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First Time Home Buyer BC Mortgages

If you’ve decided to take the leap and purchase your first home, congratulations! You’re probably feeling excited, but also nervous or even overwhelmed. Owning a home is extremely rewarding, but going through the process of purchasing a house and qualifying for a mortgage can be quite intimidating. Fortunately our experts are here to guide you through the entire process.

If you’re like the vast majority of people, you probably do not have the cash on hand to purchase an entire house and will need to apply for a mortgage. A mortgage is essentially a loan that is secured by real property (your home). Mortgages come in all shapes and sizes – and it is important to do the research, or have a mortgage broker do it for you, to make sure you’re getting the best mortgage for your situation.

Why First Time Home Buyers in Canada Should Use a Mortgage Broker

As a first time home buyer, you’re probably concerned with saving as much money as possible, which is why working with a mortgage broker is a wise decision.

While you could walk into your local bank branch and ask for a mortgage, the bank is only able to offer you a mortgage product their suite of products. That means you could be signed up for a less than ideal mortgage – costing you a lot of money in the long run.

A mortgage broker works with a massive network of banks and lenders, some of which are not even accessible on the consumer level. When you work with a mortgage broker, they compare all the available mortgages in their network, and present you with only the best rates. By having a mortgage broker shop around for you, you have the potential to save thousands and thousands of dollars over the lifetime of your loan.

Not only does a mortgage broker save you time (by shopping on your behalf), and save you money (by finding you the best rate available), their services are free! A common misconception about mortgage brokers is that you are required to pay for their services, but this is simply untrue. A mortgage broker is paid by the lender, but only once your mortgage is approved.

Questions about buying a home?Speak to a Vancouver Mortgage Expert today!

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First Time Home Buyer BC Down Payment Requirements

You won’t be able to pay for your new home entirely with mortgage funds – so you must have saved up a sizeable down payment for a house in BC. In Canada, there are general price brackets set in place by the government that determine how much of a down payment you are required to put down.

  • Homes priced at $500,000 or less require a down payment 5% of the purchase price
  • Homes that are priced between $500,000 and $999,999 require a down payment of 5% of the first $500,000 and 10% for the amount above $500,000
  • Homes priced at $1 Million or more require a down payment of 20% of the purchase price
first time home buyer bc benefits and tips

You can avoid having to purchase mortgage insurance if you put down 20% or more of the purchase price.

The main benefit of putting down a larger down payment is that you’ll require a smaller mortgage, leaving you with less interest to pay. Another reason to put down a larger down payment (if you’re able to) is that you can avoid paying insurance premiums. The Canada Mortgage and Housing Corporation requires mortgages to be insured if they are covering more than 80% of the home’s purchase price.

Borrowing Capacity of First Time Home Buyers

To determine how much money you are capable of borrowing, the financial institution offering the mortgage will examine your financial situation. This amount is based on your income, existing debts, other liabilities, and whether or not you are purchasing with someone else. Because this is going to be the absolute maximum mortgage amount you could qualify for, it is always a good idea to draw up your own budget to determine what you could realistic pay towards the mortgage each month. Your budget should factor in non-mortgage costs that come up like, gifts, travel, and medical expenses.  Once you have a rough idea of how much you can spend, you can begin looking at real estate.

Securing a Mortgage for First Time Home Buyers

Once you’ve found a property you’d like to purchase, you can complete the mortgage application process with your mortgage broker. The lender will likely ask for things like appraisals or land surveys before advancing funds. This is also when your mortgage broker can negotiate the best mortgage for your situation. Specific mortgage variables include interest rates, amortization periods, terms, and payment schedules.

BC First Time Home Buyer Benefits

If you qualify as a first time home buyer, you have the ability to take advantage of various tax breaks and down payment assistance programs that are designed to save you money. These programs include a tax credit, RRSP Home Buyer’s Plan, and a Land Transfer Tax Rebate. A Vancouver Mortgage Broker is well versed in each of these programs and will advise on how you can get the most rebates and tax breaks available.

Tax Credit for First Time Home Buyers in BC

Since 2009, first time buyers in BC have been eligible for the First Time Home Buyer’s Tax Credit. The credit is designed to help offset fees like inspections and legal fees. It is a non-refundable credit valued up to $750.

First Time Home Buyer RRSP Withdrawal

The RRSP Home Buyer’s Plan is an excellent way to borrow tax-free funds from your RRSP. Typically, early withdrawals from RRSPs are considered taxable income, but with this plan, you’re able to borrow up to $25,000 from your RRSP fund and put it towards a down payment.

First Time Home Buyers save on Land Transfer Taxes

In BC, there is a rebate to help first time home buyers offset some of the cost of their land transfer tax. For homes priced up to $500 000, home buyers are eligible to receive up to an $8,000 rebate. It is important to note that homes purchased for more than $525,000 are not eligible to receive a rebate.

First Time Home Buyer & Vancouver Mortgage

Our Experts know exactly what it takes to get first time home buyers approved quickly and easily. With a large network of lenders at our fingertips, we can confidently connect you with a suitable lender and get you the best rate available. Don’t waste time going to a bank! Talk to a Vancouver Mortgage Expert today to find out how easy the process can be.

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