Posted on
August 1, 2023
by
Nina Djuric
What is a down payment and how much of a downpayment do I need to purchase a home?
A down payment is the amount of money you contribute upfront toward the purchase of a home. It’s subtracted from the purchase price, and the remaining amount is covered by your mortgage.
While the ideal down payment is 20% of the purchase price (to avoid mortgage insurance), the minimum required depends on the price of the home and recent regulation changes in BC.
General guideline:
5% on the first $500,000
10% on the portion from $500,001 to $1,499,999
20% on homes priced $1.5 million or more
What can I afford?
You will need to contact a mortgage broker to figure out how much of a mortgage a lender will loan to you. In the meantime, you can play around with the mortgage calculator on my website.
How much will I pay for closing costs?
It depends on the home, however, a good rule of thumb is 2-4% of the final home price.
What is property transfer tax (PTT)?
It is a tax you must pay when you buy a home in BC unless you are exempt. Click here to see the first-time buyer exemption guideline. The general PTT rate is 1% of the purchase price up to and including $200K; 2% of the purchase price over $200K+ and including $2 million. And 3% of the purchase price for over $2 million+
Should I get a pre-approval before house hunting?
Yes, 100%. This is crucial so that you can stay within budget and avoid any disappointments during the house purchasing process. It can already be stressful - don’t let the numbers be too.
Do I really need a buyer’s agent?
Absolutely! Not only is it a free service for you - we offer consumer protection when it comes to drafting up the contract. We also offer industry resources and information as well as comparable market analysis and real estate advice so that you can make the best financial decision for one of the biggest investments of your life. Stay protected!
How many homes should I view before putting in an offer to purchase?
When it feels right! Take your time in deciding if the home is right for you. I have had buyers who wrote on the first home and those who needed to see more. Most times all your boxes for needs/wants won’t all be met so it is important to decide what is really a need and a want. Location can’t change but your kitchen cabinets can!
Who signs the contract of purchase and sale?
The contract of purchase and sale is a contract for the sellers and the buyers. The buyers signing will also be on the mortgage/financing and who will have legal ownership over the home.
What is a deposit?
A deposit is good faith money that is put down by the buyer upon a firm agreement of purchase and sale of a home. This is your way of saying “you are serious” to the seller. The amount is typically 5% of the purchase price and forms part of your downpayment.
*This is extremely important to remember if you are still needing to sell your current home!
Will home prices continue to go down?
No one has a crystal ball to give you a definitive answer, however, we do have tools and predictions on what we think might happen. There are too many factors to consider. Prices may go down a little bit more, but that shouldn’t be too daunting if you are holding your real estate long-term. Real estate is cyclical and what goes up, goes back down and vice versa. The most important thing to focus on is finding a wonderful deal and sit back while home prices start appreciating again.
Is now a good time to buy a house?
The market is ever-changing, even the most informed experts can’t predict when the market will peak or fall. If you are purchasing a home for a long-term investment or enjoyment, you should be protected from short-term changes in the market. Instead, focus on picking a home that fits you and/or your family’s needs. In our current market conditions, there are deals to be made!
Please reach out with any questions. I encourage discussions on all things real estate. Happy to help, happy to educate!
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Chat soon,
Your local real estate agent, Nina
