Purchasing a House in Canada

Looking for a House  – MLS Listing

House Purchase in CanadaLooking for a house in Canada is done by using MLS listing. realtor.ca has more than 95% of the listings on the market in Canada. The details of each property, such as the house’s size, number of bedrooms and bathrooms, and photos of the property will be in this system. In Canada you usually won’t purchase directly from the seller. Although it sometimes happens that the owner will publicize and sell his/her own house, most owners in Canada will use a realtor, with his/her access to all of the market data, to sell their home.

What Is Included in a Canadian House?

Typically, when you purchase a Canadian house, it comes with everything that is attached to the house: the cabinets, the heaters and radiators, the air conditioning, light fixtures, blinds, carpets, curtains, shelving, and the big appliances like the refrigerator, stove, oven, dishwasher, washing machine, and dryer. If the house happens to have a storage shed in the backyard, a tree house, or play equipment that is fixed to the ground, those will typically be included as well. Different, isn’t it?

Why a Realtor?

It’s standard in Canada to use a realtor when either buying or selling a home. Canada has a culture of conservative traditions that work well for it, and realtors are one of those traditions. A seller’s realtor would typically prefer to talk to a buyer’s realtor, as opposed to the buyers themselves. If you choose not to use a realtor, it’s possible that you will not be taken seriously by sellers’ realtors. Furthermore, there are several good reasons to use a realtor when purchasing a house in North America Read More>>

What is the Process for Getting a Mortgage, and How Do I Start?

If I were to make one recommendation based on my experience, it would be: take care of your mortgage before you ever look at the first house. As you learned above, buying certain properties could require you to enter a “bidding war,” similar to an auction, with another potential buyer. In such a case, it’s important to know your price limit, the types of properties you’re approved for, and the terms of your loan beforehand. It’s important to have all of this knowledge, and maybe even conditional approval from your lender, before you go to battle for your desired property.

The 12 steps of the process are as follows:

1. Finding a Mortgage Expert and Processing Your Personal Data

It’s important to get recommendations from friends and other trusted people when looking for the right mortgage expert. The expert will take your personal data, such as name, address, income and down payment source(s) for the purchase. The broker will ask your permission to pull your credit report. After pulling your credit report, the broker will be able to give you a fuller picture of the likely situation for you in getting a mortgage that meets your needs. She or he will then ask you a few focused questions, and from there, prepare for your meeting. This initial process is very quick, a few minutes, and your personal data will be processed the same day, enabling you to get some initial feedback regarding your purchasing power.

2. Meeting with Your Mortgage Expert

The initial meeting with your mortgage broker is an important strategic meeting, with the goal of focusing your search is terms of both what you want and can buy. At this meeting, you and your broker will make sure that you can afford what you want, without the monthly payment threatening your financial health. You and your broker will be looking at the probable scenarios to determine what will be affordable to you, such a condo, townhouse, a house with or without a rental unit, as well as deciding which areas would be within your price range. At the end of the meeting, your consultant will be able to get a mortgage for you, not just to finance your property, but to help enable you to reach your financial goals in both the short and long term. Based on your goals and situation, you and your consultant will decide on whether it makes more sense to choose a fixed or variable rate, the term that best serves your goals, and the other important parameters that will affect your ability to save both today and twenty years for now.

Since each lender offers different programs, this meeting will help your mortgage broker determine which lenders would be best to approach to secure the mortgage that will meet your needs. With the information from this meeting, you’ll also be able to go back to your realtor, who will then have search parameters to find properties that meet both your needs and your wants. At this stage, the mortgage broker will send you a list of documents to prepare. Good preparation will save you both money and time! To see the list of documents you will need, please either click or call us!

3. Finding a Good Realtor

It sounds easy, but unfortunately, it’s not. A good realtor will bring knowledge and capability far beyond what you could get from a database. She or he will be able to define, clearly and accurately, the profile of the property you’re looking forward. The good realtor is responsive and communicative; with a good realtor, you’ll get immediate notification when a house that fits your criteria is placed on the market. The realtor will ensure that neither your time nor money, nor your emotional resources are wasted. If you set your heart on a particular property, your realtor will have an effective strategy for getting that property. The good realtor will create a focused search for you, and make sure to provide you with properties that meet your needs and wants. Furthermore, she or he will be able to see things about properties that you might not have even known to look for, and will veto a house, even if you like it, saving you potential headaches and heartaches.

We have a small, but quality, list of realtors that we work with, who work in focused areas and bring an exceptionally high standard of work to the table. We’re more than happy to share our realtors and why we chose them with you.

4. House Hunting

This is the fun part of the process! There’s nothing like shopping for a house; for immigrants in particular, buying a home is often a deeply meaningful experience far beyond just buying real estate. It can be a very fulfilling experience, making the buyer feel like he is now truly a part of his chosen country. It’s very important to focus, and to only go and see those properties that fit both your needs and your budget.

5. Making an Offer

In Canada, buyers typically don’t make offers on multiple properties at once. Once you find the “right” property, the one you love that meets your needs and budget, your realtor will guide you through the process of writing an “offer of purchase.” This offer will be very detailed, addressing things like price, time to closing, what will be included with the house, what adjustments and repairs will be expected of the sellers, and others. An important detail is whether the house is “subject to purchase,” giving you the exclusive right to purchase the house, but without obligating you to do so. It’s very important that you have at least seven to ten business days before the subject removal; this will give you time to check the condition of the house and ensure you have the right financing for this house. All of this is done before you commit to purchasing the house.

6. Negotiations

At this stage, the seller will respond to your offer, and you and they will go back and forth over various terms, such as price and dates. Unlike in Israel, there won’t be any face-to-face negotiation. Instead, your realtor will forward your offer of purchase to the seller’s realtor. The sellers will then review the document, and forward it to your realtor, who will forward it back to you. It’s possible that they will either sign everywhere, accepting your offer as is. However, it’s also quite likely that they will erase or mark through some of your conditions, writing their counteroffer over them, and signing the offer and initialing all of their changes. It’s important to note that every time you make a counteroffer, the seller has the option of rejecting the entire contract. If you and the seller work out all of the terms, and they accept your offer, the accepted offer will be signed by all parties. It might look like a draft with lots of marks, depending on how much negotiation has gone back and forth, but both parties are committed at this point.

7. Accepted Offer

Lots of happiness all around – the price and terms are agreed. Now, the work begins. You have a very short time frame to get a mortgage approved and to get a bank committed to it, as well as to check the quality of the building and make sure this is a good purchase.

8. Subject Removal Term

This part of the process will feel like a race against time. In just seven to ten days, you have to finalize your mortgage and inspect the property. During this time, you will be in constant contact with both your mortgage expert and your realtor.

Financing Commitment: In most cases, the bank will give you an approval that will indicate the mortgage amount and offered terms. Sometimes, the offer that your bank will extend is insufficient, and so it’s important to have enough time to approach other lenders should the need arise. It’s important to know that your bank commitment will have many requirements for you, called conditions. Should you fail to fulfill any of the conditions, even the tiniest, the bank will have the right to withdraw the mortgage offer. One of the terms, which takes 3 – 4 working days, is having the house appraised within 30 days. You pay for the appraisal as part of the expenses of purchasing the house, while the bank orders the appraisal and owns the documents that result.

At this point, if you have a down payment that is less than 20% of the purchase price, you will have to be approved by a mortgage insurer, GenWorth or CMHC. This takes time, and does not always have a positive result. We insist on taking the time to prepare ahead of time, so that we will be able to satisfy all of the bank’s requirements and have all conditions checked off, ensuring that, when the time comes to remove the subject of financing, you have a confirmed mortgage with no risk of the bank cancelling.

Locating a Lawyer: At this point, you will need to select an attorney who will act on your behalf in transferring the ownership of the property from the sellers to you. He will receive his commission as part of the purchase expenses. Sometimes, you’ll be able to choose an attorney from the general pool of attorneys who practice real estate law in your area, whereas in some cases, you’ll be limited to a specific list of attorneys. In either case, it’s important to get recommendations from your friends and other trusted people in order to find a good lawyer. We’ll be happy to help you and to recommend attorneys that we know and trust.

House Inspection: The cost of inspection is nothing to sneeze at: $400 – $500. But there is no reason to buy a house without having it inspected! Given the cost of real estate in Canada, buying a house with problems is an expensive mistake. It’s important to remember that houses in Canada are built of wood, and the foundations and structure are sensitive to weather, humidity, and water damage. In Israel, a leak in the washroom and a spot on the ceiling usually means you fix the leak and paint the ceiling. In Canada, a water leak can destroy the house’s structure from inside the walls, requiring tens of thousands of dollars of professional repair. If the leak is in a condo, the condo will have an assessment against it, and both banks and insurers might refuse to finance it.

9. The Day of Subject Removal

On this day, you will be asked to commit to the purchase. If you’ve decided that this is the house that you want, you will have to prepare a certified check for the sellers. The deposit check will be deposited in a trust account belonging to the sellers’ realtor. You will also sign an addendum for the removal of all the conditions to the purchase; at this point, you are committed to purchasing the house without condition. If you decide later on that you don’t want the house, the sellers have the right to cash the deposit check, and you may also be asked to pay more. Before signing the addendum to remove the subjects, you must get verbal confirmation from your mortgage consultant that your mortgage has been secured with no remaining conditions. In most cases, you should then proceed with presenting all other conditions, even those that case after inspection. At this point, the house’s status in the computer system will change to “sold,” and a “sold” sticker will be attached to the “For Sale” sign in front of the house, indicating that the sale is complete.

10. Waiting to Get the Keys

In the larger Canadian cities, things happen fast. From the minute you started looking for your house until you submitted your initial offer, it may have been only a few days or weeks; from the removal of subjects until you get the house, it’s usually only 16 – 18 days. It’s a very fast process, similar to the time tables of renters. During this time, there are a few things you’ll have to take care of:

Bank meeting: Some banks will require a mandatory meeting at the branch as a condition of taking the mortgage. At this meeting, you’ll set up an online account, and you’ll be offered other services from that bank.

Meeting with the lawyer: A few days before getting the financing and the keys, you’ll meet with an attorney to sign all of the original documents, register the house and transfer ownership. The lawyer will explain the details of the mortgage contract and answer all of your questions. Don’t hesitate to call your mortgage consultant for any clarification, even if you’re sitting in the attorney’s office. It’s important to know that your attorney is the one who coordinates everything financially. On the day you complete the sale, the certified check you deposited on the day of subject removal gets transferred from the seller’s realtor’s trust account into your lawyer’s trust account. The mortgage funds are also deposited into your lawyer’s trust account; he then calculates the final balance, including his commission, insurance, taxes (provincial and federal), and anything else included in his instructions from the bank.

Finding a moving company: It’s very important to take care of this in advance, since most moving companies are very busy at the beginning and end of the month, and especially in spring and summer. Contact us to learn about how our experts can pack and move your house in less than one day.

Transferring utilities: You’ll need to transfer your telephone, cable, internet, electricity and gas, disconnecting service at your old home and connecting it at the new location. It’s important to budget a few hundred dollars for the fees and deposits as part of the expense of purchasing your new home. Start this process a month in advance in order to give the utility companies notice to coordinate technicians to complete these services.

11. Date of Possession

This process usually takes place over two or three days. On the day of completion, your mortgage monies will be transferred to your lawyer’s office electronically and combined with your down payment. It’s then the lawyer’s responsibility to complete the transfer of ownership, register the mortgage, and release the funds to the sellers. One to two days later, usually during the afternoon, your realtor will give you the keys. You will typically receive the house in good condition for moving in immediately. It will typically be empty and very clean, including clean floors, carpets and cabinets.

12. Annual Assessment and Ongoing Meetings

Our goal is to strategically manage your mortgage, maximizing your savings not just over the five year term, but over the twenty five to thirty year life of the loan. Every time a bank offers a promotion that affects you, or the market or your situation changes, we’ll invite you to check your options to save more money. Once each year, we’ll check in with you and see if your needs and priorities have changed, and if adjustments need to be made to your mortgage based on payment pressures, or changes in the rates in the market. Our aim is to prepare you for the rates change and adjust your payment according to the inflation rate, protecting you from unnecessary payment shock at the end of the term. Gradual adjustments will prepare you for the change in your monthly payment and cash flow.

What’s Next

Six months before the end of the mortgage term, we’ll start the search process again. This is a great opportunity to find the lender who will give you the best rates, terms, and conditions. It likely won’t be the same lender you started with. This time, the process is much simpler and easier on you. Based on our experience, it’s worthwhile to spend the time organizing your documents – this bit of preparation can save you literally tens of thousands of dollars.

 

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