Purchase FAQ’s

Principal Pay Down

• Unlike your rent payment, mortgage payments include a principal component that otherwise brings your total monthly mortgage balance owing down and resulting in an increase of your equity.

Appreciation

• Appreciation refers to the increase in your home’s value over time. Your value may increase for a number of reasons, including interest rate fluctuations, supply and demand, inflationary periods, and even due to emotional house shoppers.

Cash Flow

Whether you’ve purchased a stand-alone rental property or have a rental component to your home, this secondary source of income, ideally above and beyond your total monthly bills, provides great value. For Example

• Rent = $2,500
• Mortgage = $1,500
• Expenses = $500
• Cashflow = $500

Sweat Equity

• Sweat equity refers to the physical improvement of upgrading your home through renovations.

• A true pre-approval is not one that is done on an online pre-approval app or calculator. These options though are a great general tool, they do not address many of the underlining components that ensure accuracy when securing mortgage financing.
• A true pre-approval requires submitting an application, pulling your credit, & submitting supporting documentation to your trusted mortgage advisor.
• At Boychuk Mortgage Group, your pre-approval includes a one-on-one success planning session to help educate you & to create a long-term mortgage & wealth strategy!
• We consider our pre-approvals a guaranteed stamp of approval as we have done the proper due diligence to protect your best interest, in advance of shopping.
• Pre-approvals are a free, no obligation step, put in place to help you understand your unique borrowing power before starting the home buying process with your realtor.
• Your pre-approval rate will be held for 120 days (sometimes more), protecting you should rates rise. This comes with a guaranteed best rate at time of submission.
• Understanding your borrowing power at the time of offer, not only provides you with the upper hand in negotiations, but it gives you the confidence needed to act.

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• Yes
• Typically, a 25 – 50% down payment is required
• There are options at 25% down payment with plans to build

Bridge financing is a short term, temporary loan that is designed to help homeowners like you, “bridge” the gap between the sale of your existing property and the purchase of your new home. This allows you to access your equity for your down payment on your new purchase, while you wait for the sale of your existing home to complete.

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Land Transfer Tax

In the province of BC, when ownership transfer title, buyers are faced with a land transfer tax – AKA, property transfer tax

• + 1% on first $200,000
• + 2% on balance up to $2,000,000
• + 3% on the balance over $2,000,000
• + 2% on balance over $3,000,000 **If Residential**

Appraisal Fees

• Your lender may ask you to order a home appraisal as part of your conditions. This cost varies depending on property value but are typically between $300 & $500.

Legal Fees

• As the final stage of your home buying process, your legal team (lawyer or notary), are responsible for legalizing your transaction, including registering your mortgage & transferring title. This estimated cost is between $1,500 & $2,500.

Home Inspection

• A home inspection is optional in most circumstance and will cost between $300 & $500.

Home Insurance

• Most lenders will require proof of home insurance at completion. This cost will vary, but you should budget $50 - $100 a month.

Costs of Newly Constructed Homes

• On a new construction purchase, you will likely be required to pay a 5% GST tax at completion, on top of your down payment.

Adjustment Costs

• If the seller has pre-paid property taxes, water bills, or utilities in advance for that year, you’ll need to reimburse them at completion via your legal team’s final adjustments. This can potentially add hundreds to your closing costs. On a positive note, the first few months in your new home will be paid for.

Title Insurance

• Title insurance can safeguard you against fraud. Fees here range from $150 - $300 & are arranged by your legal team.

Down Payment

• Your down payment is the accumulation of funds that make the difference between your total purchase price & your total mortgage.

Minimum Down Payment

• 5% on the first $500,000
• 10% on the next $500,000 up to $1,000,000
• 20% on any purchase over $1,000,000

Moving-In-Costs

• Make sure to budget for last minute expenses such as professional movers, lock smiths, cleaning supplies, etc…

There are generally TWO ways to avoid paying Property Transfer Tax in B.C.

• As a first-time home buyer, purchasing a resale home under $500,000
• Purchasing a pre-build home under $750,000

Partial rebates

• As a First Time Home Buyer, purchasing a resale home between $500,001 - $525,000
• Purchasing a pre-build home between $750,001 - $800,000

HOUSE HACKING!

• This strategy refers to living in one part of the home while renting out the rest of the space. House Hacking is designed to help you improve what you can qualify for while also bringing down your total monthly costs via the rental income generated.
• When comparing a detached home to a strata unit, you will also save on monthly strata fees. When done right, you may even find yourself cash flow positive month over month.

Remember a $400 monthly debt today equates to about $100,000 in lost borrowing power. When considering the elimination of a $400 monthly strata fee, that could mean an increase in your total borrowing power of about $100,000.

Common home ownership costs include:

• Mortgage Payment
• Property Taxes
• Home Insurance
• Strata Fees (If applicable)
• Utilities – Heat, Water, Gas
• Internet & Cable