There’s a common misconception about home ownership that we’re going to debunk today; that you’re not able to purchase a home if you don’t have a 20% down payment. But I have some good news for you – if you qualify, you can invest in a Shuswap home with as little as 5% as the down payment!
Now, that being said, there are other fees and closing costs to consider as well. Let’s take a deeper dive into what kind of funds you’ll want to have ready to go, so you can be prepared for closing day. First, let’s review the Canadian lending rules in regards to minimum down payments on a home purchase:
For a purchase price less than $500,000, the minimum down payment is 5%
For a purchase price between $500,000 - $999,999, the minimum down payment is 5% of the first $500,000, and then 10% of any additional amount over $500,000
For a purchase price of $1,000,000 or more, the minimum down payment is 10%⠀⠀
As a heads up, however, be aware that if you decide to put less than 20% of your home’s purchase price as your down payment, then you will also need to purchase loan insurance as well.
Next, let’s discuss the next portion of fees when it comes to investing in your new Salmon Arm area home; the variety of closing costs you’ll want to consider.
Traditionally, for your closing costs you’ll want to prepare for fees that amount to approximately 1.5% of the purchase price of your property. You’ll also want to keep in mind that these costs will need to be paid in full on the day of closing. Here’s a quick overview of common closing costs below; ⠀
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Property Transfer Tax: This is calculated as a percentage of the purchase price of your home. In BC, when you purchase your first home, you may qualify for a reduced (or even exempted) property transfer tax. Calculate your potential Transfer Tax with this handy Government of BC PTT calculator.
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Legal Fees and Disbursements: You’ll want to have a lawyer or notary review and prepare documentation; these are services which come at a cost, so set some money aside to cover the legal fees you’ll incur.
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Title Insurance
Most lenders require title insurance as a way to protect themselves against losses - but it can also protect you as the buyer for instances such a property ownership dispute, unpaid back taxes, and existing liens.
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Understandably, all these numbers and fees can be somewhat overwhelming, so give me a call today at 250.804.9874 and I’ll walk you through the details that best suit your needs and individual mortgage scenario - and here’s a bonus: our conversation and the work I do for you is completely free to you!