you’ve decided to buy a home, start by determining
what type of community, or specific neighbourhood, you’re
interested in. List your space needs, including:
space requirements (i.e. how many bedrooms)
you're bringing with you from your old house
close to schools, shopping and other services
size of down payment you can afford
important to be realistic when you're thinking about a down
payment and setting a price range.
don't want to be saddled with something you can't afford.
At this stage, it's a good idea to talk things over with a
real estate sales professional.
you’ve identified the features you want in a home,
the search begins. A REALTOR will use various tools to try
and find properties that meet your specifications. One of
the important search tools will be the local MLS® system.
By sitting down at a computer the REALTOR can key in your
needs, choice of neighbourhoods and price range and immediately
come up with a list of suitable properties available through
the MLS® system. Also common are MLS® catalogues,
which provide additional information about each property,
along with its photograph. Both computer systems and catalogues
are updated regularly.
can also view MLS® listings posted to the national mls.ca
web site. It features area maps, photographs of available
properties and has links to the listing agent.
you select a property and decide to visit a house, there
are many things to consider. Does it have all the features
you wanted? Is the neighbourhood what you expected? Try
to picture your favorite furnishings in a room. Remember
all of the technical considerations:
type of wiring does the house have?
about power outlets? (different appliances use different
type of heating system does it use?
about the roof and foundation?
condition are the windows in?
about the plumbing?
are other things to look at as well. If you don't have time
or don't feel comfortable doing it, home inspection services
are available for a reasonable fee. Having a qualified home
inspector look at the house is always a good idea. The older
the home, the greater the need for professional inspection.
you find the house you want to make your home, you can work
with a REALTOR to develop an offer. In the offer, you should
specify how much you're willing to pay. State when the offer
expires, and suggest a closing date for the transaction.
You can also propose some conditions on the offer. Some
common types of conditions are:
a suitable mortgage (include the amount, interest rates
and any other figures you feel important)
your current home (the seller may continue to look for
a buyer, but will give you the right of first refusal)
seller providing a current survey, or a "real property
report," (showing the location of the house on the
property owned by the seller and that there are no encroachments)
seller having title to the property (your lawyer will
check this out when he or she conducts a title search
to see if there are any liens on the property, easements,
rights of way or height restrictions)
there is a septic system, the seller should have a health
inspection certificate, stating the system meets local
you still have any doubts about the home's safety and
construction, you may wish to make the purchase conditional
on an inspection by a qualified engineer
inclusions - basically, what stays and what goes.
will need to present a deposit along with your offer. An
appropriate deposit will show your good faith to the seller.
The seller's agent is bound by law to bring all offers to
the seller's attention.
your offer is accepted and all the conditions are met, the
offer becomes binding on both sides. If you walk away from
the deal at that point, you may lose your deposit. You may
also be sued for damages. Therefore make sure you understand
and agree with all of the terms of the offer before signing.
issue for most buyers is the affordability of the mortgage.
A quick way to calculate how much you can afford is to use
the gross debt-service formula (GDS). Most financial institutions
will require that the Principal, Interest and Taxes (PIT)
on your mortgage loan not exceed 30 per cent of your gross
income. Increasingly, financial institutions will factor
energy costs into the PIT formula, moving the rule of thumb
GDS from 30 to 32 per cent.
can work it out in reverse: multiply the monthly payment
on principal, interest and taxes (include any condominium
maintenance fees) by 40. So if your monthly payment for
these items is $1,000, you'll need a gross annual income
of at least $40,000. Discuss your mortgage limit and different
types of mortgages with your REALTOR or financial advisor
before you seriously begin the search for a home.
the mls.ca web site, home buyers can automatically calculate
their estimated mortgage payments on listings. Simply find
your desired property and click on the mortgage calculator
to determine what your estimated monthly mortgage payment
is on that specific listing.
matter what type of home or property you’re buying,
plan on some extra expenses. In some provinces, you may
have to pay a land transfer tax (a sales tax on property).
You may also have to pay:
mortgage broker's fee
costs (if the seller couldn't come up with a current survey)
A high-ratio mortgage insurance premium
interest adjustment (mortgages are normally calculated
from the first of each month: if your closing date is
the same as the beginning of your mortgage, there will
be no adjustment. However, if your closing date is July
and you move in on June 15, those last 15 days are the
interest adjustment period. Your lender will expect you
to cover the cost of the interest during that time)
also have to reimburse the seller for the unused portion
of any prepaid property taxes or utility bills. As well,
you must also pay any legal fees, and, if applicable, any
REALTOR fees. Be prepared to furnish proof to your lender
that you have insured your new house as well.
the property can formally change hands, there are still
a few things to do. On or before closing day, your lawyer
and the seller's lawyer will arrange to transfer title of
the property from the seller to you. The mortgage money
will be transferred to your lawyer's trust account, and
then to the seller, and your lawyer will bill you all additional
expenses such as land transfer taxes or outstanding legal
this time, be sure to check with your lawyer that everything
is as stated in the offer-to-purchase. Once you're satisfied
and the keys to the front door are in your hands, there's
nothing else to say... except welcome home!
Note: Article provided by CREA. The comments contained on this site are for information purposes only and do not constitute legal advice.
The Canadian Real Estate Association website: www.crea.ca