Buyer Information

Rising Interest Rates – What does it mean to you?

Published By: on September 14th, 2017 in Category Buyer Information, Nanaimo Real Estate

Last week the Bank of Canada raised their interest rates, again, by a quarter of a percent. Financial experts are expecting one more similar hike before the end of 2017.

Why are they rising?

Interest rates are rising because of Canada’s strong economy. Business is good. Low interest rates are meant to stimulate the economy and they have done their job.

The good news:

Rising interest rates mean greater return on investment dollars. For those who already own their own home and are living off their investments, they will be breathing easier.

The bad news:

We are still 3% below 2008 rates but with higher prices and higher stress tests. The stress test means that you must qualify for an interest rate that is 2% higher than what you will actually be paying. This is to protect consumers from getting caught paying more than they can afford if rates continue to rise.

If you are trying to get into the market, you need to lock in current rates before they rise again. Get a 3 month written approval from your lender. You’ll need to go through a full credit review in order to get a guaranteed rate. Then it’s time to shop!

Call us at Love Real Estate Group to help you find your new home. We’d love to help you through the process.  Call 778 557-5640

Pros & Cons of Buying New Construction

Published By: on July 28th, 2017 in Category Buyer Information, Buying new construction, Nanaimo Real Estate

Moving to Vancouver Island? Great idea!

Here’s some things you may want to consider:

The logistics of moving into a new town, city or province are challenging.

Often Buyers come to Nanaimo (commercial center of Vancouver Island) to stay for a weekend or even a week, to shop for a future home. They are planning a move in a month or two and need to find their new home.

Competition for resale homes in Nanaimo and much of Vancouver Island is fierce. Most homes are selling within the first few days. That makes it very difficult for Buyers who are coming from afar. You may find a suitable home online, book a flight and race out here to view it in person, only to find that the home is sold by the time you arrive.

One solution to this dilemma is purchasing new construction.

When you buy new construction you can buy yourself the time you need. There is less competition for new homes, so as an out-of-towner you will have a little more time to consider your purchase and a little more time to organize your move.

Buying new has some great advantages and also some significant drawbacks. Here’s some things you should keep in mind:

Top 3 Advantages when buying new construction:

1. AVAILABILITY – On the top of the advantages is availability. If you are not able to stay in the area for an extended period of time, you may not be able to access a resale home that meets your needs. Inventory is very low and timing is everything when you have this much competition.

2. NEW HOME WARRANTY – All new homes in BC must be covered by a New Home Warranty or an Owner-Builder Declaration. The New Home Warranty is a 10-year warranty for your home, but it is better to call it a 2-5-10 warranty. There is a 2-year warranty on labor and materials. A 5-year warranty on the building envelope, including water penetration and a 10-year warranty on the structure of the home. Owner-Builders who build their own homes and occupy them are not required to purchase a New Home Warranty. If they sell their home within 10 years then they are personally liable for any defects that would be covered by a New Home Warranty. As you can imagine, this comes with its challenges.

3. CHOICES – If you buy early enough you may have some choice regarding colours, finishes and appliances. Most new construction homes are Spec Homes. These are homes where the builder has planned and some times completed the home before having a committed buyer. In this case you will be buying the home as planned by the builder. You may have some input, but it will be limited. If you want to have control over more detail you will need to hire a custom builder. This comes with a higher price tag because it is very time consuming for the builder.

Top 3 Disadvantages when buying new construction:

1. TIME DELAY – While the timing may have been easier for you at the time of purchase, the timing of completion is much harder to predict. There is no way around the unpredictability of construction. Weather, illness, supply problems, labour shortages can all slow a project down. As a Buyer you must have a contingency plan in mind in case your move in date is delayed. Be prepared to put your goods into storage and find a vacation rental while you wait. Make sure you’ve allowed yourself some cash reserves to cover any delays. Possible delays and their consequences should be dealt with in your contract of purchase and sale.

2. SURPRIZES – It’s possible that you may arrive and find that the home is not as you expected. When you are negotiating your contract, make sure that you signing off on a specific floor plan and finishes list. Significant variation from these specifications may then be a breach of contract. However, in a rising market, the builder may be happy to back out of a contract and put the finished home back on the market to sell at a higher price.

3. CONSTRUCTION ZONES – If you are one of many new homes in a development you may be moving into a construction zone. This can be trying. Noise, dirt and congestion are the top 3 of many challenges.

Top 3 Pieces of Advice when buying new construction:

1. BUYER’S AGENT – Get an experienced Realtor to act as your Buyer’s Agent on your side. This will not cost you anything extra. The Seller usually pays buyer’s Agent fees.

2. LEGAL ADVICE – Ask a local lawyer (one who knows the local market) to look over your contract to make sure that you are protected in case of major delays or departures from your plans.

3. RESEARCH YOUR BUILDER AND THEN PLAN IN SOME FLEXIBILITY – Most builders have great intentions and take pride in their work. Their reputations are very important to them. Even the best builder cannot control every aspect of your project. A bit of flexibility on your part can keep communications open and cooperative getting you moved in as soon as possible.

Now in Effect – New Rules for Minimum Down Payments on BC Homes

Published By: on February 17th, 2016 in Category Buyer Information, Nanaimo Real Estate, Nanaimo Real Estate News

 

money

INCREASED MINIMUM DOWN PAYMENTS FOR BC HOMES OF MORE THAT $500K  The new  down payment rules are now in effect for those purchasing BC homes over $500K. Up to $500K a buyer is required to have a 5% down payment. On purchases over that price, the buyer will be required to put down 10% of the amount over $500k.

For example: on the purchase of a $700k home. 5% of $500k is $25k plus 10% of the extra $200k is $20k for a total minimum down payment of $45k. That’s up $10k from the previous rules.

The intent is to prevent buyers from taking on more debt than they can afford.

BC Budget 2016 – What’s in it for Home Buyers?

Published By: on February 17th, 2016 in Category Buyer Information, Nanaimo Real Estate, Nanaimo Real Estate News

new home

February 16/16 Important Real Estate News:

 

There are some significant changes in the BC Budget for 2016. If you are thinking of buying in BC this year, you’ll need to know how these changes affect your bottom-line.

Yesterday’s budget includes several measures intended to increase housing supply, allow first-time buyers to enter the market, and finally measure the prevalence of foreign ownership.

They include:

 

 

INCREASED PROPERTY TRANSFER TAX ON LUXURY PROPERTIES                                  An increase in the property transfer tax for luxury homes with a new tier of three per cent on the portion of a purchase above $2-million. That is on top of the current rates, which impose a one per cent tax on the first $200,000 and two per cent for the portion between $200,000 and $2-million.

EXEMPTION FROM PROPERTY TRANSFER TAX ON ALL NEW CONSTRUCTION BELOW $750K                                                                                                                    There is a new exemption for newly constructed homes, which will mean the property transfer tax won’t apply to new homes below $750,000. A partial exemption will apply for homes between $750,000 and $800,000. Those exemptions only apply for Canadian citizens and permanent residents purchasing their primary residence. The first-time home buyer program, which provides exemptions and reductions for houses below $475,000, remains in effect. Great news! On a $500k home that is a savings of $8K. That is a significant savings.

TRACKING FOREIGN OWNERSHIP                                                                                    The province will track foreign ownership by requiring anyone purchasing a residential property to disclose whether they are a Canadian citizen or a permanent resident– and, if not, where they are from. The requirement also applies to directors of corporate owners.

The intent here is to make it easier for Canadian buyers to purchase moderately priced homes, while increasing the tax burden on luxury buyers. Also, the government is making a commitment to track foreign buyers so that they can manage the situation based on facts not perceptions.