What you need to know before buying a home in Canada

Posted June 1, 2021 05:15

Thinking of buying a home in Canada? If so, it is important to recognize that buying it here as in any other place in the world carries a great responsibility. Before doing so, be sure to prepare yourself with the knowledge, resources, and experts who can guide and support you along the way.

Buying a home is a rewarding step, but if you don't know where to start, here are the 6 things you need to know before buying a home in Canada.

1. Have more than the mortgage deposit

If you already have the deposit, Congratulations! You are one step away from fulfilling one of your biggest dreams. If you are still saving, it is important to know some federal regulations regarding the percentages that apply to it, depending on the value of the house:

  • For a house of $ 500,000 or less, you need 5%.
  • For a house between $ 500,000 and $ 999,999 you need 5% of the first $ 500,000 and 10% of the remaining portion.
  • For a house of $ 1,000,000 or more you need 20%.

2. Make sure you are pre-approved for the mortgage

Trying to buy a house without being pre-approved is like trying to hit the target with the light off, since you don't know how much you can invest in a property.

Another point to consider is that once you are pre-approved, the lender can maintain the interest rate only for 120 days, in case there is an increase.

3. Look for the best interest rates

Interest rates have never been this low. The pandemic made it easier for this to happen and why is it so important? Because this determines how much of the mortgage you are going to pay monthly.

4. Check the incentives for first time buyers

The government of Canada offers the First Time Home Buyer Incentive (FTHBI), which is a loan that encourages them to fulfill the dream of owning their own home. Thus, the first buyers can:

  • Give only 5% on a house deposit on the existing market.
  • Give 5% or 10% of the price of a new home under construction.
  • Obtain an interest-free loan that can be repaid at any time within the next 25 years after the purchase or when the home is sold.

In order to access this benefit, the applicants income cannot exceed $ 120,000 per year and the property's value cannot exceed four times their income. Also, these must be Canadians, residents or skilled workers.

Lastly, there is a federal first-time buyer plan that allows you to take up to $ 35,000 from the retirement savings program, or RRSP. Accessing this amount through this program is free of interest.

5. Work with a real estate agent

If you are looking to buy a house you can consider going solo in the property search; however, not having the expertise and experience of a real estate professional can make the process complex.

So what are the advantages of working with a real estate agent?

  • You have better access to houses inside and outside the local market.
  • Real estate agents know neighborhoods and market conditions.
  • An experienced agent knows advanced negotiation techniques.
  • Real estate agents understand the magnitude and number of papers a buyer needs to sign when buying a house.

6. Inspect the house

Unfortunately due to the surge in demand for homes, the vast majority of buyers are choosing not to carry out the respective inspections due to the fear of losing the property.

This can have severe consequences that will impact your pocket in the medium and/or long term. From moisture and mold to foundation problems, this can cost you a lot of money.

Therefore, regardless of the situation, a home inspection should always be carried out. By doing so, you will not lose money and you will have the security of having made the right decision.

Having your own house is a way of planting roots, raising your family and guaranteeing a dignified retirement. For this reason, you need to make sure you are prepared before taking this step.

Do you have any questions about the process of buying a property? Contact me, scheduling a One-On-One appointment through the following link: https://lisbethherrera.com/meet