Timely tips for first-time home buyers

From securing a mortgage to unexpected extra expenses, here’s what you need to know

Oak Bay realtor Graham Bavington and mortgage broker Chris Gill offer their suggestions for first-time home buyers wading into the housing market.

Alec Cottrell

News contributor

Hoping not to miss out on today’s hot real estate market, many prospective buyers are looking to get a foothold in Greater Victoria’s market while the opportunity presents itself.

However, some first-time home buyers may be apprehensive about pursuing such a big commitment. Buying a home for the first time can be an intimidating endeavour, even for the most ambitious individual.

First-time buyers have many questions to ask themselves before starting to look at real estate. First and foremost, is the time right to buy or rent? Graham Bavington, an Oak Bay realtor with Burr Properties Limited, says it all depends on the wants and needs of the buyer, taking into consideration affordability, as well as location.

“You might ….(be) looking for a condo, but you need it in a particular part of town because that’s where you spend your life… your timeline might be less than ideal for purchasing,” Bavington says.

However, for those who have their heart set on buying their first home, Bavington and his colleague, Chris Gill, co-owner of the Condo Group in Victoria, have some advice. “Really, the first thing is getting the (mortgage) pre-approval, just so you know where you’re standing financially. The key is… go to talk to a broker, or (one of the) mortgage specialists at (your bank),” Gill says.

“That’s really important to know so you don’t get your hopes up (on a home you might not be able to actually afford).”

Securing a pre-approval for a mortgage helps determine the budget of a homebuyer. However, homebuyers should also keep other expenses in mind, especially in the case of buying a condo.

“The monthly (mortgage) payment is the most important thing but there are also strata fees, and of course property taxes, so you have to look at all your expenses and decide what you can comfortably afford. You don’t want to be mortgage-poor,” cautions Gill.

“Your fees are generally limited to the legal fees to have (the) the title transferred from the seller to you. You may also have a property transfer tax, unless you’re a first-time homebuyer (who’s) been living in B.C. for 12 months. A property transfer tax is, if you’ve purchased more than one property anywhere in the world; that can be a considerable fee to pay,” Bavington says.

“There are also mortgage insurance fees, which vary depending on how much (percentage-wise) you intend to put down as a payment on a home. It’ll be worked into the mortgage. You won’t really see it but it is there,” Gill added.

For first-time homebuyers in Victoria, with the cost of real estate being so high, it can be hard to secure the down-payment needed for their first home.

This initial hurdle in affordability has led to a rise in the occurrence of family members stepping up to help young couples and families afford their first home.

“Victoria is a tough market to break into when you’re young and wanting to get in for the first time. You need a bit of help normally. That’s how a lot of first-time buyers are getting in is (with) some help from their parents, also if they’ve built up a decent RRSP, because you can borrow against your RRSPs,” says Gill.

“If you’ve been with your bank for years… I’d (say) go to your bank. If you know a friend (who’s had a good experience with a broker), go to them. There are some great brokers in town,” says Gill, adding it comes down to personal preference when choosing whether or not to seek a mortgage from one of the big banks or a broker.

The next step comes down to selecting an agent.

Gill suggests shopping around to be sure you find an agent that suits you, and is willing and able to accommodate a first-time homebuyer’s wants and needs.

“You want to be able to trust the person that you’re working with,” says Gill, highlighting the importance of the relationship between the buyer and agent.

After buyers have achieved a successful offer on a home, they have several more issues to consider.

“A successful offer is an agreement between a buyer and a seller on dollars, dates, conditions and inclusions,” explains Bavington, who said the move-in day for buyers is negotiated into the procedure of making an offer on the home.

The closing date – the time when the seller receives their money and the buyer begins paying property taxes on their new home – is also negotiated into this process.

The option to hire a building inspector to inspect the property is also a separate clause included as part of an offer.

“They just make sure there are no big (issues) with the home,” says Gill. If there happen to be any big red flags, Gill says the homebuyer still has the option to walk away from the deal.

“The top three things (when beginning your search for your first home are): determine your wants and needs, select your real estate agent, and get pre-approved. I think those are the top three for me,” Bavington says.

 

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