How Much Money Do I Need to Buy Real Estate in Today’s Market?

How much money do you really need to invest in real estate? How much does it cost to invest in real estate?  Sound like something that you’ve been pondering lately?

As we sit here with these low interest rates, you might be wondering whether tapping into these ripe conditions for investing in the Fraser Valley is an option. In our last post, Is 2021 A Good Year to Invest in Real Estate in the Fraser Valley, we shared key points why this is a good time to buy. If you’ve been thinking of buying, then now would be the time to take advantage of the low rates.

Our good friends at Maximum Mortgage Solutions have broken down key factors to consider if you’re thinking of buying real estate and want to plan for how much investment capital you will need. Maximum Mortgage Solutions is based in the Fraser Valley and have been offering premium level guidance to homeowners for the past 15 years. They have a proven track record for making mortgages easy to understand.

Here are 8 things to factor in before you buy real estate. 

Closing costs may include the following:

  • Down Payment – This is the amount of money you pay upfront when purchasing a home.   
  • Property Taxes – These are a paid annually (or can be paid monthly through your financial institution and added to your mortgage payment) and are calculated as a percentage of your property value and will vary from city to city.
  • Legal Fees – Expect anywhere from $1000 to $1500 for a home purchase.
  • Strata Fees/Condo Fees – This would be a great time to go over the Form B or AGM documents with your Realtor, Ben Hardy.
  • Land Transfer Tax – Make sure to ask your Realtor Ben Hardy for more information if this is applicable on your new purchase.
  • Home Inspection (optional) – the cost of this depends on the size and age of the house. Expect to budget $300 – $1,000 for this.  Moving Expenses/Home Furnishing –Moving costs vary greatly, get a quote a early.
  • Mortgage Protection Insurance – it is important to protect your mortgage against unforeseen events. We can have you covered in the event of death, disability and critical illness.

Additional costs associated with home ownership. These are a few that you’ll want to include in your budgeting! 

  • Roof maintenance + replacement costs
  • Heating and Ventilation and Air Conditioning (HVAC) replacement
  • Electrical
  • Plumbing
  • Landscaping

 What are the requirements to buy a house? 

  • A reliable source of income.
  • A debt-to-income ratio that falls within permissible lender guidelines.
  • A fair or good credit score.
  • A down payment.

What are some down payment options to consider?

Traditional down payment options can come from:

  • Savings
  • Investments
  • RRSPs
  • Non-repayable gift from immediate relative
  • Proceeds from sale of another property or equity from another asset

traditional mortgage requires a down payment of minimum 20% of the purchase price and offers the flexibility of either a fixed or variable rate. 

high ratio mortgage allows you to put a lower down payment (less than 20% and as low as 5%). High ratio mortgages must be insured by CMHCSagen (formerly known as Genworth) or Canada Guaranty. 

What should I look for in a mortgage? 

When looking at mortgages, we need to have a good understanding of the following:

  • The difference between variable and fixed rate – A fixed rate loan has the same interest rate for the length of the term, while variable rate mortgages have an interest rate that may change during the term which is determined by the prime lending rate as set by your lender.
    • Prepayment Privileges – This is the ability to prepay a portion of the mortgage principal before it is due and without penalty. Each lender may have different prepayment privileges. 
    • Portability options –Many mortgages can be transferred from one home to another. It offers several benefits to homeowners on the move. Every lender has different portability options.
    • Line of credit components – Some lenders may offer a line of credit component that can be added on to your mortgage. 

As your Mortgage Professionals, we will provide you with options to meet your financial goals. We work with big banks, credit unions and private lenders. Maximum Mortgage Solutions will find you the best financial solution.

What are the benefits for getting pre-approval?

A pre-approval can help you determine the following:

  1. The maximum purchase price/down payment required
  2. The monthly mortgage payment (strata fees/property taxes)
  3. The mortgage rate
  4. Documentations required to complete the mortgage financing

After being pre-approved, Ben and his Team will work with you through the real estate transaction. Once Maximum Mortgage Solutions receives your accepted offer to purchase we will get an official approval from the best suited lender. This approval guarantees your mortgage amount, rate, term and prepayment privileges in the form of a Commitment Letter.

Ready to invest in real estate? 

Maximum Mortgage Solutions has a comprehensive resource page on their website that we highly recommend you check out. Want to chat with a mortgage specialist to learn more how much money you’ll need to secure your investment? Get in touch with Brad and his team at Maximum Mortgage Solutions.

If you’ve been thinking about buying and have no idea where to start – we’ve got you covered! Contact the Hardy Team today – let’s maximize your real estate investment.

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