10 Things Every First Time Buyer in BC Should Know

1. Your budget is set by the stress test, not the rate you will pay

Lenders qualify you at the higher of your contract rate plus two percentage points or 5.25 percent. That is why a pre-approval comes in lower than people expect, and it is why the maximum is not the budget. Leave room. The affordability calculator applies the test for you.

2. You need cash beyond the down payment

Property transfer tax, legal fees, inspection, appraisal, title insurance, adjustments and insurance all come due at completion and cannot be rolled into the mortgage. Budget 2 to 4 percent of the price on top of the down payment, more on a new home with GST. The closing cost estimator gives you the number.

3. The transfer tax exemption has a line, and it matters

First-time buyers pay no transfer tax on the first $500,000 of a home priced up to $835,000, a saving of up to $8,000, phasing out by $860,000. If you are buying new, the newly built home exemption goes to $1.1 million instead. A home priced $10,000 over the line costs more than $10,000 more. Know where the line is before you set your search range.

4. Use the savings programs early

The First Home Savings Account gives you $8,000 a year of deductible, tax-free-out room, to $40,000. The RRSP Home Buyers' Plan lets you take up to $60,000 out tax free. First-time buyers can take a 30-year amortisation on an insured mortgage. Open the FHSA now even if you are two years out; the room accumulates from the year you open it.

5. Your agent works for you under a written agreement

In BC a licensee must have a written agreement with you before acting for you, and must disclose in writing how they are paid. One agent cannot represent both you and the seller. If you call the listing agent about their listing, they cannot act for you. Pick your own agent, sign the agreement, and read it.

6. You have three business days to change your mind

After an offer on most resale homes is accepted, BC's Home Buyer Rescission Period lets you cancel within three business days for a fee of 0.25 percent of the price. It is a safety net, not a strategy, and it does not replace proper subjects.

7. Subjects are your protection. Keep them.

Financing, inspection and document review. Shorten them if you are competing; do not drop them. The appraisal can come in low. The inspection can find a buried oil tank. The strata minutes can reveal a special levy. Each has happened to a client of mine, and the subject is what let them walk away or renegotiate.

8. On a strata, the documents are the inspection

Most first-time buyers on the Peninsula buy a condo or townhome. The depreciation report, two years of minutes, the Form B, the bylaws, the budget and the insurance summary tell you more about what you are buying than any walk-through. Read every page, or sit with someone who will read them with you. Pay special attention to the insurance deductible.

9. Do not change your finances between pre-approval and completion

No new car, no new credit line, no job change you can avoid, no moving the down payment between accounts. Lenders re-verify before funding, and a changed file can cost you the approval days before completion.

10. Buy the home you will stay in

Moving is the expensive part: transfer tax, commission and legal fees every time. The first-time buyers I have watched do well bought a home they could carry comfortably and lived in it for seven or ten years. The ones who struggled stretched to the maximum or bought something they outgrew in two. Neighbourhood, layout and a realistic view of your next five years matter more than squeezing the last $20,000 of value out of the deal.

The short version

• Budget to the stress test and leave room. Have cash for closing beyond the down payment.
• Know the $835,000 transfer tax line and the newly built exemption. Use the FHSA and HBP early.
• Sign a written agreement with your own agent. Use the rescission period as a backstop, not a plan.
• Keep your subjects. Read the strata documents. Do not touch your finances until the keys are in your hand.
• Buy to stay.

If you are buying your first home on the Peninsula, I will go through all ten with you against real listings before we write anything. It takes an hour and it is the best hour in the process.