Goods and Services Tax (GST)

If you buy a brand new home (new construction) it is usually subject to Federal Goods and Services Tax (GST). The current tax rate is 5% but a partial rebate may be available under certain circumstances. Our job as your mortgage broker is to help you figure out what programs you are eligible for.

Appraisal Fee

A professional appraisal will do a physical inspection of the property, carefully noting information about the number of rooms and the general condition and appearance of the home. Then the home will be compared to comparable properties and a value will be assigned. The cost for an appraisal is generally around $200.

Home Inspection

You should always have the property undergo a full inspection. The inspector knows what problems to look for and will issue a full inspection report. This will give you the option of declining to purchase, asking for repairs,  re-negotiating the price, or carrying through with your original offer to purchase.

Moving and Redecorating Expenses

An expense that isn’t often considered a “closing cost” is that of paying for a mover to transport your furniture and household items to your new residence. Also keep in mind you’ll want/need to buy home décor items and possibly furniture, fencing, and other items for your new home.

Electricity and Telephone Transfers

Home buyers should expect to pay about $75 each to have power and telephone services transferred from a former to a new residence.

ACERAGES, RECREATION AND INVESTMENT PROPERTIES

If you are purchasing outside the city, on an acreage or private development you may also have to consider:

Tests for Water Quality

A water quality test will be required if you are purchasing a property that uses well water. The cost for this type of test ranges from about $100 for a “do-it-yourself” test to several hundred to pay a professional to conduct this test as well as a test to determine the flow rate of the well.

Septic Field Test

If the property you plan to buy has a septic field, it’s a good idea to have it tested for leaks or other problems. The cost for this test is about $300. If a septic warranty is included in your purchase agreement, you can avoid paying this fee.

Fuel Adjustment Expense

If the home you plan to purchase uses heating oil or has a propane burning fireplace, you will be required to pay the owner for a full tank of fuel at closing.

Our job is to get you the best available mortgage and to advise you on many of the cost saving programs you may be eligible for.

A home buyer should always have a home inspection when purchasing a home. A home inspection is an examination of a property to evaluate the overall condition of a home as well as the major systems and components. In other words, every inch of the home—inside, outside, under and over—from the crawl space to the chimney and roof.

What is Inspected

A typical home inspection includes a walk around the exterior of the home to see if there are any glaring problems, such as loose siding, dry-rotted window frames and cracks in the foundation. The inspector will also verify the roof is in good condition.

he home inspection will also include a check of all appliances to be sure they are working properly. Dishwashers, toilets, sink faucets, tubs and showers will be checked for water pressure, leaks, evidence of past water damage.  The furnace and hot water heater will be checked to ensure they are working properly and the inspector will probably ask the age of all appliances and systems.

Other interior systems the home inspector will check include electrical, HVAC, plumbing, insulation, floors, ceilings and walls, windows and doors. If the home has a fireplace, the inspector will verify it is clean, look for cracks or loose bricks in the chimney, ensure flashing is securely attached around the chimney and that a chimney guard is attached to prevent birds and small animals from getting inside. (Only Wood Energy Technology Training certified inspectors are qualified to inspect wood-burning appliances).

The home inspector will provide you with a detailed inspection report, including recommendations for repairs or improvements. When you receive the report (usually within 2-3 days) you can decide if you will ask the home seller to pay for any work you want done as part of your offer to purchase.

We appear to be in a rapidly changing market place.

According to the Real Estate Board of Greater Vancouver there has been a downward price shift in the past few months. The overall price of residential properties in Vancouver has gone down 2.1% since May of this year.

What seems to be driving the prices down is the increase in properties for sale. From July 2007 to July 2008 there has been an increase in available housing inventory of 24%.  In real numbers:  In July 2007 there were 4,924 listings. In July 2008, there were 6,104 listing.

At the same time, sales have declined by almost 50% over the past year.

This is good news for buyers, who have much more to choose from, and more time to negotiate and make well thought out buying decisions.

Sellers will have to sharpen their pencils and must be prepared to wait longer for their property to sell. 

It will be interesting to see what happens in the housing market as the Olympics get closer. Many of the highrise building projects in the downtown area are nearing completion, and the landscape of the Olympic Village is changing daily.

Be sure to give us a call if you need help making your way through the rapidly changing mortgage market. We work hard for our clients, getting you the best mortgage available.�
 

The Averbach Mortgages Team

There are many different types of mortgages and rates available in today’s marketplace. The fixed rate mortgage loan offers the most stability and terms that do not change over the life of the loan. Adjustable rate mortgages allow borrowers to take advantage of hoped-for decreasing mortgage rates in the future. Low-Interest/High ratio loans are ideal for home buyers who don’t have a large sum of money for a down payment.

A conventional mortgage is a mortgage for less than 80%-in other words the borrower provides at least 20%-25% as a down payment, and is either fixed or variable rate loans.

With fixed-rate loans, the payments remain the same throughout the term of the loan.  This is ideal for someone whose income is expected to remain stable throughout the year and who has a low tolerance for risk.

An adjustable rate mortgage loan is a good idea if the borrow believes rates will decline in the near future. This loan rate is tied to the prevailing market prime rate and rises and falls as the prime rate goes up or down. Variable rates are typically lower than adjustable rates and the initial rates are usually very low to make them attractive to borrowers.

If rates do decline, the payment remains the same, but more of the payment is applied to the principal, allowing the loan to paid off earlier. If rates do begin to rise, the loan can be refinanced to a fixed rate.

Low-Interest/High Ratio Loans

A low-interest/high ratio mortgage is a mortgage where the borrower provides a down payment of less than 20%. Mortgages for 75% or more require mortgage insurance, usually provided by Canada Mortgage and Housing Corporation (CMHC) or Genworth. The insurance premium (of up to 7.3% of the mortgage amount) offers the lender the assurance that they will be repaid should your default on your mortgage.

This is merely an overview of mortgage products available to borrowers. Check back often for information on the vast array of products and variations offered to today’s Canadian home purchaser.