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brento1138
Joined: 17 Nov 2004
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 Posted: Mon Jul 11, 2011 8:30 pm Post subject: Buying a Home... Back Home (Canada) |
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Has anyone here made the move to buy their first home? I have several questions, and I'm mainly interested in your story. Firstly, I'm not interested in buying a place in Korea. I don't think I'll be here anyways. Too much stuff waiting back home for me.
The main gist of what I'd like to do is to buy a property in Vancouver, Canada (yeah, high prices, I know...) around $200-250,000. Just a small apartment, nothing fancy. I might rent out one of the rooms, probably to foreign students studying in Canada from the middle east or japan. (why? you might ask? cuz they always pay, or should i say, their parents always pay the rent on time) That would add a nice $500-$800 per month paying off the property.
I'm just wondering what you did to get a mortgage, what a down-payment for a 250,000 place would be. Did your bank approve it easily? Especially after not having an income in Canada?
I'm thinking a $25,000-$40,000 down-payment would be ideal. The more the better. And paying the monthly fee won't be difficult or a problem at all.
I just don't want to pay rent ever again in my life. That's money down the drain. Even if I were paying a $1000 monthly mortgage, at least that money is going into my OWN place. |
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No_hite_pls
Joined: 05 Mar 2007
Location: Don't hate me because I'm right
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| Posted: Mon Jul 11, 2011 9:06 pm Post subject: Re: Buying a Home... Back Home (Canada) |
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| brento1138 wrote: |
Has anyone here made the move to buy their first home? I have several questions, and I'm mainly interested in your story. Firstly, I'm not interested in buying a place in Korea. I don't think I'll be here anyways. Too much stuff waiting back home for me.
The main gist of what I'd like to do is to buy a property in Vancouver, Canada (yeah, high prices, I know...) around $200-250,000. Just a small apartment, nothing fancy. I might rent out one of the rooms, probably to foreign students studying in Canada from the middle east or japan. (why? you might ask? cuz they always pay, or should i say, their parents always pay the rent on time) That would add a nice $500-$800 per month paying off the property.
I'm just wondering what you did to get a mortgage, what a down-payment for a 250,000 place would be. Did your bank approve it easily? Especially after not having an income in Canada?
I'm thinking a $25,000-$40,000 down-payment would be ideal. The more the better. And paying the monthly fee won't be difficult or a problem at all.
I just don't want to pay rent ever again in my life. That's money down the drain. Even if I were paying a $1000 monthly mortgage, at least that money is going into my OWN place. |
My wife and I almost bought a beautiful property near Vancouver on the Georgia Strait.
Anyway, I wouldn't not recommend buying a place in Vancouver because I always was taught the philosophy to buy low not high. Vancouver prices are the highest they have ever been and interest rates are still near zero in Canada. I can not see much of an increase in the value of the property but hey what the heck do I know. I had thought that prices were too high in Vancouver years ago and they still climbed.
Why not invest in Stocks and Bonds you will probably average a higher return than in real estate without the property taxes, strata fees, and maintenance costs. Real Estate in my opinion is a real headache. |
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brento1138
Joined: 17 Nov 2004
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| Posted: Mon Jul 11, 2011 10:45 pm Post subject: Re: Buying a Home... Back Home (Canada) |
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Thanks for the reply. I wouldn't say this is an absolute investment. It's just a way to get around paying rent. I want to own my own place.
If there is anything I hate, it's paying rent. I'd rather pay a higher monthly fee (even if it goes to strata, tax, mortgage) than see it go to some property owner. I'll always remember renting out a crap-hole in Burnaby, and asking the person who maintained the building about getting repairs. It took 3 months to get doors in my apartment. Doors! Apparently the landlord lives in China. So, I don't see why I should send 900 odd dollars a month to some guy in China. No thanks. I'll never see that money again. That money I'd rather have going into my own property, and yes, the hands of bankers (but hey, at least I get to keep some of it!). If I decided to sell the place, I'd get all my money back! (more or less) |
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recessiontime
Joined: 21 Jun 2010
Location: Got avatar privileges nyahahaha
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| Posted: Mon Jul 11, 2011 11:46 pm Post subject: Re: Buying a Home... Back Home (Canada) |
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| brento1138 wrote: |
| The main gist of what I'd like to do is to buy a property in Vancouver, Canada (yeah, high prices, I know...) around $200-250,000. Just a small apartment, nothing fancy. |
Is that how much apartments cost over there? Are you sure?
| brento1138 wrote: |
I'm just wondering what you did to get a mortgage, what a down-payment for a 250,000 place would be. Did your bank approve it easily? Especially after not having an income in Canada?
I'm thinking a $25,000-$40,000 down-payment would be ideal. The more the better. And paying the monthly fee won't be difficult or a problem at all.
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You will have to talk to a Canadian bank about that. If a place in Vancouver cost a measly 250k then yes I don't see why you couldn't get it with a down payment that size. Not too sure about how banks feel about giving a person that works overseas a home loan, best to call and ask many different tier 1 banks |
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brento1138
Joined: 17 Nov 2004
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| Posted: Tue Jul 12, 2011 12:56 am Post subject: Re: Buying a Home... Back Home (Canada) |
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| recessiontime wrote: |
Is that how much apartments cost over there? Are you sure?
You will have to talk to a Canadian bank about that. If a place in Vancouver cost a measly 250k then yes I don't see why you couldn't get it with a down payment that size. Not too sure about how banks feel about giving a person that works overseas a home loan, best to call and ask many different tier 1 banks |
Cool. I think the trick would be to just sit on the money for a year (after moving to Canada) and after having proof of a well-paying job in Canada for a year, you can probably convince a bank to loan the money for a mortgage. I've had no debts for years now, and never any problem paying off anything. The most I've ever put on a credit card was around $3500 but I paid that off the day after I charged it. The only thing I'm missing is that Canadian income. Hmm.
As for housing prices, you can find decent-priced stuff in Burnaby, Surrey, and Richmond. Even places in the West End and East Vancouver are surprisingly lower priced (for Vancouver, I mean). Some places come cheap for a reason though (leaky condos for example) and I will steer clear of those. I was looking at [url]http://jordybrisbin.com/ [/url]and seeing what I may / may not be able to afford. Looks like I need a bigger down payment than what I originally thought of.
Actually, I've never given this house buying stuff much thought before. That's why I came to Dave's first. Absolutely no clue about buying a house. But I'm learning.
Still hoping to hear a story or two from some people here, or any advice. |
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Captain Corea
Joined: 28 Feb 2005
Location: Seoul
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| Posted: Tue Jul 12, 2011 3:29 am Post subject: |
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Two quick points...
1. Watch out for those prices in Vancouver. Your numbers look a bit low, and overall, there's a chance it's heading for a bubble burst.
2. It may be possible for you to get an immigrant's mortgage. I've never done it, but I think if you put 40% down, they'll be more flexible on your Canadian credit score. |
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riverboy
Joined: 03 Jun 2003
Location: Incheon
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| Posted: Tue Jul 12, 2011 3:41 pm Post subject: |
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I would aoid buying a house anywhere near the major metropolitan areas. I'm pretty sure we're goong to see housing crash similar to that of the States. Bubbles do not last forever and they always revert to prices similar to where they began. Vancouver is in a bubble.
Even though mortgage rates are very low, look at exactly how much total you will pay after a 15 or 20 year mortgage. And if the prices drop, as they likely will, then you will owe more on your house than it is worth.
If you want to buy, look at rural areas with stable prices, instead of the over inflated areas in Canada.
I'd invest in farmland as well. There is a good chance that there is going to be a big jump in food prices in the future. |
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Redcap
Joined: 03 Jan 2010
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| Posted: Tue Jul 12, 2011 5:29 pm Post subject: |
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One very important criteria that will influence a Canadian financial institution's mortgage eligibility requirements is whether you are a Canadian resident.
If you have severed all financial ties with Canada, and have played the "non-resident" card in order to avoid paying Canadian income tax during the course of your employment in Korea, you will have to ante up a larger down payment. The chartered banks in Canada, as an industry standard, require non-residents to come up with a 35% down payment in order to qualify for a mortgage.
Generally speaking, the smaller mortgage companies will be willing to accept a lower down payment than 35%. However, they will inflict a higher interest rate upon you in exchange for allowing the smaller down payment.
If you're still considered a Canadian resident, your down payment will be considerably less. Additionally, the banks will be able to track your Canadian credit history and evaluate your Canadian credit score. Forgive me if I'm stating the obvious, but a current, healthy, Canadian based credit history will be an important factor in determining your eligibility for a mortgage in Canada.
Here are a couple of important things you should be aware of when applying for a mortgage in Canada :
1) Canadian financial institutions will require your GDS (Gross Debt Service Ratio) to be 32% or less of your gross household income. That is, the total amount of your monthly mortgage payments (including principal and interest), heating costs, and property taxes not exceed 32% of your household's gross monthly income.
2) Lending institutions in Canada will also look at your Total Debt Service, which is banker-speak for your monthly debt load : mortgage + car payments + credit card payments + other loans = TDS. Banks want to keep your TDS at 40% or lower, of your gross monthly household income.
As a general rule, Canadian banks aren't the most hospitable creatures when it comes to cozying up to ex-pats who want to buy real estate in Canada. Be prepared to knock on a lot of doors, and have many of them slammed in your face. Be persistent, and don't settle for the first approval. Always shop around and compare.
Best of luck. |
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jazblanc77
Joined: 22 Feb 2004
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| Posted: Tue Jul 12, 2011 6:05 pm Post subject: Re: Buying a Home... Back Home (Canada) |
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| brento1138 wrote: |
Has anyone here made the move to buy their first home? I have several questions, and I'm mainly interested in your story. Firstly, I'm not interested in buying a place in Korea. I don't think I'll be here anyways. Too much stuff waiting back home for me.
The main gist of what I'd like to do is to buy a property in Vancouver, Canada (yeah, high prices, I know...) around $200-250,000. Just a small apartment, nothing fancy. I might rent out one of the rooms, probably to foreign students studying in Canada from the middle east or japan. (why? you might ask? cuz they always pay, or should i say, their parents always pay the rent on time) That would add a nice $500-$800 per month paying off the property.
I'm just wondering what you did to get a mortgage, what a down-payment for a 250,000 place would be. Did your bank approve it easily? Especially after not having an income in Canada?
I'm thinking a $25,000-$40,000 down-payment would be ideal. The more the better. And paying the monthly fee won't be difficult or a problem at all.
I just don't want to pay rent ever again in my life. That's money down the drain. Even if I were paying a $1000 monthly mortgage, at least that money is going into my OWN place. |
By law, you must pay at least 5% down on a house purchase, however, to avoid having to pay CMHC insurance, you must pay 20% or more. You can purchase through a Realtor or even privately through ComFree. With a Realtor, expect to pay commission. In any purchase, you should take into account the closing, legal, and commission costs which generally come directly out of your pocket.
If you are a first time home buyer, there are programs that you can take advantage of, including being able to take a loan from your RRSPs that is repayable within 10 years. This is a great program because you will reduce your taxable income and get a tax break in the next tax year. On $15,000 worth of RRSPs, you could save up to $5000 on your purchase. If you do not have any money in RRSPs but want to take advantage of this incentive, you must carry a balance for 90 days before you are allowed to cash it out.
It is possible to put down less than %5, but it gets trickier and your mortgage rates will be less competitive. The bank may pay it for you, but then variable rates will be off the table and you can expect to pay a fixed rate of at least 6%. You can also borrow money from an unsecured line of credit which is set up for interest only monthly payments.
When you make an offer, you should have it drafted by a lawyer to allow conditions which may include that you get acceptable financing or that the home inspection is acceptable to the buyer. You can reduce price by taking major repairs into account and may ask (within reason) for up to 10% of the asking price. In apartments, make sure that you have your lawyer review the condo agreement and the terms of possession.
The market is soft right now and interest rates are great, so it is a good time to buy. They are talking about the market getting tougher around the Fall. Find a broker who will be able to obtain financing for you and explain all of your options.
No matter when you do, remember that there are always costs that you don't think of. In apartments, you are likely to be required to pay condo fees. You should also make sure that you have savings or a line of credit that is always free in case you require major repairs. Find out what the utilities and taxes will cost. Will you need to do any renovations to make your space liveable?
When you buy into new developments MAKE SURE that you research the Developer that built your new home. During the boom years, there was a massive flux of new construction projects that we thrown up cheaply and very poorly. CBC reported recently that 77% of new developments (houses and condos) are having similar problems to buildings that were made in the 70's. A new house or condo should not have the same problems as one that was built 30-40 years ago! Do your research and make sure you have a homebuyer's inspection completed.
Good luck!!! |
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jazblanc77
Joined: 22 Feb 2004
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| Posted: Tue Jul 12, 2011 6:09 pm Post subject: |
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| Captain Corea wrote: |
Two quick points...
1. Watch out for those prices in Vancouver. Your numbers look a bit low, and overall, there's a chance it's heading for a bubble burst.
2. It may be possible for you to get an immigrant's mortgage. I've never done it, but I think if you put 40% down, they'll be more flexible on your Canadian credit score. |
An immigrant mortgage is actually 45%. At least that is what I heard being offered to some temporary foreign workers last week through the bank where my wife works. They are Welders and make some good dime.
Worst case scenario is that if the OP doesn't have a good credit score (or it is non-existent), that they will have to establish credit and build it for at least 6 months. Even with established credit, the score still may be low and it would just dictate the interest rate for a mortgage. The OP might not be eligible for anything but the higher fixed rates. Even that isn't so bad if the purchase can be made before the bubble bursts.
Last edited by jazblanc77 on Tue Jul 12, 2011 6:20 pm; edited 2 times in total |
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Captain Corea
Joined: 28 Feb 2005
Location: Seoul
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| Posted: Tue Jul 12, 2011 6:09 pm Post subject: |
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| Jaz, the buyer pays the real estate agent's fees? I thought it came out of the seller's portion? |
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jazblanc77
Joined: 22 Feb 2004
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| Posted: Tue Jul 12, 2011 6:12 pm Post subject: |
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| Redcap wrote: |
One very important criteria that will influence a Canadian financial institution's mortgage eligibility requirements is whether you are a Canadian resident.
If you have severed all financial ties with Canada, and have played the "non-resident" card in order to avoid paying Canadian income tax during the course of your employment in Korea, you will have to ante up a larger down payment. The chartered banks in Canada, as an industry standard, require non-residents to come up with a 35% down payment in order to qualify for a mortgage.
Generally speaking, the smaller mortgage companies will be willing to accept a lower down payment than 35%. However, they will inflict a higher interest rate upon you in exchange for allowing the smaller down payment.
If you're still considered a Canadian resident, your down payment will be considerably less. Additionally, the banks will be able to track your Canadian credit history and evaluate your Canadian credit score. Forgive me if I'm stating the obvious, but a current, healthy, Canadian based credit history will be an important factor in determining your eligibility for a mortgage in Canada.
Here are a couple of important things you should be aware of when applying for a mortgage in Canada :
1) Canadian financial institutions will require your GDS (Gross Debt Service Ratio) to be 32% or less of your gross household income. That is, the total amount of your monthly mortgage payments (including principal and interest), heating costs, and property taxes not exceed 32% of your household's gross monthly income.
2) Lending institutions in Canada will also look at your Total Debt Service, which is banker-speak for your monthly debt load : mortgage + car payments + credit card payments + other loans = TDS. Banks want to keep your TDS at 40% or lower, of your gross monthly household income.
As a general rule, Canadian banks aren't the most hospitable creatures when it comes to cozying up to ex-pats who want to buy real estate in Canada. Be prepared to knock on a lot of doors, and have many of them slammed in your face. Be persistent, and don't settle for the first approval. Always shop around and compare.
Best of luck. |
Good post. |
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jazblanc77
Joined: 22 Feb 2004
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| Posted: Tue Jul 12, 2011 6:18 pm Post subject: |
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| Captain Corea wrote: |
| Jaz, the buyer pays the real estate agent's fees? I thought it came out of the seller's portion? |
If it is an MLS listing, the buyer will have to pay the commission for their Realtor. However, in some cases it can be negotiated that the seller will pay it. That's part of the appeal of using ComFree because half of the commission is automatically taken off of the purchase cost since it is technically a private sale. At least this is my understanding.
If the OP ends up buying through ComFree, that is fine, but it is recommended that you still draw up offers using a lawyer AND even hire a Realtor so that if there is anything to disclose on the property condition, the seller is required to do so to a Realtor. In private sales, it the seller is not required to disclose the same amount of information about property condition and therefore hold less liability in the sale. |
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Redcap
Joined: 03 Jan 2010
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| Posted: Tue Jul 12, 2011 6:45 pm Post subject: |
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| riverboy wrote: |
I would aoid buying a house anywhere near the major metropolitan areas. I'm pretty sure we're goong to see housing crash similar to that of the States. Bubbles do not last forever and they always revert to prices similar to where they began. Vancouver is in a bubble.
Even though mortgage rates are very low, look at exactly how much total you will pay after a 15 or 20 year mortgage. And if the prices drop, as they likely will, then you will owe more on your house than it is worth.
If you want to buy, look at rural areas with stable prices, instead of the over inflated areas in Canada.
I'd invest in farmland as well. There is a good chance that there is going to be a big jump in food prices in the future. |
This is the million dollar question in Vancouver. Literally.
With bulldozer-bait crack houses fetching a million dollars in Vancouver these days, many are wondering if this is a bubble market ready to burst.
One thing to keep in mind is that Vancouver is an anomaly within the Canadian real-estate market. Whereas other Canadian cities see housing prices drop during economic decline or uncertainty, Vancouver keeps chugging along like a runaway freight train. Is this train running out of track ? Many believe so. There's a lot of nervous homeowners in Vancouver hoping that interest rates stay down for a long time. These folks are mortgaged to the hilt and will find it extremely hard to stay in the game if interest rates start climbing in the next couple of years. If the rates do go up, then the market will certainly go into correction mode, and housing prices will fall.
Conversely, it can be argued that there is a seemingly endless supply of buyers for Vancouver real estate, and the supply of buyers is showing little sign of diminishing. Whether it be someone from another part of the Canada who is fed up spending too much time on the business end of a snow shovel and looking to trade in the shovel for an umbrella, or instant millionaires in China looking to park some of their new found wealth, one thing is clear : Vancouver is where they want to go.
You can look at all the economic indicators you want, but Vancouver has shown itself to be impervious to the same issues that cause other real estate markets to falter. |
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Redcap
Joined: 03 Jan 2010
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| Posted: Tue Jul 12, 2011 7:19 pm Post subject: Re: Buying a Home... Back Home (Canada) |
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| jazblanc77 wrote: |
| brento1138 wrote: |
Has anyone here made the move to buy their first home? I have several questions, and I'm mainly interested in your story. Firstly, I'm not interested in buying a place in Korea. I don't think I'll be here anyways. Too much stuff waiting back home for me.
The main gist of what I'd like to do is to buy a property in Vancouver, Canada (yeah, high prices, I know...) around $200-250,000. Just a small apartment, nothing fancy. I might rent out one of the rooms, probably to foreign students studying in Canada from the middle east or japan. (why? you might ask? cuz they always pay, or should i say, their parents always pay the rent on time) That would add a nice $500-$800 per month paying off the property.
I'm just wondering what you did to get a mortgage, what a down-payment for a 250,000 place would be. Did your bank approve it easily? Especially after not having an income in Canada?
|
By law, you must pay at least 5% down on a house purchase, however, to avoid having to pay CMHC insurance, you must pay 20% or more. You can purchase through a Realtor or even privately through ComFree. With a Realtor, expect to pay commission. In any purchase, you should take into account the closing, legal, and commission costs which generally come directly out of your pocket.
If you are a first time home buyer, there are programs that you can take advantage of, including being able to take a loan from your RRSPs that is repayable within 10 years. This is a great program because you will reduce your taxable income and get a tax break in the next tax year. On $15,000 worth of RRSPs, you could save up to $5000 on your purchase. If you do not have any money in RRSPs but want to take advantage of this incentive, you must carry a balance for 90 days before you are allowed to cash it out.
It is possible to put down less than %5, but it gets trickier and your mortgage rates will be less competitive. The bank may pay it for you, but then variable rates will be off the table and you can expect to pay a fixed rate of at least 6%. You can also borrow money from an unsecured line of credit which is set up for interest only monthly payments.
When you make an offer, you should have it drafted by a lawyer to allow conditions which may include that you get acceptable financing or that the home inspection is acceptable to the buyer. You can reduce price by taking major repairs into account and may ask (within reason) for up to 10% of the asking price. In apartments, make sure that you have your lawyer review the condo agreement and the terms of possession.
The market is soft right now and interest rates are great, so it is a good time to buy. They are talking about the market getting tougher around the Fall. Find a broker who will be able to obtain financing for you and explain all of your options.
No matter when you do, remember that there are always costs that you don't think of. In apartments, you are likely to be required to pay condo fees. You should also make sure that you have savings or a line of credit that is always free in case you require major repairs. Find out what the utilities and taxes will cost. Will you need to do any renovations to make your space liveable?
When you buy into new developments MAKE SURE that you research the Developer that built your new home. During the boom years, there was a massive flux of new construction projects that we thrown up cheaply and very poorly. CBC reported recently that 77% of new developments (houses and condos) are having similar problems to buildings that were made in the 70's. A new house or condo should not have the same problems as one that was built 30-40 years ago! Do your research and make sure you have a homebuyer's inspection completed.
Good luck!!! |
You make some very good points for the OP, and for any other prospective buyers.
The importance of researching the developer can not be overstated. Many Vancouver buyers got burned when they plunked down deposits to buy condos and high-rise units during pre-construction sales. Swayed by glossy brochures, and tastefully staged display suites, many buyers did not use any due diligence and neglected to research the developers. If they had, they would have discovered that some of the developers had a bad track record for construction quality, while others had no track record at all.
This leads to another point: always get a pre-purchase inspection. And always make sure to research the inspector, checking his/her credentials, as well as requesting references. |
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