Buying your own home is actually the biggest financial decision of your life. This is something that no one does on a regular basis. So, you need to make the wisest decision possible, both financially as well as emotionally. The Canadian government offers numerous mortgage plans and first time home buyer incentives to motivate the feeling of home ownership in Canada. You just need to know the important rules, conditions, interest rates, and qualifying criteria of those plans.
Besides these rules and qualifying conditions, wishful home owners need to know about some other important things associated with finalizing and purchasing a home. Want to know them? Read below to get updated about the most important things to remember while buying a home in Canada.
How much do I need to save for buying a home in Canada?
Obviously, you need to save smartly for buying your own home in Canada. Rules say that you need to put down at least 5% for the down payment and 3% for other closing expenses for a home ownership. Besides, if you are a first time home buyer, you can opt for the first time home buyer incentive offered by the Canadian government. This incentive will let you have 5% or 10% of the home purchase amount from the government and save the extra expenses of your pocket.
Home owners not only need to save for the down payment, but they need to save for other closing expenses as well. These closing expenses include your realtor charges, taxes, notary fees, repairing expenses (if any), and some other one-time fee charges. So, remember to save a good amount of money before you move ahead with your home ownership dreams.
What are the most important things to consider while buying your home?
1) Beneficial to work with a realtor– Being confident and going solo for a home search in Canada is good. But finding a home, making an offer, and signing a deal can be best done with the help of an experienced realtor only. Realtors are experts in finding the best locations, offers, and homes according to your requirements, and saving you from legal jargons in the contracts. Besides this, experienced realtors have complete market knowledge and great negotiating skills to help you get the most profitable deal.
2) Not just the deposit money– Buying your own home in Canada is a deal of great savings and heavy expenses. You are highly mistaken if you think that you need to save only for the down payment or the deposit money. There are numerous other things that demand savings from your side, for example, taxes, real estate agent’s charges, your lender’s fees, insurance, and other processing charges. So, stay ready with 2% or 5% of the purchase price for down payment and some extra savings for other closing expenses.
3) Get pre-approvals first– It is important to maintain a good credit score and apply for a specific loan amount for buying a home smartly in Canada. Your lender will check the credit score and decide the final loan amount while giving you a pre-approval for the purchase. Before you get busy dreaming for your new home, apply for a mortgage pre-approval so that you don’t hit your targets in dark. Moreover, pre-approvals would let you have an idea about your total expenditure in the purchase.
4) First-time home buyer incentives are profitable– Home ownership in Canada involves great financial transactions. So, why not looking out for a financial help and easing out on your pocket? The Canadian government motivates your home ownership dreams by offering first-time home buyer incentives. You can get 5% or 10% of the final purchase price of your home with the help of these incentives. Not only you can save a lot on your down payments, but these incentives are free from any interests and can be repaid within a period of 25 years or at the time of resale of your home.
5) Condo purchases are different from home ownership– Buying a condominium is way different than buying a home in Canada. Condominium owners need to pay their condo fees also along with paying for their monthly mortgage expenses. This condo fees includes maintenance charges for common areas in the condominium building like gym, spa, sauna, and pool, etc. These condo charges are near about 65¢ per square foot in GTA and 18¢ per square foot in Quebec region. So, you need to be ready with these extra expenses if you are planning to buy a condo in Canada.
6) Location matters the most– You might wish to crack the cheapest and the smartest deal ever while buying your own home in Canada. But a cheap deal doesn’t always mean the most genuine deal. Location of a home matters the most when it comes to spending a large portion of your life there. Once the purchase is made, you can change almost everything in your new home, except the location. It is permanent and remains the same throughout your stay in the home. So, choose the location wisely that gives you an easy access to the nearby schools, hospitals, and work spaces.
7) Feel free to ask– Buying a home is not like setting up a new relationship where you need to stay quiet and hesitant before asking questions. You can ask as many questions as you want, before the purchase. Make sure to ask about the reasons as to why the seller is leaving the home? What is the condition of the roof? How is the plumbing system? How old are the home inspection reports? What are the neighbors like?, etc. Exact answers to these smart questions will help you decide the worthiness of your decision so that you won’t have to face regrets after the purchase.
8) Stay away from emotional purchases– Emotions and finances need to stay away from each other. People usually attach themselves to a home and end up paying way more than the actual worth of that property. So, drop the idea of visiting the home first, and consider all the available offers for that property. This is to ensure that you choose the best of all the available deals without letting your emotions interfere in such an important financial decision of your life. This guiding tip becomes more relevant in areas like Toronto and Vancouver which are the most efficient estate markets and have multiple offers for buyers.
9) Home inspections are a must– Home inspections reveal all the hidden truths about pest infestations, leakages, termite attacks, foundation damages, and all other serious damages in a home. Before you finalize the deal and make financial transactions, ask about the last home inspection reports of that property. If not done recently, ensure to opt for a home inspection first so as to know each and every hidden secret of the property. You might think of the extra inspection charges but this would save you from some heavy repairing expenses later on.
10) Negotiation is the key– Negotiating with your seller and cracking the cheapest deal is always a must while making such a big financial move in your life. Your home inspector might find some faults and repairable points in your home. Renegotiate with your seller based on those findings and ask for compensatory reduction in the final purchase of the home. If your seller doesn’t agree for the price reduction, ask him for fixing the issues or involve your realtor in the negotiation deed as he would be an experienced person for such tasks.
The pro tip– Choose the best mortgage plan and lender for you- The Canadian government gives multiple mortgage loan options for home buyers in Canada. Knowing about those mortgage plans, you can save a lot of your hard-earned money and make wise purchasing decisions. Different mortgage plans for home ownership in Canada are-
• First time home buyer- The Canadian government offers first time home buyer incentive for wishful home owners in Canada. You can easily get-
o 5% or 10% of the net home purchase amount for a new construction.
o 5% of the net home worth for a re-selling property.
o 5% of the net worth of the property for a mobile or manufactured home (new as well as re-selling)
• First mortgage loan- Home owners who wish to apply for first mortgage loans need to have a credit score of at least 680. They need to clear the stress test and give a proof for their income verification. Some minimum down payment is required. In case the applicant has a bad credit score and has pending debts, the down payment requirement and interest rates would be higher for him.
• Second mortgage loan- The Canadian government offers a second mortgage loan on the same property where your first mortgage loan is running. This is to offer a helping hand for your emergency medical expenses, your children’s tuition fees, or any other personal expenses. The interest rates and other documentary requirements are more for second mortgage loans as compared to first mortgage loans because the lenders are at a higher risk for their money.
• Self-employed mortgage loan- Business owners and self-employed individuals can also opt for a mortgage loan for buying a home in Canada. The self-employed mortgage loans have high interest rates as compared to other traditional mortgage loans. These self-employed mortgage loans also need income verifications may it be in the form of traditional income verification, non-traditional income verification or stated income verification mode.
All these mortgage loans have specific down payment requirements, qualifying criteria, and document requirements for the approvals. Different lenders would offer different interest rates and would have different document requirements. So, it is highly advisable to stay updated well in advance about all the necessary requirements so as to get the approvals on time. Depending upon your budget, savings, income sources, and other requirements, you must opt for the most beneficial mortgage loan and choose the most pocket-friendly lender for your deal.
Conclusion-
Setting up a new home and making a such a big financial decision are very important turning points in everyone’s life. Both these steps need you to have core knowledge, experienced brokers or lenders, and make smart decisions. So, stay updated about the available mortgage plans, their qualifying criteria, and savings required. Choose the location wisely, finalize the home, get pre-approvals, and own your dream home.
Besides these rules and qualifying conditions, wishful home owners need to know about some other important things associated with finalizing and purchasing a home. Want to know them? Read below to get updated about the most important things to remember while buying a home in Canada.
How much do I need to save for buying a home in Canada?
Obviously, you need to save smartly for buying your own home in Canada. Rules say that you need to put down at least 5% for the down payment and 3% for other closing expenses for a home ownership. Besides, if you are a first time home buyer, you can opt for the first time home buyer incentive offered by the Canadian government. This incentive will let you have 5% or 10% of the home purchase amount from the government and save the extra expenses of your pocket.
Home owners not only need to save for the down payment, but they need to save for other closing expenses as well. These closing expenses include your realtor charges, taxes, notary fees, repairing expenses (if any), and some other one-time fee charges. So, remember to save a good amount of money before you move ahead with your home ownership dreams.
What are the most important things to consider while buying your home?
1) Beneficial to work with a realtor– Being confident and going solo for a home search in Canada is good. But finding a home, making an offer, and signing a deal can be best done with the help of an experienced realtor only. Realtors are experts in finding the best locations, offers, and homes according to your requirements, and saving you from legal jargons in the contracts. Besides this, experienced realtors have complete market knowledge and great negotiating skills to help you get the most profitable deal.
2) Not just the deposit money– Buying your own home in Canada is a deal of great savings and heavy expenses. You are highly mistaken if you think that you need to save only for the down payment or the deposit money. There are numerous other things that demand savings from your side, for example, taxes, real estate agent’s charges, your lender’s fees, insurance, and other processing charges. So, stay ready with 2% or 5% of the purchase price for down payment and some extra savings for other closing expenses.
3) Get pre-approvals first– It is important to maintain a good credit score and apply for a specific loan amount for buying a home smartly in Canada. Your lender will check the credit score and decide the final loan amount while giving you a pre-approval for the purchase. Before you get busy dreaming for your new home, apply for a mortgage pre-approval so that you don’t hit your targets in dark. Moreover, pre-approvals would let you have an idea about your total expenditure in the purchase.
4) First-time home buyer incentives are profitable– Home ownership in Canada involves great financial transactions. So, why not looking out for a financial help and easing out on your pocket? The Canadian government motivates your home ownership dreams by offering first-time home buyer incentives. You can get 5% or 10% of the final purchase price of your home with the help of these incentives. Not only you can save a lot on your down payments, but these incentives are free from any interests and can be repaid within a period of 25 years or at the time of resale of your home.
5) Condo purchases are different from home ownership– Buying a condominium is way different than buying a home in Canada. Condominium owners need to pay their condo fees also along with paying for their monthly mortgage expenses. This condo fees includes maintenance charges for common areas in the condominium building like gym, spa, sauna, and pool, etc. These condo charges are near about 65¢ per square foot in GTA and 18¢ per square foot in Quebec region. So, you need to be ready with these extra expenses if you are planning to buy a condo in Canada.
6) Location matters the most– You might wish to crack the cheapest and the smartest deal ever while buying your own home in Canada. But a cheap deal doesn’t always mean the most genuine deal. Location of a home matters the most when it comes to spending a large portion of your life there. Once the purchase is made, you can change almost everything in your new home, except the location. It is permanent and remains the same throughout your stay in the home. So, choose the location wisely that gives you an easy access to the nearby schools, hospitals, and work spaces.
7) Feel free to ask– Buying a home is not like setting up a new relationship where you need to stay quiet and hesitant before asking questions. You can ask as many questions as you want, before the purchase. Make sure to ask about the reasons as to why the seller is leaving the home? What is the condition of the roof? How is the plumbing system? How old are the home inspection reports? What are the neighbors like?, etc. Exact answers to these smart questions will help you decide the worthiness of your decision so that you won’t have to face regrets after the purchase.
8) Stay away from emotional purchases– Emotions and finances need to stay away from each other. People usually attach themselves to a home and end up paying way more than the actual worth of that property. So, drop the idea of visiting the home first, and consider all the available offers for that property. This is to ensure that you choose the best of all the available deals without letting your emotions interfere in such an important financial decision of your life. This guiding tip becomes more relevant in areas like Toronto and Vancouver which are the most efficient estate markets and have multiple offers for buyers.
9) Home inspections are a must– Home inspections reveal all the hidden truths about pest infestations, leakages, termite attacks, foundation damages, and all other serious damages in a home. Before you finalize the deal and make financial transactions, ask about the last home inspection reports of that property. If not done recently, ensure to opt for a home inspection first so as to know each and every hidden secret of the property. You might think of the extra inspection charges but this would save you from some heavy repairing expenses later on.
10) Negotiation is the key– Negotiating with your seller and cracking the cheapest deal is always a must while making such a big financial move in your life. Your home inspector might find some faults and repairable points in your home. Renegotiate with your seller based on those findings and ask for compensatory reduction in the final purchase of the home. If your seller doesn’t agree for the price reduction, ask him for fixing the issues or involve your realtor in the negotiation deed as he would be an experienced person for such tasks.
The pro tip– Choose the best mortgage plan and lender for you- The Canadian government gives multiple mortgage loan options for home buyers in Canada. Knowing about those mortgage plans, you can save a lot of your hard-earned money and make wise purchasing decisions. Different mortgage plans for home ownership in Canada are-
• First time home buyer- The Canadian government offers first time home buyer incentive for wishful home owners in Canada. You can easily get-
o 5% or 10% of the net home purchase amount for a new construction.
o 5% of the net home worth for a re-selling property.
o 5% of the net worth of the property for a mobile or manufactured home (new as well as re-selling)
• First mortgage loan- Home owners who wish to apply for first mortgage loans need to have a credit score of at least 680. They need to clear the stress test and give a proof for their income verification. Some minimum down payment is required. In case the applicant has a bad credit score and has pending debts, the down payment requirement and interest rates would be higher for him.
• Second mortgage loan- The Canadian government offers a second mortgage loan on the same property where your first mortgage loan is running. This is to offer a helping hand for your emergency medical expenses, your children’s tuition fees, or any other personal expenses. The interest rates and other documentary requirements are more for second mortgage loans as compared to first mortgage loans because the lenders are at a higher risk for their money.
• Self-employed mortgage loan- Business owners and self-employed individuals can also opt for a mortgage loan for buying a home in Canada. The self-employed mortgage loans have high interest rates as compared to other traditional mortgage loans. These self-employed mortgage loans also need income verifications may it be in the form of traditional income verification, non-traditional income verification or stated income verification mode.
All these mortgage loans have specific down payment requirements, qualifying criteria, and document requirements for the approvals. Different lenders would offer different interest rates and would have different document requirements. So, it is highly advisable to stay updated well in advance about all the necessary requirements so as to get the approvals on time. Depending upon your budget, savings, income sources, and other requirements, you must opt for the most beneficial mortgage loan and choose the most pocket-friendly lender for your deal.
Conclusion-
Setting up a new home and making a such a big financial decision are very important turning points in everyone’s life. Both these steps need you to have core knowledge, experienced brokers or lenders, and make smart decisions. So, stay updated about the available mortgage plans, their qualifying criteria, and savings required. Choose the location wisely, finalize the home, get pre-approvals, and own your dream home.
