Advisor Insight - Making the Jump from Renter to Homeowner

For some people currently renting in Greater Vancouver, the end goal is to someday make the transition to homeownership. Yet, the process to make this move is intrinsically nuanced and it can feel daunting, to say the least. While there isn't one clear cut path to go from renting to home-owning, there are some strategic ways to make the experience more approachable and manageable. We gleaned insight from rennie advisors, Tony Liang, Calvin Kan, Disa Lim, Nagib Karim, and Tina Baloochestany who have helped numerous first-time homebuyers enter the housing market.

On taking advantage of pre-sale project options
Tony: For first-time homebuyers, pre-sale projects can be a viable and more financially adaptable option.  A built-in advantage of buying a pre-sale condo is that your mortgage payment does not start until your home is completed--usually in two to three years--which provides the buyer an opportunity to save more money while waiting for completion.

Disa: Pre-sales are a great opportunity for first-time home buyers since a home purchased for under $750,000 may be exempt from property transfer tax. Plus, developers often require staggered deposits over longer timelines, thereby opening opportunities to save more money. I’d recommend tasking your Realtor to keep you updated on upcoming projects or join project mailing lists. It’s worth being in the loop to get an accurate gauge of the housing market. 

On taking advantages of older properties
Tony: When looking for your first home, don’t dismiss an older strata apartment. Some perks of buying an older home is that it will likely come with higher square footage and a lower price point. An experienced Realtor will do their due diligence in seeking information and records on older homes to ensure they have a strong foundation and an active strata that has kept up with building updates.

On being incentive savvy
Nagib: Be sure to take advantage of any first time home buyer incentives from banks and the government. If you happen to have RRSPs, you might be eligible to use them under the government’s Home Buyers’ Plan (HBP), a program that allows you to withdraw up to $25,000 in a calendar year from your RRSPs to buy a home for yourself. 

On tapping into your financial resources
Calvin: Whenever possible, I recommend my clients to make a 20% down payment or more on their mortgage. However, be prepared that even with 20% down, mortgage payments may still be higher than previous rental payments. If it is an option, your family may be a resource to help contribute to a more substantial downpayment. The higher the down payment, the lower your mortgage payments.

Disa: To initially enter the real estate market, some of my clients had down payment help from their family, bought with a sibling or friend, added a co-signer, or opted to put a down payment less than 20% and required a Canada Mortgage and Housing Corporation (CMHC) mortgage loan insurance. The benefits of CMHC mortgage loan insurance allows you to get a mortgage for up to 95% of the purchase price of a home. It also ensures you get a reasonable interest rate, even with a smaller down payment.

On actively saving up
Nagib: To save for a down payment, my clients have had to cut back on entertainment expenses such as eating out frequently, movies, concerts...etc. Little by little these savings can result in an additional $500-$800 per month. At the very least, that's an additional $6000 per year going towards your future home. 

Tina: If you want to maximize your savings, it’s important to live below your means by paying the lowest rent possible. Some of my clients have moved home after purchasing a pre-sale home. If this is an option you can exercise it’s a very effective way to save up additional funds. 

On considering emerging neighbourhoods
Nagib: When making the leap from renting to buying, consider neighbourhoods out of the city core. The Tri-Cities are worth looking at and homes along the transit corridor in Surrey are a great option. 

Disa: I’ve helped many first time home buyers get into the pre-sale housing market. Many have chosen Surrey and New West because both locations offer efficient transit options for homeowners to access other areas such as Downtown Vancouver for work.

On taking that first step
Disa: I was 23 when my father assisted me with the down payment of my first home. From that first property, I built equity and continued to buy and sell. I have always looked at buying a home as a strategic long-term investment opportunity. I would encourage anyone looking to transition from renting to buying to take the initial steps by connecting with a mortgage specialist and a Realtor to begin exploring your options. 

On the best case scenario 
Tina: In some cases with purchasing pre-sale, the property value rises between purchase date/signing contracts and the completion day. I’ve been able to help clients do this at a few projects that are located in up-and-coming neighbourhoods--Surrey and Burquitlam respectively--which mean my clients were able to purchase at great prices with home values that rose leading up to completion. 

A special thank you to rennie advisors Tony Liang, Calvin Kan, Disa Lim, Nagib Karim, and Tina Baloochestany for sharing with us their real estate insights and perspectives. 

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