Six tips to help you through the home-buying process in Canada
The road to home ownership is not always an easy one. Throughout the past year, we’ve seen that the pandemic has created both challenges and opportunities for newcomers looking to purchase a home. For some, lifestyle changes have created opportunities for increased savings. Others have had to alter their plans in the face of economic uncertainty and rising home prices in markets across Canada.
But whether you’re looking to buy within the next year or planning ahead for the future, having access to the appropriate resources, information and support can ease the home-buying process and help you make the best decisions for your housing needs and financial situation.
Here are six tips to help you through the home-buying process.
1. Figure out what you can afford
Before you start looking for a home, get a general idea of how much you may be able to afford and what your mortgage payments would be. This will help you set a realistic price range so you can balance home ownership with your lifestyle needs.
Here is an easy-to-use mortgage calculator that will estimate how much home you may be able to afford.
But there’s more to buying a home than just the purchase price. Be sure to also budget for:
- Closing costs such as a home inspection, legal fees and land transfer taxes
- Property taxes and property insurance
- Mortgage insurance (if needed)
- Heating, hydro, water and other services
- Home maintenance and repairs
2. Save for your down payment
Considering the high cost of home ownership in Canada, most newcomers (and most Canadians) don’t pay the full price of their home all at once. Typically, buyers make a down payment on a home using money they’ve saved and then borrow the rest (through a mortgage) from a lender, such as a bank.
In Canada, you need a down payment of at least 5% to buy a home. However, make as large a down payment as you can to lower your mortgage payments and potentially avoid paying additional costs such as mortgage insurance.
For many newcomers, building up a down payment is the biggest barrier when it comes to buying a home. While everyone’s financial situation is different, reviewing your spending habits, creating a budget and setting goals can help you continue to build up more monthly savings that can be used towards purchasing a home.
Find out more about mortgage down payments for newcomers.
3.Understand your mortgage options
There are a lot of mortgage features to choose from in Canada. Talking to a mortgage specialist is one of the best ways to make sense of all the options ⎯ and to help you save money over the lifetime of your mortgage.
Here’s how a mortgage specialist can help you:
- Offer advice on saving for your down payment
- Help you complete your mortgage pre-approval
- Explain Canada’s home-buying and mortgage process
- Explain your financing options and help you save money
- Refer you to a realtor to help you find a home
4. Get a mortgage pre-approval
Once you’re ready to buy a home, be sure to get a mortgage pre-approval. A pre-approved mortgage means the bank has made a commitment (subject to conditions such as a property valuation and down payment verification) to loan you the money for your home.
- You’ll know how much you can afford to borrow for your new home
- You’ll be in a better position to negotiate with sellers once you have found a home
- You’ll also know your interest rate
Typically there’s no cost to get pre-approved for a mortgage and you are under no obligation. Most banks guarantee your quoted rate for a certain amount of time, even if rates go up.
5.Find a real estate agent
Also consider hiring a reputable local real estate agent. Your agent, like your mortgage specialist, can be an invaluable resource for you throughout the entire home-buying experience.
6.Explore different neighbourhoods
As you start looking at homes, don’t just think about the type of home you want—also think about your lifestyle and how close you want to live near amenities such as schools, highways, medical services, shopping, restaurants and recreation.
For help finding neighbourhoods that match your needs and budget, try this Neighbourhood Explorer.