We are thankful to Trove for lending us this beautiful venue. To let us film this video. So, what is today's topic? If you've recently immigrated to Canada or returned to Canada, then this topic is highly relevant for all of you. Because today, we'll be discussing the complete guide to buying home in Canada in 2023. So, in today's video, we'll explain what preparations need to be made for home ownership. we'll explain what preparations need to be made for home ownership. In this video, we'll provide detailed explanations to help you be better prepared. We'll also discuss the currently relaxed policies in Canada for individuals with work visas. And in a high-interest environment, what kind of decisions should we make? We'll touch upon that as well. Welcome, everyone, to Novella's YouTube channel. I am Edmond. I am Kinson. Before we begin, let us introduce this channel. Novella Wealth is an investment insurance wealth management brokerage located in Richmond, British Columbia, Canada. The primary purpose of us starting this channel is to share professional and practical financial and tax knowledge with all of you. Whether you are new immigrants, returning residents, or like Edmond and me, have been living in Canada for many years, we hope this channel can cater to all your financial needs. Enhancing your quality of life in Canada. We cordially invite all of you to like, subscribe, and share if you enjoy our videos. We will then create more high-quality videos for all of you. Without further ado, let us begin. We shall begin promptly. Let's start by understanding what exactly happened in the Canadian real estate market in 2023. Earlier, our housing market had been declining for a whole year.年 But in the first four months of 2023, signs of a rebound have emerged. Just in the month of April, according to the HPI aggregate composite benchmark, it's indicated that we've already risen by 2.3% in April. Representing an average home price of CAD 746,600. And April marks the fourth consecutive month of a rebound in the housing market. Only a small portion is showing signs of decline. Coupled with the rising mortgage application rates, these data collectively tell us that the housing market has begun to rebound. Many find this figure hard to comprehend. To put into perspective, in the past month alone, the average house price has risen by about CAD 16,900, that is approximately a quarter of the average annual income of Canadians. If this continues, housing prices would double within three years. According to BMO's Senior Economist, Douglas Porter, the sales volume in April has begun to rise, and the chances of price reduction are low. Moreover, the number of housing starts is increasing, clearly indicating that real estate has hit its lowest point. The Bank of Canada also mentioned that the rate hikes will slow down, even though on June 7th, 2023 (and subsequently on July 12th) there was a 0.25% increase demonstrating a deceleration in the pace of rate hikes. However, inflation still persists. The third point to note is the resilience of the economy still remains. While the market moving forward is looking clearer, and housing prices are not getting cheaper, If you wish to purchase a home, it's worth understanding the home buying process here. Firstly, you need to know your needs. Why do we say this? For instance, does your home need a garden? Or a peaceful area? Do you have children or elderly people in the family? These factors will all impact the location of your home and the type of home you need. Next, we need to set a budget before home shopping. Understand your financial situation Many times, our job involves planning a home purchase timeline for clients. For instance, calculating the down payment. Knowing your budget is essential to determine the type of home you can buy, as the home purchase process is complex and involves Factors related to credit ratings and borrowing. So, in the following, we will explain what to pay attention to help you purchase your first home. Buying home in Canada can generally be divided into three main parts. The first part is the down payment. Known as the Down payment. The down payment usually ranges from 5%, 10%, to 20%. Additionally, if you're buying "pre-construction" today, you need to pay attention to the payment plan for pre-construction. The second part is securing a mortgage from the bank. So, there'll be considerations about borrowing. Pay attention to your credit score. Or closely examine the terms from the bank. They will also look at your income. We may need to provide income documentation for the past two to three years. If someone has no credit history or new immigrants lack other information, we may need to consider B-Lending. The downside of B-Lending is higher interest rates. But the advantage is that you can secure funding for home ownership. Additionally, we can apply for pre-approval from the bank before buying home. We'll then know the amount of borrowing available. This helps calculate the type of home you can afford. The third part is costs. Such as transaction fees. When buying an existing house today, there may be some maintenance costs. Or renovation expenses. Or new furniture and appliances. All three of these are budget considerations before purchasing home.
123
00:06:43,148 --> 00:06:47,081
It's also important to find a reputable real estate agent. When buying home in Canada, both the buyer and the seller have their respective agents. Generally, this helps safeguard the interests of both parties. It can also help find suitable properties for everyone. An experienced real estate agent negotiating on your behalf, and reviewing the purchase and sale contract, is crucial. Real estate agents in Canada need to have the appropriate license. The quality of agents can vary at times, there are good and bad ones. We recommend not relying solely on social media and contacting an agent just based on that. We suggest when selecting an agent, do some research, whether they've actually helped their previous clients. Or you can ask friends if they've worked with a real estate agent who can introduce you to someone. A good real estate agent typically has a team behind them, including home inspectors, mortgage managers, or even lawyers and certified transaction coordinators. So, if you find a real estate agent, they can help you not only find a good home, but also save you a lot of trouble, avoid many pitfalls, and prevent potential financial losses. Regarding commissions, there's actually no explicit regulation in Canada stating what the commission should be. In general, it's usually around 2% to 6%. And this commission is bear by the seller. 當我們準備好所有事情的時候 When we have everything ready, we can go view the houses. So, what is the role of an agent? It's to arrange house viewings for you. In addition to agents showing you around, you can also browse websites to find potential properties. For example, you can check out Zolo, Realtor.ca, and see if there are any favorites. If you like something, you can have your agent arrange a viewing. Once you've found a house you like, you can make an offer. During times when the market is hot, many capable buyers make cash offers for quick transactions. Basically, an immediate deal. However, typically, when we make an offer to buy home, we might include some conditions. For instance, it might be subject to loan approval or home inspections. If those pass, we might set a timeframe to decide whether to proceed with the offer. Once we have an accepted offer, it's time to engage a lawyer or notary to handle the down payment and legal documentation, and going to the city hall to process the home transfer. Lastly, set a date for possession Edmond, you've already covered the steps of the home buying process earlier. The next step in home purchase, is to be aware of the expenses and fees involved. Firstly, it's important to understand that buying a home involves substantial costs. It's potentially a significant investment. We need to ensure that the home is in good condition before deciding to purchase. So, typically, we'll need to do a home inspection. Depending on the type of home you're buying, like a condo or a detached house, inspection fees will range from $500 to $1000. Additionally, when applying for a mortgage, the bank will do an appraisal on your home. This cost is typically around $300 to $600. When submitting the offer, you'll also need to prepare a deposit, around 5% of the home's price. In the final stages of home buying, you'll need to hire a lawyer or a certified notary. Their fee is typically between $1,500 and $2,000. As we mentioned earlier, the seller covers the agent's commission, while the buyer is responsible for the home transfer tax. home transfer tax varies by province in Canada. In BC, for the first $200,000, it's 1% of the home's value. For the next $200,000 to $2 million, it's 2%. For the portion above $2 million up to $3 million, it's 3%. And for any part over $3 million, it's 2% again. However, there are possibilities to be exempt from home transfer tax in BC. First, you can qualify for the First Time Home Buyer Program, if the home is used as your principal residence and you've never owned a home before, including abroad, you're completely exempt from home transfer tax for home value under $500,000. You can still get a partial exemption if the home value is under $525,000. If you're not a permanent resident or citizen, you'll need to pay a foreign buyer tax of additional 20%. However, there are exceptions. if you're coming here through the BC Provincial Nominee Program, if you're nominated, you're exempt from the foreign buyer tax. Ontario also has a similar foreign buyer tax called the Non-Resident Speculation Tax (NRST). It was increased from 20% to 25% on October 25, 2022. Similar to BC, Ontario has their own exemption. Those selected through the OINP provincial nominee program and their spouses Refugees and their spouses Spouses of Canadian citizens or permanent residents can also be exempt from NRST. Another fee that we need to be mindful of is mortgage insurance
238
00:12:46,639 --> 00:12:49,888
When we apply for a mortgage at the bank Generally, they will ask us whether we want to get this mortgage insurance Actually, mortgage insurance Covers the situation where we pass away before repaying the mortgage This insurance will then pay off our home mortgage Whether or not we recommend someone to buy mortgage insurance Is debatable Because this traditional mortgage insurance As we repay the mortgage over time The amount we owe the bank decreases In case of an accident The insurance payout also decreases Sometimes, due to this We suggest clients to get a regular life insurance policy The payout remains the same As my mortgage payments decrease The insurance payout doesn't decrease Additionally, there's home insurance Usually, this insurance is divided into two parts There's the contents within the house Like the items in the home In case of burglary, fire, or water damage This insurance covers the contents inside the home The second part covers structures outside the home For instance, fire, earthquake, or water damage to the home's exterior this insurance can cover us in repairing the home. I believe that many friends from Hong Kong who have come to Canada in recent years have used the Stream A or Stream B programs Their status is actually under a student visa or a work visa Starting from January 1, 2023 the Canadian government implemented a regulation called the Prohibition on the Purchase of Residential Homes by Non-Canadian Act In simple terms, it's the foreign buyers' ban Lasting for two years, the ban targets individuals without Canadian status meaning permanent residents or citizens This ban doesn't apply to all regions of Canada but specifically to areas within a CMA or CA You can find the details online to determine which areas fall under these categories But actually most city areas are within the scope of this regulation. This ban also has some specific categories of individuals who are exempt For example, international students who meet specific requirements Those who have spent the majority of their time in Canada within five years They are allowed to purchase properties below 500,000 CAD On March 27, 2023 The government revised this ban What's the new revision? It's for friends holding work permits Their work permit validity Needs to exceed 183 days to be eligible for home purchase Meaning it's calculated from the day of home purchase If you have an offer or accept an offer today You need to write the date of the contract Starting from that day The valid duration on the work permit needs to be over 183 days to buy Different from before the amendment There's no need to submit past year's tax records or residency history This new revision is an advantage for current overseas buyers Because the current conditions might not be suitable But if a customer buys a "pre-sale" home today, it might be two, three, or four years By the time they're ready to take possession, their work permit might have expired And if they're eligible for Canadian status, they won't need to pay this 20% foreign buyer tax again.
301
00:16:47,927 --> 00:16:54,727
Today, on June 7, 2023, the Prime Rate has just been adjusted to 6.95 Just added 0.25 basis point Meaning that if we buy a home today The mortgage cost is going up again This is one of the factors everyone needs to consider And there's another thing, often asked Should I go for fixed interest or variable interest Actually, there's no right or wrong answer In the past 15 years or so, variable rates have been popular Due to being in a low-interest state for a long time In fact, variable rates have been quite good But when there were continuous rate hikes in 2022 Friends who previously took fixed rates appeared smart In our experience, it's often akin to looking at investments Those who prefer fixed rates are like those who like regular GICs But those who prefer variable rates often invest in stocks Their mortgage choice also reflects their investment perspective What should we pay attention to when buying a home? It depends on our needs. If we have children, should the location be quieter? Or perhaps near schools or parks to provide them with more space to play. If we don't have children, maybe we want more convenience. For example, a location with easy access to dining and transportation. Making it easier to get around. These are some of the main factors to consider when buying home. Earlier, we discussed the home buying process, as an important reminder, It's crucial to engage with professionals during this process. to help with the process For example, real estate agent, lawyer, home inspector, mortgage broker, finding these experts will make the home buying process much smoother. Kinson, just yesterday I was helping a long-time client. He told me he wants to purchase a new home. I then rearranged his finances for him and ultimately saved him $60,000 in taxes. So, before making a home purchase, it really pays to have a comprehensive financial plan in place. I hope this video today can assist all of you in understanding the process of buying a home in Canada and budgeting for expenses. Before you begin with this process, if you'd like to engage professionals to assist with budgeting and financial planning, please feel free to scan our QR code here. You can have a one-on-one free consultation with us. Before you go, what are your thoughts and questions about home purchase in Canada? Tell us in the comments. We'll do our best to provide answers. If you find our videos helpful to you or maybe your friends will find this helpful, please help share to your friends. And don't forget to hit the notification bell to stay updated when we release new videos. That way, you'll be the first to know. That's about it for today. Goodbye.
