Canada, with its growing economy, vibrant ethical and cultural diversity and immigrant-friendly policy, is definitely considered by many as the right place to settle. No wonder it’s ranked as the second-best country to live in.
Canada’s real estate market is also growing influenced by the above-said factors. Every other Canada citizen is looking to invest in real estate. Though owning a house is a dream come true, the process towards it is tedious. So here are 5 important factors that can prepare you well before buying a house of your own.
- The right time to buy :
After you have decided to buy a house of your own, get to know the real estate market trends. Do it at least a few months to get the hang of price variations, the type of properties listed, sold, etc. Following real estate blogs can come in handy. The market trends help you to figure out the right time to buy a house. However, one thing you need to consider is, there will be an increase in competition when the conditions are favorable for buyers. So, apart from the market factors, weigh in factors such as your financial contribution, mortgage rates, availability of houses in your preferred location, etc while considering the right time to buy.
- Research Evaluate Decide :
Firstly make a basic list of your requirements such as the size of the house, location, required facilities in the house and preferable neighborhood (Eg: Parks and good schools if you have school-going children). Then, dive in a little deeper and think about aspects like whether you are okay with a pre-owned house or you want a newly constructed one. List out what are the things you are flexible with, for eg: you might let go of a backyard but proper ventilation is a must. Explore the different types of ownership and decide which one you want to opt for like if you are going for a condo, you own only the living unit and the land the building rests does not belong to you.
Once you finalize a few houses as per your requirement, start researching about the builders of each house. This helps to know the quality of the construction. Make sure the builder is a registered builder. In certain provinces, newly built houses come with warranties against bad workmanship, structural damage, etc. There are cancellation policies which have provision for you to get back the deposit if you are not going ahead with the purchase. Make sure you are aware of that. One important step that should not be neglected is getting a house inspection done and to know the future value of the house.
- Holistic financial approach :
It’s a known fact that buying a house is an expensive affair. But there are many cost elements involved other than the down payment and mortgage which can take you by surprise. So have a holistic financial approach and consider all the expenses involved for you to be well prepared.
Firstly, try to understand whether you can afford a house or not. Your monthly housing costs should be no more than 32% of your average gross monthly income. This percentage is known as your gross debt-to-income or gross debt service (GDS) ratio. Your monthly debt load should be no more than 40% of your average gross monthly income. This percentage is known as your total debt-to-income or total debt service (TDS) ratio. You can go for a mortgage pre-approval which gives a clear idea of how much mortgage you are qualified for and at what interest rate. This helps you to set your budget.
As a thumb rule, make sure that you put down a larger down payment. The more the down payment, it is easier to get a mortgage. This also means you can pay off the debt sooner and the chances of mortgage default will be lesser. Look out for options to save for your down payment and check your credit score as well. Get to know the type of mortgages and see which one will suit you. The other costs you need to consider are Land transfer tax, Legal fees, Title insurance, GST/HST on a New Home Purchase, Property Taxes, Utility Bills and a few more.
- Hire a real estate agent :
By reading so far, you can understand that buying a house is an exhaustive process. That is why a real estate agent comes in the picture. They can help you make the most of the process easy. The real estate market in Canada is pretty regulated that a real estate agent should be a registered one. Look out for the agent’s experience, read reviews and ask for references.
- Look out for incentives :
There are quite a few incentives available especially if you are a first time home buyer. RRSP Home Buyer’s Plan, First-Time Home Buyers’ (FTHB) Tax Credit, GST/HST New Housing Rebate, Mortgage default insurance, Land Transfer Tax Rebate. Make sure you are aware of these incentives to reap the financial benefits.
