Buying a home is a momentous occasion in anyone’s life. Thankfully, Canada Mortgage and Housing Corp. has some suggestions that can help you navigate the ins and outs of the home-buying process.
1. Determining if home ownership is right for you
Recognize the real costs of homeownership
- Upfront costs (e.g., down payment, closing costs, taxes)
- Ongoing costs (e.g., mortgage payments, property taxes, insurance, utilities, condo fees, routine maintenance)
- Major repairs (e.g., roof replacement, foundation repair)
Renting vs. buying
- There are benefits and drawbacks to both renting and owning a home – make sure you understand them before you decide which option is right for you
2. Determining if you are financially ready to own a home
Calculate how much you are spending on a monthly basis
- Calculate how much you can afford to spend on housing each month without putting your financial health at risk
- Your monthly housing costs should be no more than 32 per cent of your average gross monthly income
- Your monthly debt load should be no more than 40 per cent of your average gross monthly income
Determine the upfront costs
- Have you saved enough money to cover a down payment, home inspection and appraisal, insurance costs, land registration fees, prepaid property taxes or utility bills, legal or notary fees, potential repairs and renovations, moving costs, and GST?
3. Financing your home
Get pre-approved for a mortgage
- This lets you know how much you can afford, your interest rate and what your monthly mortgage payments will be
You will need the following to qualify for a mortgage
- Contact information for your employer
- Proof of address
- Government-issued photo ID
- Proof of income
- Proof of down payment (amount and source)
- Proof of savings and investments
- Details of current debts
Know your credit score
- Lenders and brokers will look at your credit history before deciding whether to approve you
Mortgage loan insurance
- Required if your down payment is less than 20 per cent of a home’s purchase price
4. Finding the right home
What do you want or need in a home?
- Location
- Size
- Special features
- Lifestyle
Forms of homeownership
- Freehold
- Condominium (strata)
- Leasehold
- Co-operatives
Start your search
- Via word of mouth, social media, newspaper and real estate magazines, visits to new housing developments, real estate websites, “for sale” signs, and/or a REALTOR®
Homebuying professionals that can help
- REALTORS®
- Insurance brokers
- Home inspectors
- Appraisers
- Land surveyors
- Builders or contractors
- Lenders or mortgage brokers
- Lawyers or notaries
5. Making an offer and closing the deal
Your offer should include
- Your legal name, the seller’s name and the address of the property
- Purchase price
- Amount of your deposit
- Any items you want included in the purchase
- Closing date
- Request for a current land survey
- Date the offer expires
- Any other conditions
You will need the following information to finalize the details of your mortgage
- Legal description of the property
- Building specifications
- REALTOR.ca listing
- Property tax assessment
- Appraisal
- Home inspection report
- Land survey
- Heating and utility costs
- Condo fees
- Signed offer to purchase
Closing day
- Take legal possession of your new home
6. Maintaining your home and protecting your investment
Make your mortgage payments on time
- You can make your payments weekly, bi-weekly or monthly
- Late or missed payments can lead to penalties, and negatively impact your credit rating
Plan for the costs of operating a home
- Maintenance and repair costs, security monitoring, snow removal,
gardening, etc.
Live within your budget
- If you regularly spend more than you earn, find ways to cut your spending or increase your earnings
Save for emergencies
- Set aside an emergency fund of roughly five per cent of your income every year to deal with unexpected expenses
Author is Tyler Difley
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