Where to Start
Determine What You Can Afford
Purchasing a home involves both one-time costs and on-going monthly expenses. The largest one-time cost is the down payment, which is usually between 5-25% of the total price of the property.
Mortgage insurance is typically required by lenders on down payments of less than 20%. For a purchase price of $500,000 or less, the minimum down-payment is 5%. A purchase price over that amount, requires 5% down on the first $500,000 and 10% down for the remaining portion.
Use the online mortgage calculator below to estimate how much you can afford and how much your closing costs will be. Then visit your lender and obtain a pre-approved mortgage. Being pre-approved lets you know your price range when searching for homes and allows you to make an immediate offer on a property you find.
Obtain a Pre-Approved Mortgage
A pre-approved mortgage protects you against interest rate increases while you look for your new home and gives you a clear idea of what you can afford, saving you time by limiting your search to only viable options.
Once you’ve found the property you want to purchase, you’ll require the following in order to confirm financing:
- A copy of the real estate listing of the property.
- A copy of the offer to purchase or the building contract.
- Documents to confirm employment, income, and previous year’s income tax assessments.
Typical One-Time Expenses
- Mortgage application and appraisal fee (if applicable), due at time of application.
- Property inspection (optional), due at inspection.
- Legal fees and disbursements, due upon closing.
- Property survey (sometimes provided by the seller, optional) as needed.
- Land transfer, deed or property purchase tax due upon closing.
- Mortgage interest adjustment and take over fee (if applicable), due upon closing.
- Adjustments for utilities, property taxes, etc., due upon closing.
- Mortgage insurance (if applicable), due upon closing and ongoing.
- Home and property insurance, due upon closing and ongoing.
Typical Monthly Expenses
Typical monthly costs incurred with home ownership are mortgage payments, maintenance, insurance, condo fees, property taxes and utilities.
The Major Elements of an Offer
Depending on the local market conditions, your opinion of value, and marketing information provided by your Realtor, the price you offer may differ from the seller’s asking price.
The deposit shows your good faith and will be applied against the purchase price of the property when the sale closes. Your Realtor can advise you on the appropriate amount.
This includes the total price offered and the financing details. You may arrange your own financing or ask to assume the seller’s mortgage, especially if it has an attractive interest rate.
You can decide to make a “firm” offer which means that you’re willing to buy the property exactly as it is. Or, you could make the offer “conditional” on things like a property inspection, approval of financing or the sale of your existing home. Your Realtor will advise you on the options you may need to consider.
Inclusions and Exclusions
These might include appliances and certain fixtures or decorative items which would be included (or excluded) in the purchase of a property, such as window coverings, light fixtures, or mirrors.
Closing or Possession Date
Generally, the day the title of the property is legally transferred and the transaction of funds is finalized, unless otherwise stated. The regulations surrounding closing and possession dates varies by province which your Realtor will know.
How to Make an Offer
When it comes to make an offer, your Realtor can provide current market information, expertise and advice and will assist you by drafting your offer.
Your Realtor will communicate your offer to the seller and/or the seller’s representative, on your behalf. There may be more than one offer on a property registered at the same time. Your Realtor will guide you through this process.
Your offer is a legal document which specifies the terms and conditions of your purchase. The offer can be firm or conditional.
Firm Offer to Purchase
Usually preferable to the seller, because it means that you are prepared to purchase the property without any conditions. If the offer is accepted, the property is yours.
Conditional Offer to Purchase
This means that you have placed one or more conditions on the purchase. The property is not sold until all of the conditions have been met o waived.
Acceptance of the Offer
Your offer will be presented as soon as possible. The seller may accept the offer, reject it, or submit a counter-offer. The counter-offer may be in reference to the price, the closing date, or any number of variables. The offer can go back and forth until both parties have agreed or one of you ends the negotiations.
Have the Property Inspected (optional)
Having the property inspected by a qualified inspector can give you some added confidence that you have made the right decision. After the inspection is complete, you will receive a written report plus estimated costs for any necessary repairs.
Hire a Legal Professional
A legal professional is there to represent your interests and to provide the legal documentation required. Your Realtor can provide you with names of legal professionals who specialize in real estate. Your Realtor or legal professional will advise you on the steps to be taken before the keys to your new home are presented to you.