Step 1: Down Payment
• For purchases under $500,000, you will need a down payment of 5%.
• If you are buying between $501-999,000 you will need 5% on the first $500,000 PLUS 10% down payment for anything over $500,000.
• If you are buying a home for over $1 million you will need a 20% down payment.
Step 2: Defining your Budget and get Pre-Qualified
You need to get pre-qualified, which should not be confused with the term pre-approved. (Get pre-approved and pre-qualified)
The big difference is that no approval is ever given by a lender until they have an opportunity to examine the property that you wish to purchase. The bank may love you… but they also must love the property you want to buy.
Pre-qualifying will focus on gathering documentation to prove the information on your mortgage application including credit, debt load, income/employment, down payment etc.
Step 3: What can you Actually Afford?
Your total home payments (including mortgage, property taxes, strata fees & utilities) should not exceed 32-39% of your gross (pre-tax) income.
Step 4: Get a Realtor and Find the Right Property
Selecting the right real estate agent is a very important step in the home buying process. When you work with an agent, you can expect them to help you with many things, including:
· Finding a home
· Scheduling tours of homes
· Researching the market, neighbourhood and the home itself
· Making and negotiating your offer to purchase, and counter-offers
· Providing expert advice on home buying
· Handling the offer, gathering documentation and closing paperwork
Step 5: Your Mortgage Approval
Once you have found the property you would like to call home, your mortgage broker will send your mortgage application and property information to the lender who is the best fit for your situation, based on your input.
If the lender likes your financial situation and the property, they will issue a “commitment” letter, outlining the terms of the mortgage. The lender will send you a list of documents, so they can verify and validate all the information you told them on the mortgage application.
Step 6: Lawyer Up
Once the lender has reviewed and approved all your mortgage documentation and the property documentation, your file will be sent to your solicitor (in B.C. you can use a lawyer or notary). They will process all the necessary title changes and set up a time for you to meet, review your mortgage documents and sign.
Step 7: Get your Keys
On the closing day the documentation for your home purchase will be filed at the land titles office by your solicitor. Typically, the possession date is 1 or 2 days later, giving time for the money (down payment & mortgage) to get to the home seller. On possession day you set up a time to meet with your realtor to get the keys.
