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The Ins and Outs of Buying a Condo in Vancouver
Factor in Recurring Costs
Although mortgages and property taxes are inevitable, there are additional fees to take into consideration when owning a condo. For your strata to keep shared areas and building features in pristine condition, even condo owners who own their unit outright need to pay monthly maintenance fees. Rest assured that these fees go toward paying for building repairs, landscaping, amenities and more. On top of strata and mortgage costs, you’ll also have to pay property taxes every year. The amount of taxes differs between municipalities, so keep this in mind when deciding exactly where in the Lower Mainland you’ll be able to invest.
Brace for Special Levies
One of the realities of condo ownership is that things are going to go wrong. When something breaks, there’s no landlord to fix it—you as an owner are fiscally responsible. If there are shortfalls in the annual budget or insufficient funds in the contingency reserve fund, strata corporation owners can vote on collecting money in addition to the monthly condo fee from all condo owners in the building. Keep in mind that these levies are more likely to occur in buildings that are over 10 years old as systems or features become dated.
Protect Your Investments
Stratas have insurance policies in place to protect the original building, common areas or liability claims against them, but these policies don’t protect the residents. To get the comprehensive coverage you need,. Starting at $25 per month, your coverage protects your belongings, appliances and any improvements you’ve made to the unit. You’ll also have liability and assessment coverages, which are useful when paying for costs such as your share of any property damages, liability payments or your strata’s insurance deductible.
Understand Down Payment Requirements
The size of your down payment ultimately influences the home price you can afford, the size of your mortgage and monthly payment as well as how much insurance you pay to the Canada Mortgage and Housing Corporation. Your down payment will range anywhere from 5 to 20 percent of the purchase price and is the minimum amount required to buy. The more you can pay upfront, the better, so choose something that you’ll be able to pay down comfortably. You can always upgrade later if your financial situation changes.
Be Prepared for a Mortgage Stress Test
To help reduce the amount of debt that Canadians and financial institutions take on, new mortgage regulations were implemented earlier this year. Borrowers are now subject to a stress test. Mortgage applications are reviewed by financial institutions based on a standardized minimum qualifying rate, meaning that you may not be able to borrow as much as you’d expected. The idea behind this isn’t meant to make homeownership unattainable, but rather to ensure that applicants can afford mortgages in a market as interest rates continue to rise.
Ask About the Building’s Reputation
Anyone who has had a negligent landlord knows the effects it can have on their quality of life—and it’s no different when it comes to a building’s condo board. No one wants to invest in a building if the money is being poorly managed, special levies are the norm or if it takes an unrealistically long time for repairs to be made. Before putting in an offer, be sure to ask current residents if they’re happy with the management of the building and review meeting minutes and documents from years past.
Navigating your way through the condo buying process can be tricky, so it’s important to know the essentials before you begin your search. Protect yourself from any unwarranted stress or costs by doing your research, being realistic about the investment and obtaining home insurance once you’ve made a purchase. When you are finally ready to move into your new place, you’ll be able to sleep easy knowing you’ve made a smart and manageable investment.
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