PURCHASING A HOME IN CANADA
The close of 2011 brought my family a lot of blessings, one of which is the opportunity for us to buy our very first home in Canada. :)
I was honestly quite worried about initiating the big decision to buy a home because we are new in Canada and we have no idea on how to go about this. Are we even allowed to buy a home in less than a year of settling here?! As it turns out – yes, we were! And what a pleasant surprise this whole adventure turned out to be!
I have an endless list of why I love Canada, but I have to say that their well-regulated real estate market is on top of my list. Canadians made home-buying not just affordable, but more importantly, comfortable. I wasn’t a bit stressed in the entire process and have extremely enjoyed our home buying adventure. :)
So, if you are new here in Canada and wondering what the process is like, please read on…
First Step: Get Mortgage Pre-Approval
We all have our dream houses in mind. Mine would be somewhat like our house in the Philippines – spacious, detached, with a garden in front and a backyard. I know I will someday own my dream house, but for now I trusted my bank to tell me how much I can actually afford to buy.
So one Saturday morning, my hubby and I walked in our bank and requested for mortgage pre-approval. It was fairly easy – we just presented documents to prove our status here in Canada and our annual household income. Our banker asked us several questions to determine our household expenses. She entered all these information in the computer, and using tried and tested mathematical parameters, we were told how much mortgage we can afford based on the interest rate that the bank is giving us. This means, in simple terms, this is the maximum amount that the bank is willing to lend us. So there – now we know our budget!
Time to shop? Oh no, not quite yet.
Second Step: Get Your Finances Ready
I did mention that Canada made home-buying affordable. But, it doesn’t mean that you won’t have to dig deep in your pocket. While you can actually get a 30-year mortgage which makes your monthly amortizations bearable, there are three home-buying expenses that you cannot loan – your 5% down payment, the land transfer tax, and your lawyer’s fee.
- Calculating the down payment is quite straightforward. It is just that — 5% of whatever amount of property you will buy.
- Calculating the land transfer tax is quite easy, too…well, at least here in Ontario. As of writing (January 2012), the Ontario Ministry of Finance’s current land transfer tax rates are as follows:
- 0.5% of the value of consideration for the transfer up to and including $55,000,
- 1% of the value of the consideration which exceeds $55,000 up to and including $250,000, and
- 1.5% of the value of the consideration which exceeds $250,000, and
- 2% of the amount by which the value of the consideration exceeds $400,000 for land that contains at least one and not more than two single family residences.
Note to First Time Homebuyers: We were able to save $2,000 on the land transfer tax via Ontario’s program for first-time homebuyers. While this will be automatically handled by your lawyer, you may want to read more about it here.
- Finally, your lawyer’s fee. Well, this would vary based on who you want to appoint as your lawyer. Our wonderful real estate agent introduced us to the Law Office of Cindy McGoldrick and we had a very pleasant experience with them. I would also say that their rates are reasonable.
Ok, now that you’ve made sure that you actually have the funds for these three things on hand…it’s time to shop! But…get help!!!
Third Step: Get a Reputable Real Estate Agent
This step, I believe, is what would make your home buying experience a pleasure or a bust. Yes, you don’t have to go through the whole home buying experience alone. There are people out there who are experts in this field. They live and breathe real-estate and are very much willing to sit-down with you and help you in the entire process. You don’t even have to pay them anything…because they get paid by the owner of the house that you will eventually buy. :)
If you are reading this, and you live within the Greater Toronto Area (GTA), and you’re looking for a real-estate agent, I highly recommend that you get Lorraine Lech to be your real-estate agent. She is connected with Keller Williams Realty, a reputable real estate associates brokerage.
Lorraine helped my family buy our first home here in Canada. I met her in one of the open-houses I visited and instantly knew that I would like to work with her. Believe me, I must have met over 20 real-estate agents with al the open-houses I drag my hubby to! I guess the difference with Lorraine is that she made me feel that it is ok to ask her anything and she gives me an answer that is to the best of her knowledge. She does not even pretend to know everything. If I have a question that she does not have a ready-answer for, she tells me straight out that she would need to research about it in order to give me a factual answer. She gets back to me in a timely manner, too, which I really appreciate.
You know how it is when some agents sugar-coat everything just to get you to buy something? Well, I am fortunate not to have had that experience with Lorraine. She is very honest and will disclose everything that you need to know in order to make the best decision for your family. Being the kind of person who wants everything laid out in front of her before making a decision, I appreciated Lorraine’s honesty and this is what made us sign her up as our agent. Moreover, what made our whole experience with her extremely pleasant was that she treated us like family. I distinctly remember four different circumstances wherein Lorraine has showed us that we are more than just a business to her…
- I remember telling her how important it is for us to live near my uncle’s family because they’re our only relatives here in Canada, and she took great considerations in finding us a property that actually met this requirement. She was spot on and eventually, the home we purchased was just a street away from my uncle’s, in the same townhouse complex! I could not be happier!
- I also remember telling her that that our pre-approved mortgage was a certain amount, but our parents are advising us not to take out the maximum loan that the bank is giving us…just as a caution to make sure that we will not overstretch ourselves financially being first time home buyers. Lorraine, being a parent herself, echoed our parents’ advice and gave me an idea of the other expenses that are related to homeownership which I have to consider in my budget. She told me that she does not want me to be “house poor” and would want my family to still enjoy life even while paying off a 30-year mortgage. Knowing that agents’ commissions are percentage-based, and reducing the price-range of the house that I will buy would also reduce her commission, I really appreciate the fact that Lorraine placed my family’s interest well before her own.
- Then there was the scare my hubby and I had after closing the deal with the house! I will never forget that water-damage that we thought we saw on the ceiling of the bathroom! I emailed and called Lorraine in a panic…on a holiday! She managed to appease me by contacting a home-inspector and booking him to come to the house within a short notice. She did this while she was vacationing with her sister out of country! Thankfully, it turned out a case of a bad paint job, and not an actual water-damage. And I should not forget to mention that Lorraine paid for the home inspection herself. She did not have to do this as we are willing to pay for it…but she did it anyway, and we appreciate her kindness.
- In between all the business of house-hunting and closing deals, Lorraine and I shared stories about our lives and families. On that cold night while waiting inside her van to know if we, out of the seven bidders (yes, seven bidders!) got the house, we casually told her about our experience as first-time parents. We laughed about the fact that we ate in an expensive restaurant with our then 18-month old daughter and we were not able to taste the food because we were speed-eating because my baby was fussing. I told her that my hubby and I are celebrating our 14th year together in December and that the house is a really nice present for both of us. Lo and behold, Lorraine managed to remember all these little bits of information and called us on our anniversary. And just recently, she gave us a little present so we can go back and eat in the expensive restaurant and actually taste the food. Lol! We love Lorraine’s thoughtfulness and we keep her in our thoughts, too.
Ok, so I guess I’ve convinced you enough to contact this wonderful lady and save yourself the trouble of scouting the internet for the best real-estate agent. For your convenience, here are her contact details:
Sales Representative, Keller Williams Realty
7145 West Credit Avenue, Building #1, Suite 100, Mississauga, ON L5N 6J7
Direct #: 416.333.5576
Office #: 905.812.8123
Toll Free #: 1.888.944.2287
Fax #: 905.812.8123
Fourth Step: Shop, Make an Offer, and Pray
With the help of your chosen agent, you can now shop around! Canada has a real-estate website which consolidates all the properties that are on sale. The search parameters are pretty good and the site is easy to navigate. I strongly suggest that if you have the time, help your agent search for your home. The website is www.mls.ca
Once you have gone in open houses and decided on the house you want to purchase, you agent will help you make an offer. Hope against hope that you will be the only person making an offer; that way, you can negotiate a better price. Depending on what your agent will advise you to do, you may decide to do a home inspection among the other conditions that you can optionally put in your offer.
Then of course you have to pray that your offer will be accepted. If you get into a scenario of multiple offers like us (we had to outbid 6 other people…yikes!), the more you have to pray! LOL! As always, trust that the infinite power above is in control and will give you what is best for you. :)
Fifth Step: Sign, Pay, and Celebrate!
At one point, your offer will be accepted…then it is time to head to the lawyer’s office and sign all those papers! Don’t forget that there are things that you need to pay for…so bring your check book! When everything is settled and done, and you’re just waiting for your closing date…take the time to celebrate! What a great feeling it is to turn that key and let yourself in your own home. :)