Plan Your Budget & Needs for your Home in Vancouver
Here are some key questions to consider when buying a home:
> How far are you willing to commute?
> Are their transit options nearby?
> How many bedrooms and bathrooms do you need?
> If you have children, are there schools and community facilities in the area?
A clear and logical game plan will help you get the home you truly want for a price you're happy with. This will help you avoid making irrational and emotional decisions that you may regret in the long run.
|> Mortgage Loan|
|> Home Checklist|
|> Types of Homes|
|> Types of Home Ownership|
To start the process contact a mortgage broker and ask for a pre-approved mortgage. The broker will ask for income verification, carry out a credit cheque and ask for a letter from your employer. Then they will tell you the amount of mortgage you qualify for, your payments, and options regarding the amortization period and the term.
A general rule used to calculate your ability to repay a mortgage loan is referred to as the gross debt service ratio. This rule states that you should be contributing no more than 30% of your gross income towards your monthly mortgage payments. Remember that your gross income is your yearly salary before deducting taxes.
Lenders will take your other financial obligations, which could include car loans, credit card payments, and leases, and factor them into the total debt service ratio. The general rule is that your total debt payments plus your maximum monthly housing payments should not exceed 40% of your gross income.
When looking for your dream home in Vancouver, having a game plan in place is an important first step in the home buying process. It will help to create a clear picture for you when searching for a home.
Here are some basic questions you may want to consider:
> Where do you want to live? City, suburbs or rural?
> What public services are nearby (i.e. hospitals, firehall, police station)?
> Are the property taxes comparable to other communities?
> Are there community centres, malls and places of worship (i.e. churches, synagogues), nearby?
> Are there adequate sewage and water systems?
Definitions of areas:
Rural: If wide open spaces and large plots of land are important to you, Northern BC is the place to be. Access to basic amenities such as coffee shops and convenient stores are less accessible and limited, as fewer people live in these "outpost" towns. You may also want to consider that the climate in Northern BC is much colder than the temperate weather of Vancouver and the Lower Mainland.
Small town: There are many small towns throughout the Lower Mainland. An advantage to living in these smaller communities is that the housing costs are more affordable. Homes in small towns such as Abbotsford, Langley and Cloverdale are 40 to 70% less expensive than those found in the Vancouver area.
Suburban: Suburban areas of Greater Vancouver are increasingly more popular as a greater number of people are looking for bigger homes with yards. Home prices are less expensive than the city.
The pace of life in suburban communities is slower, but the quality of life can be better. For example, walking trails, parks, and newer schools are appealing to families looking for good community living.
City: Prices are higher in Vancouver. If amenities such as restaurants, shops, theatres, beaches and urban parks appeal to you, then this would be your choice of neighbourhood. Suburban home dwellers will have to adjust to smaller living spaces, expensive parking and less storage in city homes.
> Is public transportation easily accessible?
> Are you close to the freeway?
> Compare the cost and convenience of public transportation versus driving.
In Vancouver, there are a series of public transit options including the sky train, public buses, commuter boats (seabus and ferry), and the West coast Express (express train) connecting outer lying communities with the downtown core. There are also drive share programs designed to help reduce the amount of vehicles on the road.
> In general, is the neighbourhood well maintained?
> What are the neighbourhood demographics? Singles, families, seniors, students?
> Is your neighbours' income and professions compatible with yours?
> Are there any new projects or upcoming developments that may affect the enjoyment of your home?
> If you are looking to buy a strata lot, are you aware of the bylaws and restrictions regarding pets and rentals ? Is this something you can live with?
> Has property values risen or gone down over time?
> Do you enjoy a diversity of foods and cultural traditions?
Neighbourhoods throughout the Lower Mainland consistently offer diverse communities with rich cultures and colourful traditions. From Iranian convenient stores along Londsdale Avenue, to the authentic cuisine of Chinatown, diverse communities share their foods and cultures throughout the Greater Vancouver Area .
4) Your Citeria
> What type of property are you looking for?
> How many bedrooms do you require?
> If you're buying a house, do you want a new home, a heritage home or a fixer upper which requires renovations?
> Do you like working in the garden or is yard work something you want to avoid ?
> Do you want a sundeck? Is the exposure important?
> Do you need a lot of storage space for gear like skis, winter coats and supplies?
> Do you want a basement, coach house or attic for additional storage or living space?
> If your're buying a condo, is a view important, or would you rather more square footage? Do you need amenities? Concierge? Guest suite? What are your requirements regarding rentals and pets?
When making these decisions, a real estate agent is a valuable professional who can help you in determining the cost and location of your dream home.
> Single Family Detached
This type of home has no shared walls with neighbours and is on land with a front and back yard. It can be any size from a bungalow, one floor above ground, to multiple stories.
A duplex, also known as 'semi detached', is two separate dwellings that are attached (side by side, or one above the other). Be aware that some duplexes are subject to The Strata Property Act.
In British Columbia, a townhouse refers to a group of homes that are shared common walls, usually in a row. They can range from 1 to 3 story units and have their own entrance.
An apartment or condominium (often referred to as a condo) is one of several homes sharing common walls. They can range from 4 to as many as 30 or more stories and are governed by The Strata Property Act.
For the following sections, it is useful to refer to The Strata Property Act for information on strata homes. The Strata Property Act is a provincially legislated set of guidelines for stratified properties. The Act details the roles, rights, and requirements that need to be followed by strata developers, owners and councils.
There are 4 basic forms of real estate ownership in Canada, free hold, strata title, lease-hold and cooperative.
Freehold interest, also known as 'fee simple', is what we commonly refer to as ownership. Freehold entitles the owner to full use of the land, subject to rights of the government. This means that local land use regulations, bylaws and other restrictions are put in place at the time of purchase.
2) Strata Title
Strata title ownership is designed to give exclusive use of a particular property or strata lot to the owner. This form of ownership gives strata lot owners a shared interest in what's known as common property.
Common property includes the hallways, elevators, grounds, parking, fitness room, pool, and anything that can be shared by all residents. Strata title ownership is often applied to apartment buildings (condos), townhouse complexes, warehouses and duplexes.
This can also include single family homes known as bare-strata title. This type of ownership is shared, which means that monthly maintenance fees are also divided between lot owners.
A leasehold interest on a property gives the owner the right to use a residential property for a long and limited period of time. This type of ownership is often for apartment buildings and townhouses built by developers. Leasehold properties are found on land leased from the provincial government or City of Vancouver.
It can also apply to single family home found on farmland and First Nations reserves. The length of a leasehold interest is usually 99 years, however, you will only be able to purchase the remaining portion. A leasehold is often less expensive than freehold, but often requires a down payment of 35%. Freehold only requires the minimum downpayment of 5%.
Some leasehold properties require annual payments to be made by the tenants. This is a fee to pay for the use of the land. Tenants will often make monthly payments over the course of a year, much like the maintenance fees paid by members of the strata. This type of leasehold may have a rent review clause that allows landlord (representing the government), to periodically adjust the rent to the current market value.
Other leasehold properties are pre-paid by the developer and will not have a rent review clause; however, the landlord may require additional payments over a period of time to reflect the current market value.
In a cooperative, each owner possesses a share in a company or cooperative association. This company owns a property containing a number of housing units.
The difference between strata development and a cooperative is the interest in land. In a strata development, the owners buy interest in the strata lot, which means they own real estate or property.
In a co-op you own shares in a company and lease back the right to live in a specific suite. All the owners in the building own shares in the company. The company owns the land. When you sell your co-op suite the new owner buys your shares. Some of the leases are registered and some are not.
Relevant info: The Strata Act
Buying Strata or Cooperative properties in Vancouver
What important questions should you ask ?
> What are the maintenance fees and what do they include? Utilities, for instance, heat and hot water? A budget is tabled at the annual general meeting (AGM) and an increase in fees is voted on by those attending the AGM.
> Has the building been well maintained over the years? How old is the roof? How old is the plumbing? What is the condition of the membranes and balconies?
> If it is a new development, when will it be completed for occupancy ? Will the recreational facilities be completed by that date?
> Is the property managed by a property management company approved by a Real Estate Council? Or, is the property self-managed ?
> How much money is in the contingency fund and is it in compliance with the strata title act? What are the capital expenditures and are they being maintained?
> Can owners rent their units? How many units can be rented in the development? (part of the strata documents include a form b and this info will be on it.)
> Have any special assessments been agreed upon or are there any pending special assessments for structural problems? How will they be paid for?
> Has the building envelope been renovated in the past? Has there been an engineer's report? Any plans to redo it? Has it been voted on? How will it be funded?
These questions are important to your home buying process, as fundamental issues such as poor maintenance and structural defects can cost you a lot of money down the road.
A structural problem known as the "leaky condo" surfaced in Lower Mainland buildings constructed from 1986 to 1996. After '96 the developers started using Rainscreen Construction. Leaky condos were a result of City Hall changing the building code for wood frame buildings in order to reduce the overall energy consumption of the structure.
What happened after this change was made?
The builders wrapped the framing in plastic which prevented the wood to dry out. As a result the framing started to rot. On top of that the developers used california stucco which is too porous for the local climate and changed the design of buildings, deleting the use of overhangs, gutters and downpipes.
Buyers should be aware of buildings built in the '86 to '96 period and carry out their due diligence in detail.
In the late 1970s and early 1980s, there was an urban boom in Vancouver, which led to the construction of new residential buildings. Many of these new condos were copied from designs of buildings constructed in much drier climates such as California. Poor design and construction led to leaky roofs and water damage in condos throughout Vancouver and the Lower Mainland. This became known as the "leaky condo", which sometimes surfaced months or even years later due to the annual drying and ventilation systems found in a building.
Water ingression behind walls was a also big concern as it turned into mould and caused many health problems including respiratory illness. Home owners who bought leaky condos were faced with massive repair bills totaling millions of dollars. Their homes were draped in tarps and scaffolding for several months and even years.
Since the leaky condo disaster occurred, the provincial and federal governments have initiated the Home Protection Act. This was an effort to protect new home owners. This act requires that all newly constructed homes have home warranty insurance. The insurance includes a minimum of 2 years on labour and materials, 5 years on the building envelope, and 10 years on a stable home structure.
Today leaky condos, although fewer in numbers, are still surfacing around the city.
Here are three important things you (or your real estate agent) should do to learn about the history of a building you want to buy:
1. Review the minutes of buildings strata council meetings, to see if any "leaky condo" problems have been recorded.
2. Request copies of any engineer's report, if any.
3. Have a home inspection completed by a certified home inspector.
Reviewing all the minutes, reports, and inspection data thoroughly is important. As a home buyer you can do this yourself. However to save time, it is wise to hire a real estate agent to do this research and provide you with their professional opinion and recommendations.