FIRST TIME BUYERS
Thinking about buying a home for the first time? Buying a home is likely the biggest investment you’ll ever make. Here are our top four tips to help you prepare for the process ALONG with options from our gov't to help first time buyers with different incentive possibilities.
Our top 4 tips for first-time home buyers
1. Assess your financial situation.
There are many pros and cons to both buying and renting a home. When you rent, you’re usually not responsible if things go wrong. When you own your own home, there are additional expenses that you may not be aware of at first blush. You may want to keep a detailed budget to determine where your money goes currently and what that might look like with the additional expenses of home ownership. Here’s a calculator from the Financial Consumer Agency of Canada (FCAC) to figure out if buying a home is right for you.
2. Find out if you qualify for the First Time Home Buyers’ Program
The First Time Home Buyers’ Program reduces or eliminates the amount of property transfer tax you pay when you purchase your first home. If you qualify for the program, you may be eligible for either a full or partial exemption from the tax. Learn more about it here.
3. Determine what mortgage you will qualify for
To avoid disappointment, pre-qualify first and then start house hunting with clearly defined expectations. There are a few ways you can do this (such as through a financial institution or a mortgage broker). Make sure you do your research and find out the option that suits your needs best.
4. Come up with a savings plan
It’s usually a good idea to save up as much as you can, as the bigger the down payment, the smaller the mortgage and interest charges! You may also want to consider establishing an emergency fund to help you prepare for any unexpected costs that come along with home ownership. To give yourself some peace of mind, it’s good practice to set aside 5% of your income as an emergency fund to be ready – just in case.
One last thing!
Once you have a home in mind, it’s time to think about getting an inspection! A home inspection is an important step in the decision-making process. In BC, home inspectors must be licensed with us and are required to follow certain laws. Learn more about what you can expect from an inspection.
B.C. FIRST TIME BUYERS PROGRAMS
Government of Canada's First-Time Home Buyer Incentive
The First-Time Home Buyer Incentive helps qualified first-time home buyers reduce their monthly mortgage carrying costs without adding to their financial burdens. This is a new program with fairly limiting parameters. A few qualifiers include having the minimum down payment required. Your maximum qualifying income must be no more than $120,000 and your total borrowing is limited to 4 times the qualifying income. If you meet these criteria, you can then apply for a 5% or 10% shared equity mortgage with the Government of Canada. A shared equity mortgage is where the government shares in the upside and downside of the property value. Find out more.
First-Time Home Buyers' Tax Credit (HBTC)
This tax credit offers a $5,000 non-refundable amount when you file your tax return the following year. The credit offers you up to $750. To find out if you are eligible speak to your accountant when filing your tax return.
Home Buyers' Plan (HBP)
The Home Buyers' Plan (HBP) is a program specifically designed to assist first-time home buyers in purchasing their first property. Under the HBP, you can withdraw up to $25,000 (or up to $50,000 combined, if you’re buying with a partner) in a single calendar year from your Registered Retirement Savings Plan (RRSP) towards the purchase of a qualifying property for yourself or someone with a disability.
GST New Housing Rebate
You may be eligible for a tax rebate on a portion of the GST you paid as part of the purchase or construction of a new home. You may also be eligible for a rebate of the costs of substantially renovating your property, building an add-on to your existing home, or converting a commercial property into a residential home. This rebate can be claimed on a newly constructed or substantially renovated property only if the fair market value of the house is under $450,000 upon completion. Check to see if you qualify.
BC First Time Home Buyers’ Program
This program reduces any amount owing for property land transfer tax when buying your first property. You may be eligible for a partial or full tax exemption under the program. For full exemption, the property must have a fair market value of of $500,000 or less. A partial exemption for properties valued under $525,000. Check to see if you qualify
Home Owner Grant
Under the B.C. Home Owner Grant, you may be eligible to lower the amount of property taxes you’re required to pay on an annual basis for your principal residence. The amount of tax relief you’re eligible for depends on where you live. For instance, those under 65 years of age residing in the Capital Regional District, Greater Vancouver Regional District, and the Fraser Valley Regional District may be eligible for a grant of $570. Home owners residing in other parts of British Columbia may be eligible for a grant of $770.
Newly Built Home Exemption
Are you buying a newly built home in B.C.? You may be eligible for the Newly Built Home Exemption?. This tax exemption helps lower or eliminate the amount of property transfer tax you’re required to pay when you’re buying a newly built home worth $750,000 or under. Check to see if you qualify.