Top Questions to Ask When Buying a Home in BC

If it’s your first time looking to buy a home or you’ve had experience in the housing market, it’s normal for many questions to arise.

Some of the most important categories to cover are:

financial,
property based,
realtor and
regulatory questions.

Making sure you’ve covered your bases and answered the questions you feel are most important is a great first step toward property seeking.

Financial Questions
Property Questions
Realtor & Regulatory Questions

Financial Questions

What is my total budget?

Your budget is usually determined by your gross income (total before taxes), the down payment, and your current loans and debt. Many financial institutions have a mortgage calculator online that will prompt you to enter these factors and will provide you with a rough estimate for a comfortable maximum purchase price and monthly mortgage payment over a set number of years and a set interest rate.

What closing costs do I need to look out for?

Closing costs are the fees a buyer pays to settle a property deal. These include land transfer tax or other legal fees, as well as lawyers or notaries for their work and disbursement fees (the expenses the professional paid for on your behalf in order to close your deal legally).

Will I need CMHC Mortgage Loan Insurance?

CMHC mortgage loan insurance is required if your down payment is less than 20% of the property price and adheres to the minimum down payment requirements in relation to the cost of a home (CMHC, 2023).

Mortgage loan insurance helps the buyer to cover up to 95% of the cost of a home and the insurance is broken down and added to monthly payments. It also protects the lender in the case that a buyer can no longer make their payments (CMHC, 2023).

This type of insurance is calculated as a premium based on the total loan amount, meaning, a buyer will pay a higher percentage in premiums with larger loans. Typically, mortgage loan insurance is helpful in stabilizing and lowering interest rates and additional fees that would accrue without the insurance (CMHC, 2023).

Are there any immediate foreseen costs if the property is purchased?

Some immediate costs should include building inspection fees, sales tax (which varies province to province), land transfer tax, home insurance, property tax and legal fees associated with your lawyer and their work on your behalf. Minor fees may include movers, additional key cutting, personalization touches like furniture or blinds, utilities, or cleaners.

Is it a leasehold or a freehold property?

A freehold property means that a buyer owns the house as well as the allotted land and is responsible for property taxes and land maintenance. Freehold properties are usually more expensive but appreciate faster.

A leasehold property is often associated with condominiums or stratas and means that the buyer owns the home but not the land and is responsible for paying additional strata or condo fees to maintain the property and “lease” the ground. Leasehold properties are usually less expensive and appreciate slower.

Recommended Reading: Leasehold vs Freehold Property in British Columbia

Property Questions

Are there repairs that will need to be made?

As a home buyer, it’s important to get a building inspection on the property you want to purchase. In Canada, properties must adhere to standards of building code and safety, and a lender will often require these standards to be met before loaning money to a buyer. Other repairs include replacement of HVAC, septic systems, or roofs which can vary in terms of severity and immediacy of replacement. Usually, severe repairs are the responsibility of the seller and, occasionally, minor repairs like holes in the drywall or a wiggly railing can be negotiated into the purchase agreement as the responsibility of the seller.

Are there any liens on the property?

A lien is a type of registered legal claim that can be leveraged on personal property to ensure debts or loans are repaid. If a buyer wants to buy a property with a lien, the buyer would then become responsible for paying off the lien. This can add extra expenses to the total price of the property which may or may not be worth it, depending on how much you love the property.

Does the strata have sufficient funds?

In British Columbia, strata corporations must have CRF’s or contingency reserve funds which enable them to pay for expenses that occur infrequently, like, replacing a roof. If you buy property under a strata all of the owners will be paying strata fees which go towards funding other maintenance of the property. Most times, representatives made of owners in the strata will form a committee that will vote on and allocate funds to the annual budget for maintenance or small projects.

Are there safety or health hazards on the property?

Normally, these sorts of hazards will be identified during a home/building inspection. It’s important to ensure that the building inspectors are certified so they can be held to legal standards should a mistake arise. Identified health or safety hazards normally reduce the value of a home until they are fixed, which will be the responsibility of the seller at the time. Health and safety hazards should always be taken seriously and handled appropriately to minimize any risks.

Why is the seller selling?

There are many reasons for selling a home, some include wanting to downsize, changing neighbourhoods for different amenities or schools, relocating for work or perhaps for more personal reasons. Usually, it comes down to the lifestyle choices or needs of a person to sell their home. Sometimes, sellers are house flippers and are ready to move onto the next project, and sometimes, people just want to cash in on a property that has appreciated greatly over the years.

What is the neighbourhood and Walk Score like?

The neighbourhood a buyer chooses a property in can become like a small community. Similar folks often gravitate to the same areas due to lifestyle choices or access to amenities, which can be an important factor when you choose to live in an area for the long term. The Walk Score is calculated based on criteria in measure of space (1 km for example). To have a high walk score, the 1 km measure should be compact with good city planning (grids), plenty of businesses and mixed use facilities, residential zones and affordable housing, parks or public spaces, and streets designed for people rather than cars.

Is the area growing?

Growing cities usually indicate areas of new development, which can mean both higher or lower property pricing. Less established neighbourhoods are normally lower in value compared to older, established ones, but newer houses tend to be a bit pricier than resale homes. If the area is consistently growing, home appreciation value will increase alongside it as more people and businesses spring up around a neighbourhood, which can be good news down the line for a new buyer.

Are there natural disaster risks?

In Canada, the government provides citizens with free access to maps and research done by scientists who study natural hazards. Some of the most common risks include earthquakes, tsunami, floods, landslides and forest fires. Each of these natural hazards occur with increased frequency and higher severity in certain geographical regions, which is why it’s important to research the basics (like underlying ground materials, proximity to the ocean, seismically active areas or areas prone to forest fire) for the neighbourhood you might be interested in. Alternatively, you could hire an engineer to assess the potential risks to your property should a natural disaster occur.

Recommended Reading: Floodplain Maps by Region (BC Government)

Is it pet friendly or does it have any age restrictions?

Most times, these restrictions only apply to the buyer of the property and many exemptions can be found, for example, children, caregivers, or spouses might not have to meet an age restriction or they might allow small or quiet pets as opposed to larger or noisy animals.

Realtor & Regulatory Questions

If I’m new to Canada, what should I consider?

If you’re new to Canada you can definitely buy a home, however, if you want to take out a loan you might have to meet extra criteria through a Canadian bank or lender. Sometimes the minimum down payment is a little higher than long term residents and you might need a reference letter from a financial institution, proof of income or a credit check. You might also need to open a Canadian bank account to set up payment with the lenders or other people you’re doing business with regarding purchasing property.

When could I move in if I buy?

The day you take legal possession of a property is called the “closing day.” Normally, this is when the lender will provide the rest of the money for the property to your lawyer and you will provide the down payment. Your lawyer or notary will close the deal with the seller and you will receive the keys and the deed to your new property, which can be in the same afternoon (CMHC 2023).

How does the “cooling-off” period regulations affect the property purchase?

In British Columbia, the provincial government adopted a new amendment to the Property Law Act starting in January 2023. The new amendment is called the “3 day cooling-off period” which allows the buyer to cancel the purchase and sale contract within 3 business days. The right to cancel an agreement (also named the HBRP or Home Buyer Rescission Period) comes with what is called a “rescission fee,” which is 0.25% of the purchase price to the seller.

What type of offer contingencies should be added?

Contingency clauses ensure that a buyer or seller has legal protection within potential legally binding contracts. Some of the common types of contingencies in a contract include a set time period for a property inspection, or specific terms to do with acquiring a mortgage within a certain interest rate. The legal protection from contingencies come from the basis that clauses are written clearly into the document and can legally cause the contract to be cancelled if the clauses are not met.

How long has the property been on the market?

If a property has been on the market for a long time, this often appears as somewhat of a red flag to potential buyers. Sometimes, it’s simply a matter of a high asking price when the value of the home might seem less, but it can also mean there are true problems with the property that make it less desirable for a potential buyer. Fortunately, many days on the market also opens up the opportunity to negotiate with the seller if it’s a property that you just can’t live without.

How much are regular monthly and yearly home costs?

Monthly costs reflect the mortgage, utilities, home insurance and other personal bills. The yearly costs hinge on how new or upgraded the property is when you’ve purchased it. A good rule of thumb is to keep 1% of the purchase price of the property for larger maintenance throughout the year. Another way to be prepared for larger maintenance fees is to calculate $1 per square foot of house.

Are there any issues with the neighbours?

If problems arise with your neighbours, the best solution is always to approach with compassion and be prepared to clearly and respectfully communicate any concerns you might have with them and also be prepared to listen. If problems aren’t getting solved in a cordial way, you might have to invoke some of the bylaws in your province or city, such as noise bylaws. This can be brought up to the non-emergency line of the police or other enforcing parties that shaped the bylaws and you can become familiar with your rights or common disturbances on the website “Dial-A-Law, People’s Law School.”

Are there current tenants to deal with?

Tenants on a property usually fall into two categories. One category is a fixed term lease in which the tenant has signed a contract for a set amount of time and will pay rent every month until the time is up. The other category is a month-to-month lease which is less binding than a fixed term lease. If you wish to give the tenant notice that you want to live on the property, you would have to find out which kind of lease they have to operate legally and give them time to move out. Leases may be broken if both the tenant and the new landlord come to an agreement to end the tenancy.