The house remains the most important purchase in life. It’s complicated and scary for first-time buyers. We offer you 10 steps to prepare.
• Also read: Costs to be covered when buying a house
1 Do you have the ability to access the property?
First, create your budget by calculating ALL your current spend, including savings and RRSPs (use budgetenligne.net); Add up the cost of your future home, taking into account the difference between your rent and any mortgage and local taxes. Request a mortgage pre-authorization that establishes your borrowing eligibility with your financial institution. Please note: This limit is often larger than your actual scope of action; You have to limit your ambitions.
2 Determine your needs
Most people buy too big. The more it is, the higher the costs for maintenance, cleaning, insurance, heating and financing. And the municipal taxes should be accordingly. On the other hand, if you’re teleworking, make sure you have a dedicated space that’s well-lit, comfortable, and where you can spend eight hours a day. And maintaining your property is more demanding and expensive than renting it.
3 Where will you live?
Relying on the selling price alone, many people opt for the most remote suburbs. But the two or three cars parked out front sometimes cost more than a house closer to public transport or work. If one of the couples is teleworking, the cost of their car could be put into a larger mortgage. Do your calculations. Use the WalkScore app. Make a list of cities or neighborhoods that interest you and go there to check for noise and inconvenience and chat with your potential neighbors. Establish specific criteria: Is the garden that important when the kids go to the arena and play video games? Do you want to buy a family house or a semi-detached house (are you a handyman) in the country, in the suburbs, in the city? How much time are you willing to sacrifice in traffic? Is the grocery store, the school, the park on the other side of the world? Will you have zero, one or three children? Some buy a condo to gain access to the property and resell it when their first child starts school…
4 Consolidate your financing
Find out about the Home Buyers’ Plan (HBP), the CELIAPP and the First-Time Home Buyer’s Incentive. In order to be able to take out a loan, your credit report must be excellent: the monthly full repayment of your credit card is essential.
5 Determine your deposit
It is calculated as a percentage of the house price. For example, 5% of a $300,000 house is $15,000. Why not wait a few years to accumulate more? If you can borrow a few thousand extra dollars from loved ones (love money) to advance more than 20% of the initial down payment, you avoid CMHC mortgage insurance and save tens of thousands of dollars.
6 Shop and make an offer
Very few realize on the first visit that the process can take months! Shop online and view many properties within your budget. Take notes. There is never an emergency: ask lots of questions about the condition of the house, the work done or to be done. When you find the rare pearl, make an offer to buy (including the price, included/excluded goods, terms and conditions): this binds you like a contract, you cannot withdraw if accepted… Normally, an offer to buy is a condition of receipt a financing. Expect your application to be denied if the owner accepts a higher amount. Some buyers increase their chances by including a letter with their offer introducing their family and explaining why they fell in love with the property and insisting that they will take care of the property…Never buy without a pre-sales visit, which creates room for negotiation and creates your budget for maintenance and renovation.
7 Look for your mortgage
Think about which type of financing suits your needs and personality. It varies depending on the type of interest rate (fixed or variable), the term, and the amortization (number of years the loan must be repaid). Look for the best rates and terms: A difference of 0.5% means a saving of tens of thousands of dollars. Add an annual maintenance and renovation budget of at least $2,000 to the financing. Boycott freebies like cashback.
8 credit
Some are afraid of variable interest rates: stay calm when interest rates are rising. They always go down eventually and you save compared to fixed prices. Home equity lines of credit allow for early repayment without penalty, and you can get major work done without going to the notary. But they require discipline not to fund a lifestyle that is too high and end up retiring with a mortgage. To consider: penalties if you resell the house before the end of the contract (separation, moving due to a promotion, etc.) and early repayments without penalty (inheritance, bonus, tax refund). Choose to pay weekly to save thousands of dollars.
9 Protect yourself
If things go well, we must expect a breakup or death. Make sure you have good life insurance (cheaper and more beneficial than the mortgage insurance offered by the lender). De facto spouses: They have a cohabitation agreement drawn up before a notary and protection agreements. Make sure the property is not affected by an easement. Obtain all documentation relevant to the purchase of a condo (building condition report, emergency and auto insurance fund, building insurance policy, reference unit, minutes of meetings, maintenance).
10 Prevent unforeseen events and document yourself.
According to experts, notary fees, welcome tax, curtains, fencing, landscaping, furniture and contingencies cost up to 5% of the house price. For more information, see the CMHC and OACIQ guides.