If you are a first-time home buyer, there are many extremely beneficial options and programs for you to consider, especially if you are buying a brand-new home. All the details and program names can be a bit overwhelming to keep straight, so we’ve encapsulated all your options into one place on this page to help you assess and implement what you need to know. Bookmark this page in your browser for easy reference.
First Time Home Buyers’ Program
The British Columbia Provincial Government imposes a property transfer tax, which must be paid before any home can be legally transferred to a new owner. As a first-time home buyer, you qualify for a full transfer tax refund if your home is in BC, you intend to use it as your principal residence, and your home’s fair-market-value is$500,000 or less.
These conditions are easily met with a condominium. Based on the selling price of $384,900 for one of our 2-bedroom, 2-bathroom 976 sq. foot units, those who are not first-time home buyers will be charged at a rate of: 1% on the first $200,000, 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000, and. 3% on the portion of the fair market value greater than $2,000,000.
That equals $5,698 - a good amount you get to keep in your jeans!
There are lots more qualifications to check and make sure you meet to qualify, but you’ll find it all on the BC Government’s website.
Home Partnership Program
The B.C. government's Home Partnership program opened this year, which provides loans of up to $37,500 to help first-time homebuyers fund their down payment in the province's pricey housing market.
This is a second, 25-year term mortgage provided by the government with an upside of no interest or payments for five years. Studies show most first-time home buyers sell within seven years, at which time this mortgage would be paid off.
Be aware you will have to start paying in five years’ time no matter what your financial situation looks like, and there is no guarantee the market will rise between now and then.
There is a list of eligibility requirements. In a nutshell, you need to be a Canadian citizen or permanent resident for five years, live in British Columbia, have a household income under $150,000 per year, be pre-approved for a high-ratio mortgage, be buying a home for less than $750,000 and intend it as your principal residence for five years.
You receive a rebate on GST
While all new homes are subject to GST, if you intend to live in your condominium as your primary residence then you are most likely eligible for a rebate of 36% of the 5% GST. The full G.S.T. New Housing Rebate is available for new homes priced up to $350,000. There is no G.S.T. New Housing Rebate on homes valued at over $450,000.00 so the full 5% will be paid.
Assume the purchase price of a new home is $324,900 excluding G.S.T. The gross G.S.T. is $16,245 (5% of $324,900). The G.S.T. New Housing Rebate is 36% of $16,245 (5% GST), which is $5,848.20. Thus, the applicable G.S.T. is $16,245 (5%) less $5,848.20 (36% of 5% on $324,900), which equals $10,396.80. (GST payable after rebates)
For homes valued between $350,000.00 and $450,000.00, the rebate is gradually reduced and is calculated by using the following formula: $6,300 x [$450,000 – the purchase price] / $100,000
Based on the selling price of $384,900 for one of our 2-bedroom, 2-bathroom 976 sq. food condominium, you will save over $4,101.30 in GST. (Note: You pay the GST at time of sale, then receive your rebate later).
You’ll find more information on the Canadian government website.
RBC's Long-Term Closing for Prebuilt Homes
When you want to buy a prebuilt condominium with a completion date of a year or more, one of the greatest concerns we hear from our clients it, “How do I make sure I’m approved at closing and how can I get the financing?”
That’s a good question because most lenders will only hold an approval for 120 days, but we discovered RBC’s excellent product and we often suggest our clients speak with a mortgage specialist at RBC which specializes in long-term closing.
Most lenders will pull your credit report at the end to make sure nothing’s changed. Or they will send out an appraiser just before you close, then base the price on the lower of either the contract or the appraisal. You would be expected to come up with that difference or lose your funding if the market value falls in the interim (unlikely as that is in Victoria).
RBC doesn’t do that. “We’ll hold a fixed rate for up to two years,” says Jennifer Byatt. “We take your application now and the market value right now. We send an appraiser out to make sure the value and current sales are there, and we take that number for our market value. At the time of closing, if anything has changed, it doesn’t matter because we have given a firm approval and we don’t look back.”
If you get sick or lose your job in the interim, even if you’ve bought two more places, it doesn’t matter at all because it’s based on where you are today.
When your home is complete and it’s time to close, they just push a button and fund. It will give you real peace-of-mind to know your financing is in place means you can live your life without worrying about the repercussions.
OSFI’s New Changes and How They Impact You
Qualifying for a mortgage means you must pass a “stress test”. That means you must prove you can afford payments based on the Bank of Canada’s five-year benchmark rate, which is currently at 4.99 percent, or your contract mortgage rate plus two percentage points, whichever is greater.
Last year, the stress test applied only to mortgages of less than 20 percent down, but as of January 1st, 2018, you need to qualify based on the ability to make a much higher monthly payment for all mortgages, no matter the down payment. This means you may not be able to purchase as large a home, but isn’t necessarily a bad thing. It never was prudent to borrow to the maximum of your financial ability.
Get a Triple-Win when you buy one of our condominiums
If you’re an average-income family or first-time home buyer in Victoria, a condominium is a viable option we encourage you to look at closely. You can get a lot of home in a condominium at a great price as compared to detached dwellings, you’ll have far less work to maintenance your home, and our location is terrific!
We have access to strategies to help you save money, and Triple Crown has an excellent selection of beautiful, modern pre-built condominiums in Langford close to every amenity and recreational pursuit a family could want.