MH: Let’s be honest, as students, we don’t really have a clue what it takes to buy a house. We know we need money—and lots of it!—but what can we do right now to help us start the process of making one of the biggest purchases of our lives? Tim Keis, a soon-to-be TWU graduate has dreams of making it big in the professional world of real estate, first as a realtor, and eventually as a developer. He has a few golden tips for us to think on as we lie in wait for our chance to break into the housing market.
What to expect when buying your first home: Tim’s Tips
Learning how to buy a home isn’t typically one of the items on a university student’s to-do list, but it should be. Four to six years after starting university you will mostly likely make the largest purchase in your life (up until that point). When this purchase is made by an informed buyer, assisted by a professional agent, the investment will always be worthwhile. If you’re not real estate savvy or experienced when it comes to home buying—as most students are—it’s difficult to know where to start. As one who is passionate about the real estate world and has dreams about entering it professionally one day soon, I always discuss three concepts with first-time buyers when they begin their search for ‘home’: Building your Real Estate Team, Are you Ready? and First Time Buyers Incentives.
Build your Real Estate Team
Your greatest asset in buying your first home is having a team of passionate and excellent professionals who are working for your best interest. I recommend having five specialists that you relate well to who can advise you on their specialty. The specialists are:
- Real Estate Agent
- Mortgage Broker
- Contractor/Renovation Expert/Home Inspector
Building strong relationships with all of these professionals will help you make an informed decision from an economic, construction, legal, and financial perspective.
Are you ready? Is the market ready for you? And if so, what are you ready for?
Not everyone is ready to buy. You may have all you need for your first down payment in your account but that doesn’t mean that you’re ready for everything. There are other expenses involved in buying a house beyond the down payment—which doesn’t include property transfer taxes, GST if the home is new, and of course, any unexpected costs. A home inspection can help reduce the likelihood of unknown expenses, although some problems are virtually impossible to forecast.
Subscribing to the Real Estate Board of Greater Vancouver stats sheets is a great way to get market information. To help you get an idea of how strong the market is, plan to meet with your realtor after reading the stats sheets and ask about comparable properties in your desired market. Vancouver’s current booming markets are sub $1 million properties which include condos and townhomes. That’s a great thing to keep in mind if you’re buying soon.
If that all checks out, have a mortgage broker pre-approve your investment. This will allow you to come to the fight swinging. As soon as you are pre-approved, your realtor can start searching for what you’re ready for financially. And by the way, preparing for your eventual pre-approval begins now. Start building credit through good debt. You can get a credit card or pay your car insurance monthly, because without a credit history you may not qualify for much, if anything at all.
You’re only a “first-time home buyer” once in your life so take advantage of the government incentives used to attract and allow young buyers to enter the real estate market. There are a few main incentives that every first-time buyer should know here in BC. Be aware that every province and municipality offer different incentives:
The First-Time Home Buyers’ Tax Credit
Eligible individuals who bought a qualifying home can claim the home buyers’ tax credit of up to $5,000 when filing your income tax and benefit returns. In 2016, the maximum return was 15% of the claimed (max $750).
GST Rebate on New Homes
First-time buyers can apply for a GST credit on new homes sold for less than $350,000 for a maximum return of $6,300. There is a proportional rebate for homes costing between $350,000 and $450,000. No rebate is available for homes sold for above $450,000.
BC Property Transfer Tax (PTT)
All BC home buyers pay a PTT when they buy a home. One percent is charged on the first $200,000 and two percent on the remainder, up to a maximum of $475,000. Proportional rebates are offered on more expensive homes.
BC Home Owner Mortgage and Equity Partnership Program
The BC government has recently announced its release of a ‘down payment helper’ for first-time buyers. If the buyer commits to paying half of the minimum down payment, the government will loan the other 50% up to $37,500, with no interest and/or payments for five years. To be eligible, first-time buyers must be pre-approved for an insured high-ratio mortgage for at least 80 percent of the home’s purchase price and have a combined income of no more than $150,000 annually.
I know it might seem like a very complex and daunting task after all I’ve said (and this really is just the beginning), but with the right people around you to help you through the process, your buying experience will be more straightforward and tailored to you. Start with building your team of experts and use this guide to help you begin your real estate dream.