The first-time home buyer often looks at affordable condominium prices as the natural first step up the towering property ladder.
But in a land-locked area like Saanich, the value of a home on a plot of land holds a greater guarantee of return on investment, says Sandy Sauve, Royal LePage real estate agent based in Royal Oak.
“When I meet a new buyer, they think they should buy a condo because it’s the least expensive,” Sauve says. “But that monthly $200 or $300 strata fee could go into writing down a mortgage.”
Sauve’s advice? Spend a bit more time saving for a down payment and strengthening good credit, then find a home with plenty of potential.
“You want to live within your means. Your housing costs should not be more than 32 per cent of your monthly income,” she says.
First-time buyers should build at least six months of good credit, and then see a mortgage broker, “who can pull in money from everywhere to get you the best rate,” Sauve says.
“The biggest investment you’ll make is buying a home, so you want to have the right people behind you who are working for you.”
Mortgage brokers can also negotiate longer terms on mortgages than can otherwise be achieved by going directly to the bank, Sauve adds.
There are also several programs that exist for first-time buyers to lessen the financial burden of purchasing a home.
The B.C. government allows first-time buyers to purchase a home up to $475,000 without paying property transfer tax, a potential savings of $7,500, Sauve says.
“Right now on the market, there are 328 homes priced under that amount from here to Sooke. That’s a lot of homes to choose from,” she says.
There’s also the ability to withdraw up to $25,000 from RRSP savings to be used towards a down payment without being taxed.
Another key program is the Purchase Plus Improvements program, which allows home buyers to add the cost of new renovations to a mortgage loan.
“For $300,000, you can get $30,000 to make improvements to your home to renovate your kitchen, or replace the carpet,” says Sauve, who lives near the Gorge waterway in Saanich.
Home buyers need written quotes for major renovations and there are qualifying stipulations for the Purchase Plus Improvements program, but it means renovating a fixer-upper isn’t quite as daunting if the location is just right.
“Land always holds its value,” Sauve says. “When you’re buying a condominium, there’s no guarantee that will hold its value.
“But land always goes up. It’s then up to you to build equity in the house, and if you start with good bones, you can do a renovation and you’ve got gold.”