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Process of Buying a Home in Canada

Whether you’re a new Immigrant or not, checkout our easy process of buying a home in Canada!

Do you want to know the process of buying a home in Canada? If so, you can continue reading. Generally, homes are quite expensive in most Canadian cities even when compared to the United States of America. This makes it necessary for you to act very smart when thinking of what type of home to buy and its location. The cheapest homes in Canada are located in Edmonton and Montreal while homes in Toronto and Vancouver are the most expensive.

Buying a home in Canada may not be as simple as you think. It involves a number of processes that require your strategic thinking. As a matter of fact, you need to consider some factors in order to make the best buy.

This article will guide you in making a successful purchase no matter if you’re on attempts to buy a mansion, bungalow, storey building, duplex, detached or semi-detached house.

Why buy a home in Canada?

The following are some reasons to become a homeowner in Canada.

  • Mortgage interest rates are low in Canada
  • You’ll end up becoming the owner of the home rather than renting it
  • The monetary value of houses keeps rising in Canada
  • You can renovate the home to your choice of design
  • Homeowners in Canada get several tax breaks from the federal government

Factors to consider when planning to buy a home in Canada

It is impossible to change a home that you recently bought except if you intend selling it to buy another property. When thinking of purchasing a residential property in Canada, you need to take note of several factors, which goes beyond the house’s cost and aesthetics.

Here are the factors to take into consideration as you’re on the verge to buy a home in Canada.

#1. Cost of property

Homes are more expensive in some Canadian cities. To save more money, you may consider buying yours in a nearby city where homes are relatively cheaper. Ensure that the house’s location is in close proximity with your workplace.

#2. Standard of living

To avoid unnecessary spending, it is best to buy your home in one of the Canadian cities with low cost of living. Some of these cities include Sherbrooke – Quebec, Halifax – Nova Scotia, Regina – Saskatchewan, Quebec City – Quebec, and Kingston – Ontario.

On the other hand, Canada’s most expensive cities include Vancouver – British Columbia, Toronto – Ontario, Calgary – Alberta, Montreal – Quebec, and Ottawa – Ontario.

#3. City’s level of crime rate

It is without doubt that the Canadian province of Ontario is very safe compared to other provinces and territories in Canada. The province is renowned for its lower crime rates. Besides, Ontario is an amazing place to plan your retirement, as well as to live permanently with your family.

#4. Weather

The weather temperature in Canada’s cities varies. Thus, you need to consider purchasing your home in one of the Canadian cities known to have comfortable climates.

#5. Job mobility

Another factor to consider when you want to buy a home in Canada is whether your job is long-term/permanent, and won’t be taking you out of the city anytime soon. If you think that your employer will only hire you for a little while, then you can wait before buying a home in Canada.

Process of buying a home in Canada

To purchase a home in Canada, the following steps can help you make a successful deal.

  1. Settle existing debts before anything else
  2. Prepare your down payment
  3. Gather documents
  4. Confirm your eligibility for rebates and monetary aids
  5. Look for a lower mortgage rate, and get preapproval
  6. Commence your search for a home in Canada
  7. Make the purchase and pack in

STEP 1: Settle existing debts before anything else

You can surely increase your credit score and debt service ratios by paying your current debts, including student loans, car loan, among other types of credits. Doing this makes it easy for you to borrow and pay for your mortgage.

STEP 2: Prepare your down payment

If you already have your down payment, you can proceed to Step 3. If not, start saving for it. The down payment is a minimum of 5% of the house cost. If the cost of the house is more than $1,000,000 Canadian Dollars, you have to tender a down payment not less than 20%.

You can save on a monthly basis for the down payment. Bear in mind that there are more advantages when you tender an higher amount for your down payment as it gives you attracts a lower interest rate and monthly mortgage payment.

Additionally, you have to set aside from 3% to 5% of the home’s worth, which serves as the closing costs. Examples of closing costs include lawyer fees, certificate of location cost, estoppel certificate, title insurance, etc.

STEP 3: Gather documents

During the process of buying a home in Canada, it is essential for you to gather all your paperwork in advance. You’ll surely need them, and must be available at hand when required. Of course, this enables you to avoid delays, as well as to fasten the whole process.

Below are list of documents often required in the process of buying a home in Canada.

  • A void cheque
  • Letter from your employer, paycheque, or T4 slip
  • Statements for savings and investment for the last 90 days
  • Documents showing your other sources of sustenance
  • An inventory of your present assets and debts
  • Proof of withdrawal from Registered Retirement Savings Plan (RRSP) – required if you intend to use the Home Buyer’s Plan

STEP 4: Confirm your eligibility for rebates and monetary aids

It is in your best interest to examine the monetary aids and rebates available to you. These include the Home Buyer’s Plan, which allows you to withdraw a maximum of $35,000 Canadian Dollars out of your Registered Retirement Savings Plan. Making such tax-free withdrawal assists you to cover part of your home down payment.

As a prospective homebuyer in Canada, you can also benefit from the Home Buyer’s Amount, as well as Goods and Services Tax (GST)/Harmonized Sales Tax (HST) New Housing Rebate.

If you’re about to buy your first home in Toronto, you may eligible fora land transfer tax rebate.

STEP 5: Look for a lower mortgage rate, and get preapproval

You can save a lot of money in future by looking for a mortgage with lower rate. A mortgage broker can definitely help you in sourcing for the best rates from different lenders. After finding a mortgage rate that suits your need, you’ll be able to lock it for not more than 160 days. You can then proceed with the mortgage preapproval process.

Getting a preapproval will enable you to know your affordability for a home, your mortgage payment per month, as well as your interest rate.

STEP 6: Commence your search for a home in Canada

Subsequent to your mortgage preapproval, the next step is to find a home listed for sale that meets your exact preference. You can find homes by talking to your friends, viewing home listings online, logging on to real estate agency websites, checking classified ads on newspapers and magazines, or walk around the area to search for “For Sale” public displays on buildings for residential purposes.

Keep in mind to inspect the property before paying the down payment.

STEP 7: Make the purchase and pack in

Being the last process of buying a home in Canada, it is necessary for you to submit an offer for purchase. As soon as the offer is accepted, you can pay your down payment to the property owner or to his/her real estate agent. Subsequently, the home’s title will be transferred in your name.

Get the keys, and move in to your new home.

Frequently Asked Questions

Can foreigners buy a home in Canada?

Indeed, both Canadian citizens and non-citizens can purchase a home in Canada. This implies that all foreign nationals are eligible to make a home purchase anywhere in the country.

Where are the cheapest homes in Canada?

  • Sherbrooke, Québec
  • Saint John, New Brunswick
  • Quebec City, Quebec
  • Montreal, Quebec
  • Thunder Bay, Ontario
  • Regina, Saskatchewan
  • Edmonton, Alberta

Which cities have the most expensive homes in Canada?

  • Toronto, Ontario
  • Vancouver, British Columbia
  • Calgary, Alberta
  • Montreal, Quebec
  • Ottawa, Ontario

Do I need a realtor to buy a home in Canada?

No, you can definitely purchase a home in Canada without involving a realtor. Nonetheless, hiring a realtor helps you to streamline the home purchase process, as well as to get the best deals.

How much does buying a house cost in Canada?

The average cost of houses in Canada is $450,000 Canadian Dollars.

Is buying a house in Canada expensive?

Yes, it is expensive to acquire a residential property in Canada, which is the reason for many people opting for a mortgage loan.

Is it cheaper to build or buy a house in Canada?

Emphatically, it costs a lesser amount of money to build a house in Canada than buying it.

How long does the whole process of buying a house take?

The entire process of purchasing an housing property in Canada takes a maximum of six (6) months.

Conclusion

Owning a home in Canada is also a good investment as they appreciate quickly. You’d be glad of spending your thousands of Canadian Dollars on your choice of residential property in Canada. We hope that this article answered your questions on “what is the process of buying a house in Canada”. If not, you can comment below.

Thanks for reading!