Homes & Relocation Detail
Buying property in Canada
Expat and relocation agent Helen Parnell provides a step-by-step guide to buying property in Canada and shows that its not as complicated as it is in the UK
The house-buying process in Canada is far easier than in the UK and the whole buying process can be completed within three weeks if required. However, there are different processes and procedures involved with which you should be familiar.
Here is a quick guide to the basic steps to buying a house in Canada.
1. Money and mortgage
Firstly, you will need to be pre-approved for a mortgage. This will tell you big a much mortgage you can afford and what your monthly payments would be. A bank or mortgage broker will need to know how much money you have, your income and your debt basically, your net worth. Most people who emigrate do not have any debt, but they do need to ascertain how much they can afford.
2. Type of Home
If you are new to buying Canadian property you will need to see a variety so that you can get a feel of what you like and dislike Canadian houses can differ quite a lot from UK buildings. Consider carefully the type of features you want in your next home and the reasons you want them. Use it as your search guide but remember that depending on your funding you may well need to make some compromises. Location is a huge part of any move so you need to research the different communities. When you start visiting homes you need a registered realtor to assist you. Any realtor will work with you and can show you any property listed publicly for sale. They will arrange visits in your target area and price range. You do not pay the realtor to help you. The seller pays the buyer's realtor to bring a buyer to the house and to write the offer. The role of the realtor is to assist you to buy a house and get the best possible house or deal for you. They will ask the selling realtor about the house and you may never meet the sellers. It is important to choose a realtor you are comfortable working with as they are going to assist you in buying the most expensive and important purchase you will make in Canada.
3. Making an Offer
Once you find the home you want, you need to make an offer for the house. The offer is always a written offer and your realtor will help you write it. They will give you information about current market trends and other similar houses that have sold in the area so that you can make an informed decision on what price to offer. Your offer usually contains certain conditions, such as financing and home inspection, and these conditions have to be removed or waived by an agreed date. Your realtor will then present the offer to either the seller or seller's realtor. A time is put on the offer for the sellers to make a decision and they can either accept it, make a counter-offer or reject it. If the seller accepts your offer the deal is concluded. If they make a counter-offer, asking for a higher price or different terms, then it is returned to you and you can then counter-offer again; this can go on for several hours or days. Eventually a price is agreed and the deal is concluded. When you write an offer it includes a deposit. This is part of your down-payment and is a sign of goodwill between you and the seller. The amount of deposit varies depending on the circumstances, price and local custom. It could be as low as CDN$2,000, or up to 5 per cent of the purchase price. In some cases especially with British expats it can be a small deposit of around CDN$1000 but with an additional deposit of CDN$10,000 offered when the conditions have been removed and the sale finalised (this gives the buyer a chance to transfer the money over from their UK account).
4. An accepted offer
After the offer is accepted there is a period of between seven and ten days in which to complete the home inspection and finalise financing. I would always recommend a home inspection be completed by a professional inspector. The home inspector's role is to inform you on the property's condition. He will tell you if something is not functioning properly, needs to be changed or is unsafe. You will also be informed of any repairs that need to be undertaken and the inspector may even be able to tell you where there have been problems with the property in the past. The cost for an inspection can be up to CDN$400. If there are major problems in the house, then as the conditions still apply you can pull out of the house purchase or renegotiate on the price. You will also have to be in touch with your mortgage broker or bank to confirm the financing. An appraisal may be needed which may incur bank charges of up to CDN$400. During this time no one else can look at the house and it is not advertised for sale. Once the conditions have been met the contract becomes final, and if you were to change your mind at this stage you would lose your deposit.
5. Other costs
There are other costs which you need to bear in mind. Lawyer fees will run to approximately CDN$600 to CDN$700 and you will also be charged to register the land at the Land Titles office, plus you must reimburse the vendor any pre-paid property taxes or utility bills.
I usually recommend allowing at least CDN$1,000 for legal costs, title insurance and other costs. Your lawyer will need to see the house insurance and will have all mortgage papers for you to sign.
6. Closing Day
A few days before closing day you must go to the lawyer and provide the balance of the purchase price along with the closing costs. The lawyer pays the seller, registers the home in your name and provides you with a title or deed. Your realtor will give you the keys to your new home on his permission and you take legal possession and finally get to call your new house your own.
Helen Parnell offers relocation, settlement and real estate services. Visit her website Moving2Alberta.
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