Despite growing housing costs, real estate remains a valuable investment for several Canadians, especially millennials who want to purchase a home. Ever since beginning of the epidemic, record-low rates of interest have created an opportunity for hundreds of individuals to purchase their first house, whereas the prospect of increasing rates in the second quarter of 2022 has prompted many more to lock in rates, get pre-approved, as well as close on homes as soon as humanly possible.
However, how do you go about buying a home in Canada? You might not know where to begin if this is your first time. The journey of purchasing a home, whether it's a single-family home, a townhouse, or a condo, does not really begin when you phone a broker to schedule a viewing. Rather, it begins years before you decide to purchase a home, whenever you decide you're ready. Here's how to buy a home in Canada, step by step. We go through everything from choosing if you're ready to buy a property to receiving your keys.
In seven simple steps, you can purchase a home.
Whether you're purchasing a house, a townhouse, or a condo, the processes are the same. For the sake of clarity, we'll focus on how to purchase a single-family home.
Step 1: Put money aside for a deposit.
Saving for a down payment is the first step in purchasing a home. A down payment of at least 5% of the buying price is required in Canada. For residences priced between $500,000 and $1 million, you'll need 5% of the first $500,000 and 10% of the remaining amount. A minimum down payment of 20% is required for residences worth $1 million or higher. Remember to save 3 percent to 5% of the home's purchase price for closing fees while saving for a deposit.Step 2: Organize yourself.
Spend the effort to manage your money and documents while you're collecting your deposit for a house. It's possible that you'll have to save for your down payment for months, giving you time to: Pay off your debts. Now is an excellent moment to pay off any credit card debt, student loan debt, vehicle loans, or a balance on a credit card. You may borrow more for your home if you have less debt. Compile your paperwork. A lot of documentation is required when applying for a mortgage, so now is the best time to get to work. If you locate your ideal home and need to move swiftly through the mortgage approval process, preparing your papers in advance is really helpful.Step 3: Examine your options for rebates and grants
Buying a property is pricey, so don't add to the expense. Check to see if any refunds or incentives are available to you.Step 4: Look for a good deal
Why must your mortgage be any dissimilar? You wouldn't get auto insurance without first searching around for the best deal, then why should your mortgage? Finding the best mortgage rate might save you hundreds – if not tens of thousands – of percent interest over the course of your loan. When you work with a mortgage broker, looking for the best mortgage rate is simple.Step 5: Obtain a pre-approval for a home loan
A mortgage pre-approval is indeed a low-risk approach to get these crucial details that will help you figure out your maximum purchase cost. You may lock in a quote for up to 160 days if you really like the mortgage rate as well as the lender. If you secure a mortgage rate, even if rates go up, you'll still be able to get the cheaper rate. Don't worry if rates fall; your lender will accept the reduced rate. If you've never gotten a pre-approval before, review our list of pre-approval dos and don'ts before proceeding.Step 6: Find a place to live
Finally, there's the exciting part: looking for a home! You're ready to call a real estate agent and start your property quest now that you have your mortgage pre-approval, a maximum purchase price in mind, and a sizable down payment. Here are some of our best advice: Find a real estate agent that specializesin the property or neighborhood you want to live in. If you're a first-time homebuyer, you should avoid advertising yourself. It's preferable to rely on a seasoned agent's knowledge. Make a list of "must-haves" and "nice-to-haves" for your future home. Knowing where you can be flexible is critical. Examine the market in your preferred neighbourhood to ensure that property prices and your maximum buying price are in line. In a competitive market, you must be ready to act rapidly.
Step 7: Make a proposal and close the transaction
Things will move quickly after you locate the house you like, so don't be alarmed! You'll start by submitting a buying bid. If the home market in your area is hot (as it is in much of Canada), you shouldn't be the only one who makes an offer. When your offer has been accepted, you'll submit a deposit to the buyer, work with your mortgage broker to confirm your mortgage financing and schedule a home inspection.Depending on the outcomes of the house inspection, the offer may be modified. Even so, you'll finally acquire financing and, with the aid of a real estate lawyer, pay your deposit and shift the title to the property into your name. Relying on the parameters of the acquisition offer, the whole procedure might take 30-60 days. You'll get the keys from your real estate agent after everything is in place, and you'll be the proud owner of your new house.
