We'll be by your side each step of the way, from mortgage pre-approval, finalizing your mortgage and to the purchase of your home. To have a Best Mortgage Vancouver Mortgage Specialist contact you online contact form or call us at 778-996-1800.

Step 1: Getting Pre-Approved

One of the first steps in buying your home is obtaining a pre-approved mortgage. With a pre-approved mortgage you will:

• Know how much you can afford and what your payments will be
• Lock in your interest rate at today's rate (or lower if rates drop), guaranteed for up to 120 days
• Demonstrate that you are a serious buyer, which can help in your negotiations with sellers and their agents

It is important to remember that although you may have been approved for a mortgage the lender will still want to review the property you have selected to make sure the property also meets their lending criteria.

How much can you afford?

Taking on too much debt can really weigh you down. So, you need to look at the big picture when financing your home. That means tallying up your total debt load, not just the mortgage payments.

In processing your mortgage application, lenders will consider two affordability factors to determine the maximum mortgage you are qualified for:

• The Gross debt service ratio: This factor considers how much of your income is going towards your housing costs. Your monthly housing costs shouldn’t exceed 32% of your gross monthly income. Over and above your mortgage payments lenders take into account the property taxes, a heating factor, and ½ of monthly condominium or strata fees if applicable.
  
  
• The Total debt service ratio: This factor takes into account not only your housing costs but also your other monthly financial obligations. Lenders prefer to see 40% or less of your gross monthly income going to cover your housing costs and other debts. Those expenses include housing costs and debt, such as car loans, credit card payments, personal loans and line-of-credit payments. 

If your credit score is high enough the lender may only use the Total debt service ratio and will allow the Total debt service ratio to be as high as 44%.

What can you afford? Our mortgage qualifier calculator will help you figure out how much you should spend on your home.

Costs to Consider

Mortgage loan insurance: The cost of insurance is based on the amount you borrow as a percentage of the value of your home.

The premium may be paid as a lump sum or added to your total mortgage amount.

Appraisal Fee: Between $200 and $350, depending on your home’s location.

Property transfer tax: In B.C. the Property Purchase Tax is payable when an application is made to register a change of title and based on the property’s fair-market value:

• if the fair-market value is $200,000 or less, the tax is 1% of fair-market value
• if the fair-market value is greater than $200,000 the tax is 1% of the value up to $200,000 and 2% on the fair-market value over $200,000
  First Time Buyers may be exempt from this tax provided.

Property Purchase Tax Exemption

You may qualify for a tax exemption if you, and the property you are purchasing, meet the following guidelines:

• The maximum purchase price to qualify for the exemption in Vancouver, Victoria, Squamish, Whistler, and the Fraser Valley is $425,000. In all other areas of the province, the maximum qualifying purchase price is $425,000.
• You may never have previously owned an interest in your principal residence (anywhere in the world).
• You must be a Canadian Citizen or Landed Immigrant and have been a resident of British Columbia for at least 12 consecutive months immediately prior to the purchase.
• The purchaser must occupy the property as their principal residence within 92 days of completion.
• Under certain circumstances, the purchase of raw land or a building lot may qualify.
• Other conditions apply may apply.

Legal fees: These include your lawyer’s fees plus miscellaneous costs to transfer the property. These vary according to the legal firm used.

Survey certificate: Required to ensure the house is situated on the lot within legal limits. You may ask the seller to provide this as a condition of your offer.

Inspection fee: An optional but advisable step to take. Have an independent professional inspect your house and make a satisfactory inspection a condition of your offer. The cost will vary according to the home and inspector. Expect to pay $250 to $350 for a $300,000 home.

Tax: New homes are subject to 7% GST. You need to know who pays the GST, yourself or the builder. Check this by reviewing the offer to purchase—you pay if the offer to purchase says ‘plus GST’ and the builder pays if it says ‘GST included.’ There is, however, a rebate on the GST if the home costs less than $450,000. Once again, you need to establish who gets the rebate. More rebate information is available online from the Canadian Revenue Agency.

Prepaid taxes or utility bills: If these costs are prepaid, you must reimburse the seller on a pro-rated basis.

How can you get your down payment?

The higher your down payment, the lower your mortgage payments. Here are some other things to keep in mind:

• If you do not have a down payment that is 20% of the purchase price of your home, you will have to apply for a high-ratio mortgage.
• If you do not have enough money saved for a down payment, you may be able to finance your down payment or withdraw your RRSP’s’ and apply the cash toward the down payment.

High-ratio versus conventional mortgages

Mortgages with more than a 20% down payment are known as conventional mortgages. Not everybody has that much cash. If you don’t, you’ll need to apply for a high-ratio mortgage. Because of the smaller down payment, these mortgages are considered riskier and require special mortgage insurance. Insurance for these mortgages is provided by the Canadian Housing and Mortgage Corporation (CHMC), www.cmhc-schl.gc.ca, Genworth Financial, www.genworth.ca and AIG.
In these cases both the lender and one of CHMC, GE or AIG must approve your mortgage application.

Financing your down payment

In some cases you may be able to purchase a home wthout a down payment.

Or if you don’t have enough savings for the minimum 5% down payment, you’re not necessarily stuck. You may use a personal loan or a line of credit for the down payment. You can turn to your family for assistance. Whatever you do, though, the money you borrow can’t be registered against the property.

If you decide to borrow your down payment, you will pay a higher insurance premium. In addition, the lenders will include the borrowed down payment in calculating a mortgage that you can afford.

The Home Buyers’ Plan—using RRSPs

Your RRSP is usually reserved for retirement, but you may be able to tap these funds to buy your first home by using the Home Buyers’ Plan. If you qualify, the plan lets you withdraw up to $20,000 tax free from your RRSP to use as a down payment. Some conditions apply:

• You must purchase your home by October 1 in the year following your RRSP withdrawal.
• You must have entered into a written agreement to buy or build a qualifying home.
• All RRSP withdrawals must be made within the same calendar year.
• To remain tax free, these funds must be repaid within 15 years. Repayments start in the second calendar year following the withdrawal.

Step 3 Finding the Right Home.

Start the Search

Once you figure out what you can afford to pay for a house and obtain a pre-qualified mortgage; you are ready to start your search. There are a variety of sources you can use to find the home that is right for you:

• Word of mouth. By telling everyone you know that you are looking for a house, you might hear about homes that are just becoming available on the market.
• Newspapers and real estate magazines. Check the new homes section in daily newspapers or look for real estate magazines available at newsstands, convenience stores and other outlets. These free publications feature pictures and brief descriptions of a variety of homes.
• The Internet. Check out real estate websites, such as www.mls.ca, for information and pictures of a wide range of properties. This site allows you to narrow your search by location, price, number of bedrooms and other features.
• "For Sale" signs. Drive around a neighbourhood that interests you and look for “For Sale” signs. This is a good way to find homes that are being sold by the owner.
• Visit new development sites. If you are looking for a newly built home, this will allow you to see the different models available and to get information from builders.
• Work with a real estate agent. For most buyers, a real estate agent is key to finding the right home. You’ll want to find someone whose attitude and availability inspire your trust. In addition you’ll want to work with a realtor who's active in the neighbourhood that you want to live in, as they may be aware of some properties that aren’t available through the Multiple Listing Services. If you are not presently working with a realtor we would be happy to provide you with a referral to a realtor familiar with the area in which you want to buy. Click here for client contact form

Useful Tips for Your Search

• Keep records. Whether you work with a real estate agent or search by yourself, it's a good idea to visit several different homes before choosing one. Most realtors will provide you with feature sheets on the properties you view to help you remember which properties have which features. Don't forget to consider the home's utility costs, property taxes and major repairs, as these will affect your monthly housing expenses. Ask to see copies of bills. You should also be ready to compromise. Chances are you won't find a home that has everything you want.
• Think twice. Even if a home seems perfect, go back and take a closer, more critical look at it. Visit on different days and times, chat with prospective neighbours and look beyond cosmetics.

Step 4 Making an Offer to Purchase

Once you have found the home you would like to purchase, you need to present the vendor with an offer to purchase the property, which is known as a Contract of Purchase and Sale. As your home is probably your biggest investment, it would be wise to work with your real estate agent and/or a lawyer/notary in preparing your offer. Remember that the Contract of Purchase and Sale is a legal document and should be carefully prepared.

Any offer or agreement will typically include:

• Your legal name, the name of the vendor and the legal civic address of the property.
• The purchase price offered.
• The chattels that will be included in the purchase price (e.g.: window coverings, appliances or a satellite dish). Whatever items in or around the home that you think are included in the sale should be specifically stated in your offer.
• The amount of deposit.
• The closing day (date you take possession of the home) — usually 30 to 60 days from the date of agreement. It can also be 90 days or longer.
• Request for a current land survey of the property.
• Date when the offer becomes null and void.
• Any other conditions that go with the offer, including property inspection and approval of mortgage financing.
• The process of making an offer, receiving a counteroffer and then revising it again is not uncommon. The whole process can seem like a roller coaster ride — exciting, but stressful. It's all part of making the deal work best for you and the seller.
  
  
  When you make an Offer to Purchase, your real estate agent or your lawyer/notary will most likely add certain conditions to it, making it a conditional offer. This means that the contract will only become final when the conditions are met. The following conditions are generally standard in a Contract of Purchase and Sale, especially for first-time buyers:
  • A satisfactory home inspection report
  • A property appraisal
  • Lender approval of mortgage financing to finance the purchase
  • For strata titled properties you will ask the seller to provide you with minutes of the strata council meetings, financial statements for the strata corporation, and other documents related to the strata corporation.

Once these requirements are met, the conditions are removed and the Offer to Purchase becomes final.

As part of the Contract of Purchase and Sale the seller will generally require that you provide a deposit of between 5 and 10% of the purchase price. This deposit will generally be paid to the real estate office that your realtor works for. These monies are held in trust and will form part of the purchase price.

Step 5: Finalizing your mortgage

Once your offer is accepted, contact us so that we can work with you realtor to ensure that the final approval for your mortgage is obtained in time for you to remove the financing condition from your offer.

In order to finalize your mortgage we will need to ensure that all of the following documentation has been provided to the lender:

• confirmation of your income
• confirmation of your down payment
• A copy of your contract of Purchase and Sale , a copy of the real estate listing, the Property Condition Disclosure Statement (PCDS) that was provided to you by the seller. We will generally obtain this paperwork directly from your realtor to save you the time and effort of getting it to us yourself.

As soon as the lender has received all of the required documents they will provide you with a written commitment letter that confirms that both you and the property have met all of their lending requirements. You can now remove the financing condition from your Contract of Purchase and Sale.

After all your conditions have been removed your realtor will pass onto your lawyer or notary all of the details of your purchase including providing your lawyer or notary with copies of the Contract of Purchase and Sale.

At the same time we will ensure that the lender receives the proper mortgage instructions from the lender.

As soon as your lawyer has received the documents from your realtor and the lender they will be able to get to work on making sure that the purchase closes on the agreed to date.

The Final Steps

Closing Day

Before the house can formally change hands, there are still a few things to do. Here's what to expect on or before closing day:

Your lawyer or notary will contact you about a week before the scheduled closing date to arrange a time for you to come into their office to sign all the final paperwork. Usually you would meet with the lawyer one to two days prior to the Closing Date.
You will also be asked to bring in a bank draft or money order to cover the difference between the purchase price plus your closing costs and any amount that you were required to provide as a deposit in your Contract of Purchase and Sale.

On the Closing Date

• your lawyer and the seller's lawyer will arrange to transfer title of the property from the seller to you;
• the mortgage money will be transferred to your lawyer's trust account, and then to the seller; and,
• your lawyer will bill you all additional expenses -- land transfer taxes and any outstanding legal fees.
• Your realtor will make arrangements to get to you the keys for your new home

Congratulations you have now achieved your goal of owning your own home!