First time buyers living in the Metro Vancouver / Fraser Valley region face the challenge of finding affordable housing in one of Canada’s most expensive markets. Coupled with new mortgage rules introduced in 2018 (stress test) getting into the market may require a measure of compromise when it comes to your expectations.
Step One: SAVE $
A twenty percent deposit would be ideal however that is not always practical in our marketplace, so with good credit, taking out a loan with your financial institution is always a good option to consider.
If you have less than a 20% down payment you may be required to take out mortgage loan insurance. Another option, if you are able is sourcing private funds to help top up the deposit.
Step Two: Meet with a mortgage broker and / or your bank.
When you meet with a mortgage lender, a wide range of questions will be asked to determine what your “budget” will be. You will need a down payment for the home you wish to purchase, and you will need to set aside funds to pay for “up front” costs such as legal conveyancing, taxes etc.
Other factors such as your credit score and debt load will come into play when meeting with your lender.
The Canada Mortgage and Housing Corporation suggests that your monthly housing costs should be no more than 32% of your average gross monthly income. This percentage is known as your “gross debt to income ratio” or GDS (gross debt service ratio).
Once the interview and application process with your lender has taken place, they will tell you how much you can afford and you can proceed to negotiate a pre-approved mortgage.
Your lender will also be able to advise you of any government programs you might qualify for that would reduce taxes payable on the purchase of your new home or provide alternate funding initiatives.
Step Three: Create a wish list for the home you want to buy.
A good place to start what can be a daunting task, is to establish what your ‘wants’ and ‘needs’ are. Create a list that includes the city and neighbourhoods you prefer, proximity to schools, your workplace (s) and other personal preferences.
After meeting with your mortgage lender you should be pre-approved, so focus your search on properties you can afford. A typical wish list will include the type of home; single family home, townhouse, condominium, then square footage of the house and lot, number of bedrooms and bathrooms, garage or carport, yard for children or pets and so on. When you have a wish list with this type of information, your property search will become much more focused.
Step Four: Time to hire a real estate professional
Hiring the right real estate agent will be crucial to making your first home buying experience an enjoyable one. Buyer’s agents invest a great deal of time, energy and resources to locate the perfect property, write and negotiate offers and walk through the entire buying process with you, their client. Working with an agent you feel comfortable with and trust will go a long way to realizing your expectations and moving into dream home.