Why First-Time Home Buyers Should Consider Presale

Anybody looking for a new home in a market as hot as Vancouver will likely tell you that it’s a daunting task, especially for first-time buyers.

There’s no easy way to navigate the city’s fast-paced frenzy. For first-time home buyers, you need to factor in many things you might not necessarily think about –such as strata, property taxes, and even locations of schools matter. There’s also choosing between a condo and a townhouse, or a wooden frame or a concrete one. It can all make your head spin.

Since many first-time home buyers don’t have a large amount of debt, and sometimes even have family members helping them buy, presale homes are a good option. Prices are obviously dependent on location and size and in Vancouver, generally range between$450,000 and $700,000.

Presales of condos in Vancouver has never been stronger and can be a solid investment for young people just starting out. In fact, more than 10,500 new condo units are slated to hit the Greater Vancouver housing market this year, according to Canada’s Market Intel report – opening up plenty of more-affordable housing options for prospective first-time home buyers.

It’s welcoming news in the city that has once again taken its usual place atop the unaffordability scale. Vancouver ranked third least-affordable housing market worldwide this year, trailing only Hong Kong, China and Sydney, Australia. And most recently, Canada Mortgage and Housing Corporation. has issued another warning, flagging Vancouver’s potential housing market risks thanks to overvaluation and the rate of price growth.

 

But There Is Some Relief

There is also the first-time buyers loan that helps people just getting into the market get a down payment faster. The program offers a down payment loan of up to 5% of a home’s purchase price, to a maximum of $37,500, on a home with a maximum price of $750,000. The loan matches the buyer’s down payment and is interest-free and payment-free for five years.

Buyers must be Canadian citizens or permanent residents for the last five years, and have not owned a stake in a principal residence anywhere in the world. Buyers’ household gross income must not exceed $150,000 annually, and the home purchasing price must be less than $750,000. After five years, buyers repay the loan or begin monthly payments at a fixed rate equal to the interest rate. This interest rate is reset at each of the 10, 15 and 20 anniversaries.

Loans are due after 25 years.Using the first-time buyers loan on a presale condo is a smart move for people looking to get into the market. It provides the most leverage for your money. Not only do you get in the market at the cheapest possible price, but you’re able to use an additional loan to further your investment.

At Chris Lotoski Personal Real Estate Corp, we ensure all your questions and concerns are answered. Give us a call at 604-805-1804.