment of at least 20%. It's essential to have your down payment saved and ready to demonstrate financial stability and responsibility to potential lenders.

Mortgage pre-approval is an evaluation by your mortgage advisor. We as Mortgage Advisors understand lender guidelines and it’s our job to source these options for borrowers. This includes determining the max mortgage amount a lender would lend to them based on their financial situation along with a breakdown of monthly payments and costs associated with home ownership

The timeline to buy a home can vary based on factors such as market conditions, financing approval, and the complexity of the transaction. On average, the process can take anywhere from 30 to 60 days, from making an offer to closing the sale. Factors that can influence the timeline include negotiations with the seller, home inspections, mortgage approval, and legal processes. It's essential to work closely with your real estate agent and mortgage lender to ensure a smooth and timely transaction.

Closing costs are fees and expenses associated with finalising a real estate transaction and transferring ownership of the property from seller to buyer. These costs typically include legal fees, land transfer taxes, title insurance, and appraisal fees. The buyer is responsible to pay these closing costs. Their mortgage advisor will ultimately break this down for them.

While it may be more challenging, it is still possible to buy a home with bad credit. Lenders may consider factors beyond your credit score, such as your income, employment history, and the size of your down payment. Some mortgage programs specifically cater to borrowers with lower credit scores or non-traditional credit histories. However, you may face higher interest rates and stricter lending requirements. Working to improve your credit score, saving for a larger down payment, and exploring alternative mortgage options can improve your chances of qualifying for a home loan.

A home inspection is a thorough examination of a property's condition conducted by a qualified inspector. The inspection typically covers the structural integrity, plumbing, electrical systems, HVAC systems, roof, and other critical components of the home. A home inspection is not mandatory but highly recommended to identify any potential issues or repairs needed before finalising the purchase. It provides you with peace of mind and can help you negotiate repairs or adjustments to the sale price with the seller.

If your offer is not accepted, you have several options. You can revise your offer and resubmit it to the seller, increase your offer amount, or continue searching for other properties that meet your criteria. It's essential to work closely with your real estate agent to understand why your offer was rejected and strategize on the next steps. Keep in mind that the real estate market is dynamic, and new opportunities may arise that better fit your needs and budget.