Current BC Mortgage Rates

So you’ve managed to save for a down payment, got the pre-approval, and are nearing the purchase of a home or condo in British Columbia.  Did you put a little money away for the closing costs?  Many homebuyers are startled when they discover the additional costs that come on top of your down payment and monthly mortgage bill.  There are numerous costs that may be applicable to you.  Let’s break them down:

Property Transfer Tax

This is otherwise known as Land Transfer Tax (LTT).  This is calculated as a percentage of your home purchase price based on fair market value.  It breaks down as follows:

1% for the first $200,000 of your home, plus an additional 2% for the remaining amount over $200,000

Here’s a useful tool to calculate your Land Transfer Tax in BC.

Legal Fees

The preparation and recording of official documents must be done properly and unless you are fully capable of representing yourself or have a lawyer-friend – legal representation will cost you at least $500 (but varies from lawyer-to-lawyer).

Title Insurance

Lenders require property insurance to protect themselves against potential losses in the event of property ownership disputes.

CMHC fees

For high ratio mortgages, the CMHC insurance itself is financed through the mortgage, but the PST on the insurance must be paid for in full at the time of the close.

There is also the CMHC Application Fee which is usually a $75 underwriting fee for processing your application.

Goods and Services Tax

This applies only if you’ve purchased a newly constructed home.  The GST will generally be charged at 5 per cent on the full purchase price.

Property Insurance

Almost every lender will want you to have protection against property damage – insurance against losses incurred during events such as floods and/or fires.  This must be in place on or before closing day.  Property insurance is paid either monthly or by annual premiums.

Property Tax Adjustment

Property tax is calculated as a percentage of the value of your home and must be paid each year.  In some cases, you may need to reimburse the previous owner if they have already paid property taxes for the full year.

RateHub.ca has a nifty closing cost calculator based on your mortgage affordability.

Ratings and reviews

Tags: bc land transfer tax, BC mortgage rates, best BC mortgage rates, closing costs, closing costs in BC, CMHC, current bc mortgage rates, property transfer tax, title insurance
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Buying a property in BC can be expensive.  Although mortgage interest rates remain low, living in BC can really put a dent in your wallet, especially if you’re not prepared for the various “other” costs that are associated with purchasing a home.  Land transfer tax is one such fee that can get overlooked.

What is it?

All provinces have a land transfer tax of some type.  The provinces of Alberta, Saskatchewan, and the Territories have small transfer fees rather than a calculable tax based upon the size of your mortgage.  If you buy land, or have an interest in land, you must pay tax each time you register that property at the Land Title office.  They are taxes levied on the provincial level.

Why do we need it?

Because the Government of Canada says so.

How do we calculate it?

Provinces calculate their rates based on their own criteria.  Some have very small, simple fees like Alberta and Saskatchewan, while others are much more complicated.  The province of British Columbia uses tiers to calculate the fee.

Purchase price of home Marginal Tax rate

For example, If the fair market value for your property is $199,000, the land transfer tax would be $1,990 (1 per cent of $199,000).  The moment your property surpasses the $200,000 threshold, it is susceptible to an additional 2 per cent.

For example, If the fair market value for your property is $400,000, the tax payable would be $6,000.

Breakdown:  1 per cent for the first $200,000 = $2,000

Plus 2 per cent on the remaining $300,000 = $4,000

First-time home buyers

You can qualify for a full rebate if you are first-time home buyer (FTHB) on homes purchased up to $425,000.  For properties greater than $425,000, but less than $450,000, you will receive a partial rebate.  Anything $450,000 and over, and the tax rebate is not applicable.   Please see chart below for example:

The calculation for the partial rebate looks like this:

[($450,000 – fair market value of your property) / $25,000] * Land Transfer tax amount

You can qualify for the first-time home buyer land transfer tax rebate if:

- You are a Canadian citizen or permanent resident

- You have lived in BC for 12 consecutive months prior to the date the property was registered…

-  OR you have filed 2 income tax reports in BC within 6 years of the property being registered

- You have never owned an interest in a principal residence anywhere in the world

- You have never received a first time home buyers exemption or refund before

The property in question also has to meet certain requirements, they are as follows:

- the fair market value of the property is not more than $425,000

- the land cannot be greater than 0.5 hectares

- the property will only be used as your primary residence

All calculations were made using RateHub’s Land Transfer Calculator.  They also have a pretty useful mortgage education centre for first-time home buyers to help answer any questions you might have.

Tags: bc land transfer tax, bc mortgage, best BC mortgage rates, current bc mortgage rates, Land transfer tax, land transfer tax calculator
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The pace of home of home building across Canada will be begin to slow later this year according to a recent report released by the Canadian Mortgage and Housing Corporation. Unfortunately this doesn’t apply to individuals living in British Columbia. The federal agency is forecasting 10,000 less Canadian housing starts this year compared with 2010, in spite of an increase to BC housing starts. CMHC believes home starts will swell five per cent this year, and nine per cent next year!

Our provincial economy is forecasted to expand at a pace slightly above the national average.

What are the factors?

• Strong employment gains
• Population growth (as supported by international and inter-province immigration)
• Competitive mortgage rates

Vancouver

The Vancouver Metropolitan housing market will see the largest increase in new home construction, thanks in part to the flock of foreign investors. Immigration to B.C.’s largest city currently adds about 20,000 households per year.

The average home price in Vancouver continues to soar, hovering close to $800,000, more than double the national average. And, CMHC is predicting prices will only go up!

Its not just home buyers that are packing Vancouver homes -Vacancy rental rates in the city remain below 2%, second to Victoria.

The greater Vancouver area accounts for almost half of MLS© sales in B.C.

Home Resales

The report mentions that British Columbia home resales should approach 83,900 in 2011. They also predict that resale numbers will continue to rise into 2012, by five thousand.

Residential Mortgages

“Mortgage loan interest rates which will remain low by historic standards, together with stable employment and strong population growth, will support the resale and new home markets in 2011 and 2012.” – Carol Frketich, CMHC

The provincial housing market stays aloft with low mortgage interest rates. Five-year fixed rate mortgages in B.C. continue to remain at historic lows. According to RateHub.ca, the lowest current rate is 3.66%. In terms of variable rate mortgages, prime rate adjustments continue to trend downwards.**

**chart can be found here.

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You’ve decided to take the plunge and it is time to purchase your first property in British Columbia. Where do you, the first-time home buyer, begin?

Step 1: Mortgage pre-qualification

This process involves visiting a potential lender, such as a bank or mortgage broker, and surrendering some financial information. This is needed to calculate how much you can qualify for, but at this stage, it is only a preliminary estimate. Your lender will use your gross income and total debt obligations to determine the amount. Pre-qualification begins the process of determining how much house you can afford.

Step 2: Mortgage pre-approval

If pre-qualifying is learning to crawl, then mortgage pre-approval is taking your first steps. This process is much more thorough. In addition to gathering your income and debt details, lenders will also examine your credit history. They will require written proof of your income and a show of the down payment. A pre-approval amount is still an estimate, but it is a sign that the likelihood a lender approving your mortgage is strong. However, it is possible to find a property that does not meet the lender’s requirements and still be rejected. The pre-approval will provide an accurate amount of what your affordability will look like, so it is important not to stray too far from that amount. Please note, a pre-approval does not take into account your lifestyle and spending habits, so it would be wise to use your pre-approval amount conservatively when shopping for a home.
Getting a pre-approval can also benefit your realtor. It will help them tailor their search to ensure they locate properties that accurately fit your pre-approval amount.
With your pre-approval amount in hand, you can decide whether you need a fixed rate mortgage or a variable rate mortgage.

What if interest rates change?

An advantage of getting pre-approved is that it entitles you to rate holds. A rate hold is when a lender will hold a particular interest rate over a specified amount of time. In other words, the lender will honour the interest rate that works in your favour. This is especially beneficial during rate hikes. A rate hold will allow you, the consumer, to keep the cheapest interest rate during that time frame, which can last anywhere from 30 to 120 days, depending on the lender.

Is it necessary?

Yes. Following these steps are crucial for any person looking to buy a home. What you need to remember is that these processes are here for you. They are meant to protect you. Not properly acting upon these steps could cost you time and money, both considered precious in the real estate industry.

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Getting a mortgage can be intimidating.  What’s the difference between mortgage A and mortgage B?  Which one is for me?  This guide is intended to better inform first-time home buyers in British Columbia (BC), who are looking for the best type of mortgages and mortgage rates available to them – but need a little help along the way.

Your key to understanding BC mortgage rates