Blogs

1. What type of legal representative do I need to complete the purchase of my home?
   
   British Columbians are some of the lucky few in Canada who have a choice when it comes to selecting their legal representative to complete their purchase, sale, or refinance transaction. They have the choice between a lawyer and a B.C. notary public.
   
   Both lawyers and notaries can assist in several aspects of the home buying process such as complex paperwork and legal contracts, overall their main goal is to make you aware of special considerations and assist you with the closing process. For a more in-depth understanding of what each roll entails, read Lawyer vs. Notary Public: What’s the Difference.
   
   
2. What is Property Transfer Tax?
   
   If you’re a first time buyer in British Columbia and you’re purchasing a property under $500,000, there’s no property transfer tax. Between $500,001 and $524,999 you may be eligible for an exemption of the property transfer tax on a sliding scale.
   
   There is also an exemption on newly built homes up to $750,000, with a sliding scale of reduced property transfer tax up to $799,999.
   
   However, if this is not your first home and it is not a new build, you’ll be paying one percent on the first $200,000, and then two percent on the portion of fair market value greater than $200,000 and up to and including $2,000,000. So, on a $600,000 house, you’re looking at $10,000 property transfer tax. If this cost is an issue for you, we do have some cash back mortgage options to assist with the payment, provided you qualify.
   
   
3. What makes up closing costs?
   
   There may be closing costs customary or unique to a certain locality, but closing costs are usually made up of the following:

• Lawyer/Notary fees
• Property taxes/Levees and fees
• Interest adjustment (paid from closing to 30 days before first monthly payment)
• Title insurance
• Homeowner’s insurance policy (plus fire and flood insurance if applicable)
• Any documentation preparation fees

4. What happens prior to closing day?
   
   At Auxilium we will thoroughly review your file 14 days before you take possession of your new property to ensure that your file is in order. During this time we will also make sure that your lawyer or notary has received instructions from us in order to ensure that your mortgage closes on time, without problems.
   
   Around a week before your closing date you will need to meet with your lawyer or notary to sign the mortgage papers. Prior to the appointment, you must ensure that the following items are taken care of:

• The balance of your down payment funds must be accessible, as you will need to provide the lawyer/notary with a certified cheque to cover the down payment and other closing costs. Your lawyer or notary will contact you in advance with these details.
• House insurance with the loss payable to your chosen lender must be arranged.
• Have read the lawyer’s/notary’s paraphrased documents prior to your meeting as they are lengthy and you will not have time to read them while in their office
  
  When meeting with your lawyer or notary, you'll present your paid homeowner's insurance policy or a binder and receipt showing that the premium has been paid. The closing agent will then list the money you owe the seller (remainder of down payment, prepaid taxes, utilities, etc.) and then the money the seller owes you (unpaid taxes and prepaid rent, if applicable). The seller will provide proofs of any inspection, warranties, etc.
  
  Once you're sure you understand all the documentation, you'll sign the mortgage, agreeing that if you don't make payments the lender is entitled to sell your property and apply the sale price against the amount you owe plus expenses. You'll also sign a mortgage note, promising to repay the loan.

5. What can I expect to happen on closing day?
   
   On closing day, your lawyer or notary will be in contact with your lender to ensure they are being funded. Once the money is received, they will begin the process of transferring the money to the appropriate parties, and registering the title in your name if you are purchasing. The lawyer or notary will work to inform you of their progress on that day, and in most cases transactions are completed by midafternoon.

The Auxilium Team offers a complimentary consultation to start your home buying process; contact us today at 250-590-6520 (toll-free 1-855-590-6520). You can also visit us at 307 Goldstream Avenue during regular business hours. We can arrange an appointment evenings or weekends to work with you.

1. What is mortgage insurance?
   
   There are two types of mortgage insurance. The first is a policy that protects lenders against losses that result from defaults on home mortgages, and it's required for borrowers making a down payment of less than 20 percent. If this insurance didn’t exist, lenders would not lend to that loan-to-value, which is the amount of the mortgage loan compared to the value of the property. Thus why insurance was created: To allow more people into the market.
   
   Like home or auto insurance, mortgage insurance requires payment of a premium for protection against loss, and is used in the event of an emergency. If a borrower can't repay an insured mortgage loan as agreed, the lender may foreclose on the property and file a claim with the mortgage insurer for some or most of the total losses.
   
   The second kind of insurance is what you take out in the event that something happens to you. This type of stand-alone insurance is a good idea because your mortgage is probably your single biggest liability, and if something were to happen to you, your partner, or both of you, you want to make sure that no one has to deal with that additional stress. Contact Auxilium Mortgage for more details.
   
   
2. Do I need homeowner’s insurance?
   
   Yes. Home insurance is a key requirement for your mortgage. The Auxilium Team is happy to provide you with a referral to our trusted partners for a consultation and quote. 

The Auxilium Team offers a complimentary consultation to start your home buying process; contact us today at 250-590-6520 (toll-free 1-855-590-6520). You can also visit us at 307 Goldstream Avenue during regular business hours. We can arrange an appointment evenings or weekends to work with you.

1. I found the perfect home, what steps need to be taken to secure a loan?
   
   If we have not already done a hard pre-approval for you, then the first step is to complete a loan application. This can be done online, over the phone, or in person. Regardless of which way we do it, we’ll need documentation from you. One of our team will assist in advising you what specific documents will be required. During the application process we will also order a report on your credit history, complete a thorough credit application, and then review all your options with you. We'll make it easy, promise!
   
   
2. How do I choose the best loan for me?
   
   Your personal situation will determine what type of loan is best for you. There are a few questions you can ask yourself to help narrow down your options.

• Do you expect your finances to change over the next few years?
• Would fluctuations in your monthly mortgage payments trouble you?
• Do you want to own more than one property in the future?
• Are you planning to live in this home for a long period of time?
• Do you wish to be free of mortgage debt as your children reach college or as you hit retirement?
  
  Your answers to questions such as these will help us decide which loan best fits your needs

3. How do you determine the best loan amount for me?
   
   We consider your debt-to-income ratio, which is a comparison of your gross (pre-tax) income to housing and non-housing expenses. Non-housing expenses include long-term debts such as car or student loan payments, alimony, or child support. We take those numbers and correlate an affordable mortgage amount, but more importantly, one that’s comfortable for you. Once again, this is something that is done during the hard pre-approval stage.
   
   
4. What happens after I’ve applied for my loan?
   
   Once we have completed the application and gathered the supporting documents, we assess the best lender and submit your application to them. Response time is usually anywhere from one day to one week depending on how busy the lender is and the complexity of the application. If we require further information, the sooner you can provide it, the faster your application can be approved and subjects removed. Once we have an approval, we will set up an appointment to review it with you and ensure that you are satisfied.
   
   
5. What is an Appraisal Review?
   
   Whenever a property has less than 20 percent down and is CMHC or government insured, the insurer will pay for the appraisal. However, when you have more than 20 percent down, a lender is more than likely going to ask for an appraisal, and that’s a cost you’re going to have to cover.

The Auxilium Team offers a complimentary consultation to start your home buying process; contact us today at 250-590-6520 (toll-free 1-855-590-6520). You can also visit us at 307 Goldstream Avenue during regular business hours. We can arrange an appointment evenings or weekends, to work with you.

1. What factors determine the monthly mortgage payment?
   
   The monthly mortgage payment is based on the amount of the down payment, the size of the mortgage loan, the interest rate, the length of the repayment term, the amortization and payment schedule.
   
   
2. What is included in the monthly mortgage payment?
   
   The monthly mortgage payment pays off principal and interest.
   
   
3. What are accelerated weekly or bi-weekly payments?
   
   If you really want to tackle your mortgage faster and save interest, it’s wise to go with what is called an accelerated bi-weekly or weekly payment option. It’s not rocket science, and in fact, it’s quite simple. Under the accelerated bi-weekly program, you’re making 13 mortgage payments over the year versus 12. We all know that anybody who’s getting paid bi-weekly gets paid every two weeks, so, if you make 26 mortgage payments and divide it by two, that’s 13 months. That extra mortgage payment definitely has an impact at reducing the principal more quickly.
   
   Most mortgage lenders are very generous with allowing you to put extra money against your mortgage as long as the increments are as little as a hundred dollars. Nowadays lenders will even let you double up or make lump sum payments. You’ll want to check if these lump sum payments are restricted to an anniversary date or if they can happen any time throughout the mortgage term.

The Auxilium Team offers a complimentary consultation to start your home buying process; contact us today at 250-590-6520 (toll-free 1-855-590-6520). You can also visit us at 307 Goldstream Avenue during regular business hours. We can arrange an appointment evenings or weekends to work with you.

1. How are pre-qualifying and pre-approval different?
   
   A pre-qualification is an informal process that takes place before the home buyer applies for a loan to determine how much money they would be eligible to borrow. Based on your general information, the lender, broker, or bank can look at your income and debt to give you a rough idea on how much you can borrow. They will calculate your affordability by doing a Gross Debt Service ratio (GDS) and a Total Debt Service ratio (TDS).
   
   While a pre-qualification is better than nothing at all, pre-approvals are more powerful. However, even pre-approvals do not guarantee you the loan. In short, a pre-approval is just that: a preliminary approval by the lender of the borrower’s application for a mortgage to a certain maximum amount and rate. Moreover, it will make realtors take you seriously when you show up for the viewing, and allows everyone involved to know how much you can afford so you don’t be wasting time looking at homes out of your price range. The best way to think of it is as an early green light on a loan, plus it puts you in a good negotiation position when you do find the home that’s right for you.
   
   At the same time, unless the lender gives you a hard pre-approval by reviewing your application, looking at your credit history, employment documentation, credit check, etc. to ensure that your information is accurate, you are sitting in the dark. In fact, without a professional’s due diligence, you can do a soft pre-approval online by yourself. At Auxilium we don’t just do pre-approvals, we do hard pre-approvals. Contact us to learn more.
   
   
2. How do I make an offer?
   
   You’ve finally found the home of your dreams and you want to make an offer to buy. How exactly do you go about doing so? Your licenced realtor will assist you in making an offer as they are well versed in doing so. Since an offer is a formal, legal proposal, it’s important to also speak with a lawyer or notary to review your offer before submitting anything in writing if you are purchasing privately (a property that is not listed for sale with a realtor).
   
   Offers to purchase a home can also be made conditional, which means that the offer is conditional on certain subjects, for example, you being approved for a mortgage, or having a home inspection done on the home. If these subjects are not removed, meaning conditions are not met, you can change or cancel your offer, even if the seller has already accepted it.
   
   An offer typically includes:

• Your name, the name of the person selling the home, and the address of the home
• The price you are offering, which may be lower than the asking price
• Any items in the home that you want to have included in the purchase price (i.e. light fixtures, blinds, etc.)
• Financial details such as the deposit amount (if required), details of your mortgage financing, etc.
• The closing date for the sale and the date you want to take possession of the home (usually 30 to 90 days from the date of the agreement)
• A request to the seller for a copy of a current land survey if available
• The expiry date (the date the offer ends), which is usually 48 to 72 hours from the time the offer is made
• Any conditions you want to make on the offer, such as making sure the house passes an inspection, or your being approved for financing
  
  Remember that an offer must be an agreeable contract with the seller, and is more than just throwing a number their way. It’s also important to not get discouraged if your first offer isn’t accepted.

3. How much do I need for a down payment?
   
   A lot of people are confused about how much cash they need for a down payment. In Canada, the minimum down payment required for an insured mortgage is five percent of the purchase price on the first $500,000 and 10% of the purchase price beyond that. Even if you’ve owned a house before, you can get in with this down payment as long as it’s your principal residence.
   
   All or part of the down payment can come from several different places, including:

• Savings: Doing a trial run of your budget is a great way to bulk up your savings account
• RRSPs and The Home Buyer’s Plan: The federal government allows each person purchasing the property to use up to $25,000 of their RRSPs, tax free.
• Gifts: If your family wants to give you money to use for your down payment, that’s perfectly fine, even if it’s the full five percent
• Flex equity: This allows you to borrow the down payment from a line of credit, credit card, or a personal loan.
• Vendor take backs: The vendor is willing to finance the property, which means the seller is willing to help with the down payment.

4. What is a mortgage?
   
   A mortgage is a loan obtained to purchase real estate. The "mortgage" itself is a legal claim on the home or property that secures the promise to pay the debt. All mortgages have two features in common: principal and interest.
   
   
5. Are there special mortgages for first time home buyers?
   
   There are several affordable mortgage options that can help first-time homebuyers overcome the obstacles that come with buying a home. At Auxilium Mortgage we’re able to help borrowers who don't have the money saved for the down payment, are missing a portion of the five percent, have a poor credit history, have quite a bit of long-term debt, or have experienced income irregularities. If you’re a first time home buyer looking for more information, download our free First Time Home Buyer’s Handbook and contact us to setup an appointment.
   
   
6. What are fixed, variable, and blended rates, and which one is right for me?
   
   Fixed rates never change over the life of the term, so this might be good for those who enjoy the security of knowing that their rate is guaranteed not to change for the term of the mortgage, but are willing to pay a slightly higher interest rate. If you have a fixed rate loan and interest rates drop significantly, then you may want to look into refinancing.
   
   Variable rates are best suited to those who are comfortable with rate fluctuations. You may have the flexibility to accept possible increases in your amortization should the interest rate increase. Payments will stay the same if the prime rate changes, but more will be paid towards interest, thus lengthening your amortization period. You can also opt to have the payments increase interest to avoid an increase in amortization.
   
   A blended, or half and half rate mortgage gives you the best of both worlds – a fixed and variable mortgage rate. Now if the prime rate changes, only your variable portion will change; your fixed portion will remain the same. So, if you are someone who prefers calculated risks – this may be is the one for you.

The Auxilium Team offers a complimentary consultation to start your home buying process; contact us today at 250-590-6520 (toll-free 1-855-590-6520). You can also visit us at 307 Goldstream Avenue during regular business hours. We can arrange an appointment at our Fort Street office, or evenings or weekends, to work with you.

1. What should I look for when deciding on a neighbourhood?
   
   Choosing your neighbourhood is as important as choosing the house itself. You need to do your research and decide where you want to be. If you’re planning on having a family down the road, find out where the good schools are located. If you’re somebody who doesn’t like to drive, consider the bus routes. If you’re a city person, find a nice area you’ll enjoy, whereas if the peaceful rural has your heart, shop around those areas. The point is, do as much homework as possible so you’re not having to quickly resell the house in a year or so. Let’s face it; you’d have to pay the transfer tax all over again, plus moving costs and face the hassle of moving.
   
   Once you find an area you like, learn about it. Look into things like crime rate and demographics, as well as community groups and activities. Go for lunch in the potential neighbourhood, walk the streets and talk to the neighbours, you’ll get a much better feel for the area than if you just talk to the sellers. It’s also important to visit the prospective home several times, at different times. You don’t want to find out that what appears to be a quaint little spot in the mornings is run by rowdy hooligans come dusk.
   
   
2. How do I choose the right realtor?
   
   The best way to begin your hunt for the right realtor is by asking family and friends if they know someone they would recommend. Having a realtor referred to you means you’ll know someone who has had a firsthand encounter with the individual, and can share their experience with you before you get started. Next, compile a list of several realtors and talk to each before choosing one. Realtors are key players in your quest for a home, as they can help you find the kind of house you’re looking for, in an area you like, with a price to match your budget. Moreover, they can also help with strategies during the bidding process. It’s important to look for a realtor who listens well, understands your needs, and knows the local area. Overall, you want to choose a realtor that makes you feel comfortable and can provide all the knowledge and services you need.
   
   
3. What should I be looking for when I walk through a potential home?
   
   When you’re viewing potential homes make sure to cover all bases. Think about things like how much storage you currently have vs. how much you think you’ll need in the future. Does the house sport a decent size closet or linen shelf? How is the cupboard space, garage and basement? You don’t want to move into a place then go nuts trying to cram your things in.
   
   Flush the toilets, turn on the taps and open the windows. Are these up to par? A thorough examination of the home will be performed by the home inspector, but it’s nice to know in advance when you’re considering.
   
   Is it move-in ready? How much extra cash are you going to have to dish out in renovations, updates, and extras? Do you have the money to spare, or should you keep looking for something that already caters to your needs a bit more? These may seem like small details, but they’re important to consider as expenses add up quickly.
   
   Keep in mind that no home is perfect; it's not going to check all of your boxes, but that doesn't mean you shouldn't take your time and think carefully about each house you see. Ask your real estate agent to point out the pros and cons of each home from a professional standpoint.
   
   
4. What questions should I ask when looking at potential homes?
   
   Many of your questions should focus on potential problems and maintenance issues. Does anything need to be replaced? What things require ongoing maintenance? Why are the current owners selling? Be sure to ask any and all questions until you’ve covered all bases and feel you have a thorough understanding of the situation. Making a list of questions ahead of time will help you organize your thoughts and arrange all of the information you receive.
   
   To best keep track of the homes you view, try to take photos of each house you view: the outside, major rooms, yard, and extra features that you like or see as potential problems. Don't hesitate to return for a second look.
   
   
5. How many homes should I view before deciding on a winner?
   
   When buying a home it’s important to look at more than one option. Comparing several homes will not only help you decide what it is you really want, but it will also open the door to opportunities you would not otherwise experience. You may even miss out on an amazing deal and the perfect home because you never took the time to properly scope the market. Think of it like dating, would you really want to marry the first person you went out with? Maybe you would, but either way you should keep an open eye when it comes to buying. It’s also important to “sleep on it.” Don’t rush a decision, always give it time to sink in and really consider what is at hand.
   
   
6. What should I look for during the final walk through?
   
   If the home was furnished when you originally viewed it, by the time of your final walk through it will be empty, giving you the chance to view it with fresh eyes. During this time take advantage of the openness and direct your attention to things like the walls, ceilings, and any other areas that were previously hidden by furniture or décor. During this time also double check to ensure the seller has lived up to their word and fixed any problems discovered during the inspection. If any damage has not yet been dealt with, be sure to address the problem before closing the deal.
   
   
7. What does a home inspector do, and how does the inspection affect the price of the home?
   
   A home inspector checks the safety of your potential new home. Focusing on the structure, construction, and mechanical systems of the house, this expert provides a realistic, unbiased evaluation of a home’s condition to make the buyer aware of any necessary repairs or potential problems.  While sellers don’t always disclose all the details to prospective buyers, a home inspector can look beyond the fresh paint to find costly underlying problems.
   
   An inspector generally checks the five principle systems of a home: the roof and upper structure, plumbing system, heating system, electrical system, foundation and lower structure. They will also inform you of the presence of pests, problems with windows, ceilings, walls, floors, the roof, etc. It's a good idea for the home to undergo an inspection before you sign a written offer, since once the deal is closed, you've bought the house. Another option is to include an Inspection Clause in the offer when negotiating for a home, as this will give you an out on buying the home if serious problems are found, or the ability to renegotiate the purchase price if repairs are needed. This clause can also specify that the seller must fix any problems before you purchase the house. Take advantage of these professionals, at the end of the day they can save you a lot of time, hassle and money.

The Auxilium Team offers a complimentary consultation to start your home buying process; contact us today at 250-590-6520 (toll-free 1-855-590-6520). You can also visit us at 307 Goldstream Avenue during regular business hours. We can arrange an appointment evenings or weekends, to work with you.

Buying your first home can be the single most exciting experience you've had so far, but it can also be the most nerve-racking. There are a host of factors to consider, and overlooking some of them can cause headaches down the road. If you missed our first 5 DOs for buying your first home, check them out. Here are 6 more DOs for you to tackle.