Buying a house is a very important decision. Not only is it a great expense, but you are also deciding what your home will be like in the next few years.
Buying a home is the dream of many and the reality of few.
Although it is said to be a complicated process, there are effective ways to facilitate this transition to a new step in life.
Real estate continues to be a significant investment for many people, and several elements must go hand in hand to ensure that the overall process is successful.
That is why if you are a first buyer, the services of a qualified real estate professional are very important.
Nevertheless, this is the correct process for buying your first home in Canada
1. Find the right real estate agent
For the purchase process to be carried out correctly, it is of great importance to find a real estate agent who is honest and willing to listen to your needs.
This can be an invaluable resource during the entire home-buying experience; the agent would play the role of a personal advisor and negotiator.
2. Have your down payment on hand
In Canada, you must deposit at least 5% of the home purchase price as a down payment, and for homes valued at $1 million or more, the minimum is 20%.
One of the most important steps in buying a home is having the down payment ready.
While the down payment is larger, it generates benefits such as a lower monthly mortgage payment.
3. Verify Refunds and Grants
Considering that buying a home is expensive and even more so in Canada, where some of its metropolitan areas have an overvalued real estate market, verifying if you are eligible to receive discounts or subsidies will make the process less expensive than necessary.
Some common programs available to first-time homebuyers are:
Home Buyer Plan: Withdraw up to $35,000 from your RRSP for your down payment on your home, tax-free
Toronto Land Transfer Tax Refund: If you are buying a home in Ontario, you can receive a partial Toronto land transfer tax refund of up to $4,475
Home Buyer Amount: A $5,000 non-refundable tax credit
GST / HST New Home Reimbursement: A partial refund from the GST or HST you paid on the cost of the new home
4. Compare prices
Finding the lowest mortgage rate could save you thousands of dollars in interest over the life of the mortgage; check with different lenders and get the best deal and the lowest rate; this can be done through a mortgage broker.
5. Improve your credit history
For some people, the words “credit history” sound scary because when their debt capacity is low or they have had problems paying their financial commitments on time, the approval process is usually frustrating with the banking entities.
One of the most effective ways to improve your credit history is by using the Micarro.ca platform.
It will not only help you increase your debt capacity but also help you build your credit quickly, safely, and effectively while driving the car of your dreams.
6. Organize your finances and paperwork
It is important to understand that not all debt is bad or contributes to impoverishment.
The reality is that debt is a tool that plays a very important role in your debt ratios, which the lender will use to determine how much to lend you.
However, it is also important to understand that “the less debt you have, the more you can comfortably borrow for your mortgage.”
7. Have the house appraised
Before taking the final step, take some time and make sure the home is inspected and appraised, as failure to do so could result in the loss of thousands of dollars.
8. Make a financial plan
Establishing your financial capacity is essential to knowing how much you can afford, so experts advise that the price of the property should not exceed 2.5 times the salary.
9. Get a pre-approved home loan
Keep in mind that the pre-approval of the mortgage is free, and at no time does it commit you to a single lender, but they will help you determine the maximum purchase price and choose the solution that best suits your capabilities.
10. Enlist the help of an estate attorney
It doesn’t hurt for a real estate attorney to review any purchase offer before submitting it.
They will perform a title search and check for outstanding property taxes and liens.
11. Steps for buying a home in Canada
The above are all the factors you need to consider and implement before and when buying your first home in Canada.
Now that you know all that, below are the home buying steps.
- Figure out how much you can afford to spend
- Start looking for your new home in Canada
- Make an offer on your new home in Canada
- Formalizing the mortgage
1. Figure out how much you can afford to spend on a home in Canada
Begin by using one of the affordability calculating tools online or the one from the Canada Mortgage and Housing Corporation (CMHC).
The CMHC is a Canadian government-owned cooperative mandated to help Canadians through the home-buying process, so the CMHC affordability calculator is a trustworthy research tool for new home buyers.
Simply key in your financial information, and the CMHC affordability tool will ascertain the approximate maximum amount you can afford to spend on a home.
Remember that if you plan to purchase a new home in Canada within two years of arrival, you’d likely have to pay a higher down payment than the regular 5%, so be sure to factor that in when using the affordability calculator.
2. Start looking for your new home in Canada
Immediately, you get how much you can spend; you’re officially ready to start looking for a home!
In the post-pandemic market, the majority of real estate listings are online.
Some of the top websites in Canada for searching for a new home include Realtor, Purple Brick, and Property Guys.
Many new home buyers in Canada work alongside a real estate agent when buying a home.
Real estate agents often have in-depth industry knowledge and expertise that enable them to spot potential problems with potential properties and effectively negotiate with sellers.
If you don’t possess much real estate knowledge, working alongside a real estate agent for all or some of the processes might be your best bet, as mentioned earlier.
However, don’t forget that you must pay the real estate agent a certain fee for their services.
However, many homebuyers go through the process without a real estate agent.
However, if you feel confident in your knowledge of the industry, your ability to research and get the best options, and your ability to adequately negotiate on your own behalf, then you might not need a real estate agent.
But before concluding that you know so much, ask yourself.
- Do you know the types of inspections that are required to be done before buying a home?
- Are you able to adequately negotiate with a seller?
Conclusively, weigh all the risks before home hunting without an agent.
One last thing is to enjoy the hunt, as it is your chance to look at homes and imagine all the many possibilities for your life in Canada.
Go and view prospective homes with your family and friends, and enjoy the experience of planning your future together.
4. Make an offer on your new home in Canada
Once you find the home you’re most interested in, you’re ready to take the next step: making an official offer.
If you’re working alongside a real estate agent, they’ll be responsible for helping you to put together an official offer.
If you’re doing this on your own, consult the CMHC guidelines on making an official offer for a property before doing so.
Don’t be disheartened if your first offer is rejected.
Purchasing a property in Canada is highly competitive, especially in some areas.
If you remain committed to the process, you will find something sooner or later.
5. Formalizing Mortgages
Once an offer of yours has been accepted and you’ve successfully closed the deal, you’ll have to formalize your mortgage with a lender.
We recommend that you work with HSBC Canada on your mortgage.
You could also check out the HSBC mortgage program for newcomers to Canada to know if you qualify.
With the offer officially finalized, you’re set to move in and begin the next phase of your journey in Canada.
Also, don’t forget to meet and introduce yourself to your neighbors!
It’s Canada, and everyone has a unique story.
Most people would happily share theirs and hear yours over a hot chocolate or a cold beer. Good luck!
