Video #4 – Should You Select a Fixed or a Variable Rate When You Obtain Your Own Mortgage?

One of the first decisions homebuyers and mortgage shoppers face is whether to select a fixed rate or variable rate mortgage.

With a fixed rate mortgage, the mortgage rate and payment you make each month will stay constant for the term of your mortgage. With a variable rate mortgage, however, the mortgage rate will change with the prime lending rate as set by your lender. A variable rate will be quoted as Prime +/- a specified amount, such a Prime – 0.45%. Though the prime lending rate may fluctuate, the relationship to prime will stay constant over your term. This video explains the 2 options in more detail.

Comparing Fixed and Variable Mortgage Rates

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You can think of the difference, or spread, between variable and fixed mortgage rates as the price of insurance that lending rates will not increase, more or less. When interest rates are low and are not expected to fall further, it is generally advised to lock in a fixed rate, as variables rates will, at best, stay the same, or increase. On the other hand, if you expect interest rates to fall with some certainty, then a variable rate is preferred, as you will be able to absorb the benefit of paying lower interest. Similarly, if the difference between the variable rate and the fixed rate is significant, it may not be worth paying the premium for the stability protection of a fixed rate. Read more

Video #6 – Land Transfer Tax (LTT) is a full tax everyone has to pay unless you are a first time home buyer. Land Transfer Tax is charged by the Land Title office when you make changes to a property’s title (ex. you are putting the property title from someone else’s name into your name). This is not the same as property tax and is not a part of your property tax payments.

This is often overlooked when considering the total cost of purchasing a home. All provinces have a land transfer tax, except Alberta and Saskatchewan, who instead levy a much smaller transfer fee. To see how land transfer tax is calculated, watch the video below. To help offset the cost of land transfer tax, British Columbia offers land transfer tax rebates for first-time home buyers.

Calculating British Columbia Land Transfer Tax

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The amount of tax you pay is based on the fair market value of the land and improvements (e.g. buildings) on the date of registration unless you purchase a pre-sold strata unit. The tax is charged at a rate of 1% for the first $200,000 and 2% for the portion of the fair market value that is greater than $200,000.

For example, if the fair market value of a property is $250,000, the tax paid is $3,000.

British Columbia First-Time Homebuyer Land Transfer Tax Rebate

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First-time homebuyers are eligible to receive a full land transfer tax refund on homes purchased for $425,000 or less. On homes purchased between $426,000 – $450,000, the first-time homebuyer will be eligible for a partial refund equal to [ ($450K – fair market value) / 25K ] * LTT amount.

You Can Qualify For the First-Time Homebuyer Land Transfer Tax Rebate If:

• • You are Canadian citizens or permanent residents as determined by Immigration Canada

Read more