Purchasing Our First Home in Canada
I’ve been busy for the past few months dealing with a lot of transitions in our life. I just got my G2 license, so I can drive now, I started my coaching practice and we purchased and moved to our first home in Canada.
We were really blessed to have been able to buy a property amidst the crazy Toronto real-estate market. Of course, it was not easy, but after 3 months of looking, researching and 2 failed bids, we were able to secure our home sweet home. So, how did we do it?
In our experience, there are 4 people needed for you to be successful in this endeavor:
- yourself (and your family)
- your real-estate agent
- your financial planner and or mortgage broker
- your lawyer.
You. It must start with you (with your family). In our case, we felt that we are paying a huge amount of rent without owning anything. Another reason is that having our own home can give us comfort and realization that we did the right thing when we move here in Canada. Having a reason is very important because whenever you feel like giving up, your reason for buying will be your motivation to move forward.
Once you’ve decided to do it, you have to determine what property you like. It will be based on different factors. What is your budget? How much money do you have for down payment? How much can the bank lend you? What lifestyle do you want to live? What neighborhood do you want to be in and the schools are nearby (especially if you have children)? Most likely, if you don’t have too much of a buying power like us who were first-time buyers, you have to trim down on the wants and just really focus on the need until you’ve built your equity.
Next, you start looking for a real-estate agent. You can use the internet or you can solicit advice from friends. The latter worked for us since we are new in Canada. We relied on our friends’ experience with their agents and we started from there.
Tip, look for an agent who really cares and will tell you good things, much more the not so good things in buying a property. Our agent is really a nice and hard-working guy and I won’t hesitate to refer him to any friends because of our good relationship with him.
Your agent will usually send you filtered home search results based on the criteria you established (you can also use free sites such as realtor.ca and condos.ca to supplement your search). Results will usually come daily and you just have to filter it. If you’re interested in any property, tell your agent so they can arrange the visit. Our agent usually picks and drops us in a convenient place since we don’t have a car back then. I think that’s how it is supposed to be as part of their service to their client.
It is a good idea that before looking for properties or making an offer, go to a bank or to your financial advisor/mortgage broker to get a pre-approval on how much the financial firm can lend you. As a precaution, the pre-approval amount doesn’t mean that the amount is 100% set in stone. If you will be giving only 5% down payment, you are required to get a default insurance and this could impact how much you can really loan. This happened to us. We have given an offer that is slightly higher than the appraised value of the unit which the default insurer is willing to insure. We had to come-up with the difference from our offer and the actual amount that we can loan.
Once you’ve visited (you may or may not visit the unit you want to buy, I strongly suggest you do) and you are interested, you and your agent will come up with an offer. Along with the offer is a bank draft as a security deposit (this is optional, but this will give a sense of commitment to the seller that you are serious about buying the unit). You can get this from your bank for a fee. On the offer day, your agent will either be at the venue or send the offer through email. If you’re successful, you’ll get the house. If not, you get your bank draft back and you’re back to square one.
There could be negotiations that may happen on the offer day such as waiving of conditions, increasing the offer amount or adjusting the closing dates, but, that is only if you are called back for round 2 or 3 of offers.
If you are successful in your bid and your offer was accepted, your next steps are to inform your mortgage provider as well as your lawyer. If you don’t know a lawyer, again, you can ask your friends, your agent and your mortgage provider for one.
Your lawyer will process and review all the paperwork needed for the acquisition of the unit. You will also give him or her the remaining balance on your down payment as well as other fees you need to pay for the acquisition. Note, first time buyers are given a one-time tax credit that can lower the amount of taxes you need to pay for purchasing of the house. Note that this is only one-time and will not be available on your next home purchase.
All in all, it was a stressful and meticulous process that will require time, attention and of course money, lots of it, especially for a first-time home buyer. But once you are living in that home together with your family, it’s all worth the effort, time, money and sleepless nights. And as they say, “There’s really no place like home.”