Frequently Asked Questions

Closing day is the day when you finally achieve your goal — you take legal possession and finally get to call your new house your own. You are sure to feel great relief and satisfaction but remember that the home buying process isn’t over just yet. There are quite a few things that need to be done on closing day:

• Your lender will provide the mortgage money to your lawyer/notary.
• You must provide the balance of the purchase price to your lawyer/notary along with the closing costs.
• Your lawyer/notary pays the vendor, registers the home in your name, provides you with a deed and the keys to your new home.

Hiring a Mover

It is now time to hire a mover. Friends or relatives may be able to recommend a professional moving company but don’t forget to ask the mover for references. You will also want an estimate and outline of fees (flat rate or hourly charge, etc.). Once you’ve selected a mover, it is a good idea to have the representative come to your home to see what will be moved and revise the estimate if necessary.

During the move, you’ll want to ensure that your belongings are insured. Your home or property insurance may cover goods in transit but call your broker or insurance company to be safe and to ask about the extent of coverage. Many moving companies offer additional insurance coverage. Be aware that professional movers are not responsible for items such as jewelry, currency or important papers. You will have to move these yourself.

If you decide to do your own packing, keep in mind that you will need the proper materials and that it could take up a lot of time.

The Big Day

On moving day, go through the house with the van supervisor and provide any special instructions. The supervisor will also make note of the condition of your goods on an inventory list. Go through the house with the supervisor to make sure the list is complete and accurate. Then, when the van arrives at your new home, mark off the items on the mover’s list as they are unloaded. Remember that even if the movers unload and unpack boxes and remove packing materials, they will not put dishes or linens into cupboards.

Saying goodbye to one home and neighbourhood and discovering a new one can be very exciting. Just make sure it is not hectic as well. Plan ahead to make the transition as smooth as possible for everyone involved. That way, you can breathe easy and enjoy your new home without having to worry so much.

Once you figure out what you can afford to pay for a house and obtain a pre-qualified mortgage, you are ready to start your search. There are a variety of sources you can use to find the home that is right for you:

• Word of mouth. By telling everyone you know that you are looking for a house, you might hear about homes that are just becoming available on the market.
• Newspapers and real estate magazines. Check the new homes section in daily newspapers or look for real estate magazines available at newsstands, convenience stores and other outlets. These free publications feature pictures and brief descriptions of a variety of homes.
• The Internet. Check out real estate websites, such as Realtor.ca for information and pictures of a wide range of properties. This site allows you to narrow your search by location, price, number of bedrooms and other features.
• “For Sale” signs. Drive around a neighbourhood that interests you and look for “For Sale” signs. This is a good way to find homes that are being sold by the owner.
• Visit new development sites. If you are looking for a newly built home, this will allow you to see the different models available and to get information from builders.
• Work with a real estate agent. For most buyers, a real estate agent is key to finding the right home.

Useful Tips for Your Search

• Keep records. Whether you work with a real estate agent or search by yourself, it’s a good idea to visit lots of different homes before choosing one. To make sure you have all the information you need to compare homes, use detailed notes and pictures. Don’t forget to consider the home’s utility costs, property taxes and major repairs, as these will affect your monthly housing expenses. Ask to see copies of bills. You should also be ready to compromise. Chances are you won’t find a home that has everything you want.
• Check out the existing financing on the property. It may be possible to take over a favourable existing mortgage from the vendor or even obtain a vendor take back mortgage in order to help close the deal.
• Think twice. Even if a home seems perfect, go back and take a closer, more critical look at it. Visit on different days and times, chat with prospective neighbours and look beyond cosmetics.

Because purchasing a home is probably the biggest investment you will ever make, you’ll definitely want a team of professionals working with you throughout the process.

The Real Estate Agent

No one will play a more important role in helping you find a home than your real estate agent. Your real estate agent’s job is to:

• Help you find the ideal home
• Write an Offer of Purchase
• Negotiate on your behalf to help you get the best possible deal.
• Provide you with important information about the community, arrange and coordinate the home inspection and essentially save you time, trouble and money

When the time comes to select a real estate agent, don’t be afraid to ask questions — especially about any possible service charges. Vendors normally pay a commission to the agent but some agents charge buyers a fee for their services.

The Lender or Mortgage Broker

If you haven’t already gone through the mortgage pre-qualification process, you will need to find a good lender to assist you during the purchasing process and for as long as you have your mortgage.

Remember that many different institutions lend money for mortgages, such as banks, trust companies, credit unions, caisses populaires, pension funds, insurance companies and finance companies. It’s a good idea to shop around and speak with more than one lender because terms and options will vary.

Some people find it helpful to use a mortgage broker. Mortgage brokers don’t work for any specific lending institution. Their role is to find the lender with the terms and rates that will best suit the buyer.

To find a lender or mortgage broker, you can:

Contact us

The Lawyer/Notary

You need a lawyer (or a notary in Quebec) to protect your legal interests such as ensuring the property you are thinking of buying does not have any building or statutory liens or charges or work or clean-up orders associated with it. He or she will review all contracts before you sign them, especially the Offer (or Agreement) to Purchase. Having a lawyer/notary involved in the process will give you peace of mind and ensure that things go as smoothly as possible. Law associations can refer lawyers/notaries who specialize in real estate law (in Quebec, contact the Chambre des notaires du Québec ).

Lawyer/notary’s fees range widely and depend on the complexity of the transaction. Shop around for rates and, when choosing your lawyer/notary, use the Checklist for Selecting a Lawyer/Notary to guide you.

Remember that a lawyer/notary:

• Should be a licensed full-time lawyer/notary.
• Should be local and understand real estate laws, regulations and restrictions.
• Should have realistic and acceptable fees.
• Can explain things in plain language.

The Home Inspector

You should consider having any home you are thinking of buying inspected by a knowledgeable and professional inspector.

The home inspector’s role is to inform you on the property’s condition. He will tell you if something is not functioning properly, needs to be changed or is unsafe. You will also be informed of repairs that need to be done and he/she may even be able to tell you where there may have been problems in the past.

Every inspection should include an evaluation of at least the following:

• Foundation
• Doors and windows
• Roof and exterior walls
• Attics
• Plumbing and electrical systems
• Heating and air conditioning systems Ceilings, walls and floors
• Insulation
• Ventilation
• Septic tanks, wells or sewer lines
• Any other buildings such as a detached garage
• The lot, including drainage away from buildings, slopes and natural vegetation
• Overall opinion of structural integrity of the buildings
• Common areas (in the case of a condominium/strata or co-operative)

There is presently no uniform certification and no requirement for home inspectors to take any courses or to have passed any tests. Anyone can say that they are a home inspector. However, a good home and property inspector generally belongs to a provincial or industry association such as the Canadian Association of Home and Property Inspectors and l’Ordre des technologues professionnels du Québec.

Home inspector fees are generally $200 and more, depending on the size and condition of the home. Use the Home Inspection Checklist to review your home inspection report.

The Insurance Broker

An insurance broker can help you with your insurance needs, including property insurance and mortgage life insurance. Lenders insist on property insurance because your property is their security for your loan. Property insurance covers the replacement cost of your home, so premiums may vary depending on its value.

Your lender may also suggest that you buy mortgage life insurance. Mortgage life insurance provides coverage for your family should you die before your mortgage is paid off. This type of insurance is often available through your lender, who then simply adds the premium to your regular mortgage payments. However, you may want to compare rates between both an insurance broker and your lender.

Be careful not to confuse property or life insurance with mortgage loan insurance, which may be required for high-ratio mortgages. ( Refer to Step 7 for more details.)

The Appraiser

Having an independent appraisal done on a property before you make an offer is a good idea. It will tell you what the property is worth and help ensure that you are not paying too much. Your lender can also ask for a recognized appraisal in order to complete a mortgage loan.

The appraisal should include an unbiased assessment of the property’s physical and functional characteristics, an analysis of recent comparable sales and an assessment of current market conditions affecting the property.

Appraisal fees may vary but you should not pay more than $250 – $350 in most areas for a typical single-family house.

Your real estate agent may be able to refer an appropriate professional.

The Land Surveyor

If the seller does not have a Survey or Certificate of Location, you will probably need to get one for your mortgage application. If the Survey in the seller’s possession is older than five years, it will probably need to be updated. Remember that you must have permission from the property owner before hiring a surveyor to go onto the property. Ask your real estate agent to help co-ordinate this with the owner.

The Builder / Contractor

If you are buying a newly constructed home or require renovations to a resale home, you will have to hire a builder or contractor. Here are some things to keep in mind when choosing one:

• Ask for references and talk to other customers about the builder’s performance.
• Check with the New Home Warranty program in the area.
• Visit other housing developments that the company has built.
• Ask builders or contractors if they are members of a local homebuilders’ association or ask for a provincial license number.

If you are having a custom home built, remember that:

You may want to hire an architect. Builders of custom homes usually work on either a fixed-price or a cost-plus basis. Authorize any changes to your contract by writing your name or initials beside the change.

Your Current and Future Needs

Before you start searching for a home, you need to think about your needs both now and in the future. Here are some things to consider:

• Size requirements. Do you need several bedrooms, more than one bathroom, space for a home office, a two-car garage?
• Special features. Do you want air conditioning, storage or hobby space, a fireplace, a swimming pool? Do you have family members with special needs?
• Lifestyles and stages. Do you plan to have children? Do you have teenagers who will be moving away soon? Are you close to retirement?

Try to buy a home that meets most of your needs for the next 5 to 10 years, or find a home that can grow and change with your needs.

Choosing a Location That Is Right for You

Even if the home you choose has everything you need, the location might not be appropriate. When deciding where to live, you should take the following things into consideration:

• Whether you want to live in a city, a town or even in an out-of-town location
• Where you work and how easy it is to commute
• Where your children will attend school and how they will get there
• Whether you need a safe walking area or recreational facilities such as a park nearby How close you would like to be to family and friends

New Home, Previously Owned or Build Your Own?

When thinking about the kind of home you want, the first thing you should consider is whether you want a previously owned home (often called a resale) or a new home. Here are some characteristics that may help you decide:

New Home:

• Personalized choices. You may be able to upgrade or choose certain items such as siding, flooring, cabinets, plumbing and electrical fixtures.
• Up-to-date with the latest codes/standards. The latest building codes, electrical and energy-efficiency standards will be applied.
• Maintenance costs. Lower maintenance costs because everything is new and many items are covered by a warranty.
• Builder warranty. A homebuilder’s warranty is usually available in all provinces (except Nunavut and the Northwest Territories). This can be important if a major system such as plumbing or heating breaks down. This warranty does not apply if you build the home yourself.
• Neighbourhood amenities like schools, shopping malls and other services may not be complete for years.
• Taxes such as the Goods and Services Tax (GST) (or, in certain provinces, the Harmonized Sales Tax (HST)) will apply. However, you may qualify for a rebate of part of the GST or HST on homes that cost less than $450,000. For more information about the GST New Housing Rebate program, visit the Canada Revenue Agency website.
• Extra costs. You may have to pay extra if you want to add a fireplace, plant trees and sod, or pave your driveway. Make sure you know exactly what’s included in the price of your home.

Resale Homes:

• Easy access to services. Probably established in a neighbourhood with schools, shopping malls and other services.
• Landscaping is usually done and fencing installed. Previously owned homes may have extras like fireplaces or finished basements or swimming pools.
• No GST/HST. You don’t have to pay the GST/HST unless the house has been renovated substantially, and then the taxes are applied as if it were a new house.
• Possible redecorating and renovations. You may need to redecorate, renovate or do major repairs such as replacing the roof, windows and doors.

Building Your Own Home:

Some people prefer the challenge and flexibility of building their own home. On one hand you can get exactly what you want in terms of size, design, location, quality of material, level of energy-efficiency, etc. However, you should expect to invest lots of time and energy.

Deciding on the Type of Home to Buy

There are many types of homes to choose from and each has its advantages and disadvantages. Think about your needs before making a decision. Don’t forget to look beyond the walls. The environment surrounding your home can be almost as important as the environment inside of it.

Single-family Detached:

The most popular style and the most solid investment. It is a freestanding home which sits on its own lot thereby offering a greater degree of privacy.

Semi-detached:

A single-family home that is joined to another one by a common wall. It can offer many of the advantages of a single-family detached home and is usually less expensive to buy and maintain.

Duplex:

Two units — one above the other or side-by-side. The owner usually lives in one unit and rents the other.

Row House or Townhouse:

One of several types of single-family homes joined by common walls. It offers less privacy than a single-family detached home but still provides a separate outdoor space. These homes can cost less to buy and maintain.

Link or Carriage Home:

Houses joined by garages or carports, which provide access to the front and back yards. Builders sometimes join basement walls so that link houses appear to be single-family homes on small lots. These houses can be less expensive than single-family detached homes.

Manufactured Home:

A factory-built single-family home that is transported to your chosen location and placed on a surface-mounted foundation. The term manufactured home has replaced the term “mobile home”.

Modular Home:

Also a factory-built home constructed in compliance with local building codes. The home is typically shipped to your location in two or more sections. It may or may not have a longitudinal sub-frame.

Condominium:

Refers to a form of legal ownership as opposed to a style of construction. Condominiums can be high-rise residential buildings, townhouse complexes, individual houses and low-rise residential buildings. Condominiums are also known as stratas in British Columbia or syndicates of co-ownership in Quebec.

Once you have figured out the home price range you can afford and the type of mortgage you qualify for, you will need to calculate all of the associated costs of the transaction to make sure you are financially ready.

Up-Front Costs

You will need to plan ahead to cover the many up-front costs of buying a home. Timing is important to help make sure things go smoothly.

Mortgage Loan Insurance Application Fee and Premium. If yours is a high ratio mortgage (less than 20% down payment), you may need mortgage loan insurance. To get this insurance, you may be asked to pay the required application fee. Your lender may add the mortgage insurance premium to your mortgage or ask you to pay it in full upon closing.

Appraisal Fee. Your mortgage lender may require that the property be appraised at your expense. An appraisal is an estimate of the value of the home. The cost is usually between $250 and $350 and must be paid when you contract for those services.

Deposit. This is part of your down payment and must be paid when you make an Offer to Purchase. The cost varies depending on the area, but it may be up to 5% of the purchase price. If you wish to make a down payment of 5% and you give a deposit of 5%, then your down payment is considered to be made.

Down Payment. At least 5% of the purchase price is usually required for a high-ratio mortgage and at least 20% of the purchase price is usually required for a conventional mortgage.

Estoppel Certificate Fee (not applicable in Quebec). This applies if you are buying a condominium or strata unit and could cost up to $100.

Home Inspection Fee. Remember that this may be a condition of your Offer to Purchase. A home inspection is a report on the condition of the home and may cost over $200, depending on the complexities of the inspection. For example, it may be more costly to inspect a home that has large square footage, one that is expensive or one where contaminants such as pyrite, radon gas or urea-formaldehyde are suspected.

Land Registration Fees (sometimes called a Land Transfer Tax, Deed Registration Fee, Tariff or Property Purchases Tax .You may have to pay this provincial or municipal charge upon closing in some provinces. The cost is a percentage of the property’s purchase price and may vary. Check with your lawyer/notary to see what the current rates are.

Prepaid Property Taxes and/or Utility Bills. To reimburse the vendor for pre-paid costs such as property taxes, filling the oil tank, etc.

Property Insurance. The mortgage lender requires this because the home is security for the mortgage. This insurance covers the cost of replacing the structure of your home and its contents. Property insurance must be in place on closing day.

Survey or Certificate of Location Cost. The mortgage lender may ask for an up-to-date survey or certificate of location prior to finalizing the mortgage loan. If the seller does not have one or does not agree to get one, you will have to pay for it yourself. It can cost in the $1,000 to $2,000 range.

Water Quality Inspection. If the home has a well, you will want to have the quality of the water tested to ensure that the water supply is adequate and the water is potable. You can negotiate these costs with the vendor and list them in your Offer to Purchase.

Legal Fees and Disbursements. Must be paid upon closing and cost a minimum of $500 (plus GST/HST) .Your lawyer/notary will also bill you direct costs to check on the legal status of your property.

Title Insurance. Your lender or lawyer/notary may suggest title insurance to cover loss caused by defects of title to the property.

If you feel you cannot cover all of the up-front costs, you can ask your lender for a loan. Remember that payment for this loan amount, based on a 12-month repayment period, will have to be included in your Total Debt Service ratio calculation.

Other Costs

Besides up-front costs, there are other expenses to consider:

• Appliances. Check to see what comes with the house, if anything.
• Gardening equipment
• Snow-clearing equipment
• Window treatments. Check to see what comes with the house.
• Decorating materials. Paint, wallpaper, flooring and tools for redecorating.
• Hand tools. You will need some basic hand tools for your new home.
• Dehumidifier. May be required to control moisture levels, especially in older homes.
• Moving Expenses
• Renovations or Repairs
• Service Hook-Up Fee. Charged for utilities. You may be required to pay a deposit for utilities such as telephone and heating services.
• Condominium Fee. You may have to make the initial payment for these monthly fees.

So, you’ve decided that homeownership is right for you. Now you need to determine if you are financially ready to buy a house.

In this step, you will find a number of simple calculations that you can do to evaluate your current financial situation, how much house you can afford and the maximum home price that you should be considering.

Once you understand these variables, you can make the best choice for you and even save money.

Test yourself

To avoid any future surprises, you can do some financial exercises to see where you stand. They include: calculating your net worth, your current monthly expenses and your current monthly debt payments.

Knowing your net worth is important because you will need this information when you discuss a mortgage with your lender. Your net worth is the amount left over once you’ve subtracted your total liabilities from your total assets. It will also give you a snapshot of your current financial situation and show you how much you can afford to put as a down payment.

Is home ownership right for you? Ask yourself these questions…

• Do you enjoy moving often?
• Do you prefer using your savings for such things as vacations, retirement or starting your own business?
• Do you enjoy not having to worry about regular maintenance and repairs?

If you answered yes to any of these questions, you may not be ready to own a home yet. While you probably have a lot of good reasons for wanting to buy a home, you also have to consider your reasons for not wanting to.

Remember that buying a home is one of the biggest emotional and financial decisions you’ll ever make, so prepare yourself to make a knowledgeable decision.

Although buying a home almost always seems like a great idea, it is important to understand what homeownership involves. Of course, being a homeowner is something to be proud of but it also means having to invest money, time and energy and take on added responsibilities. So, before you decide to buy a home, make sure you’re ready.

When most of us consider becoming homeowners, we immediately think of how wonderful it will be. It is true that there are a lot of good reasons for wanting to buy a home. Here are some of the main advantages of owning a home:

Financial Security. If housing prices rise, your home can provide you with some financial security due to capital appreciation.

Flexibility. You can decorate or renovate your home to meet your own family’s personal tastes and needs.

Stability. Having a place of your own.

Although it is nice to think about the positive aspects of owning a home, it is important to consider the downsides as well. Here are some of the main disadvantages of owning a home:

Financial Stress. Coming up with the down payment, meeting regular mortgage payments and other ongoing costs will tie up a lot of your cash, and can put considerable stress on your finances.

Maintenance. Keeping your home in good shape requires time and money.

Higher Costs. You may pay more each month for housing than you did as a renter. There are also extra costs for maintenance and property taxes.

More Responsibility. You alone are responsible for payments, repairs and maintenance.