Step One – Knowing What You Can Afford
Understanding what you can afford is an important first step in any property purchase. Our affordability calculator will help you determine what is in your scope based on a series of factors including income, down payment, taxes, regulations and a host of other items that are part of every real estate purchase.
If the calculator doesn’t provide you with enough information, we’re available to help you determine what is possible. Our experienced team can conduct a thorough assessment and ensure your information is accurate according to current Canadian Mortgage Guidelines, which you can then use to apply online.
When you apply online, you’ll receive an immediate response that includes a list of required documents based on your profile. Once everything is submitted, our team will speak with you directly about your mortgage possibilities and how much you can afford – a process known as “pre-approval”.
Step Two – Understanding Mortgage Rates
Mortgage rates are not one size fits all, so it’s important to understand what suits you and your goals best. As experienced mortgage brokers, we know it can seem like a lot to learn in a small amount of time – which is why we’re here to help.
We’ll work with you to answer the questions that many people have, like the difference between open, closed, fixed and variable mortgages, how rates are determined, how mortgage penalties work, what restricted rates are and how all rates are determined.
This part of the discussion can be somewhat intimidating for first-time buyers, especially with so much competition clouding the conversation and vying for your business. We’re not here to convince you to go with us or that you should spend more than you have. We are simply here to act as a guide to help you understand the complexities of the mortgage market and find a solution that best suits you.
Step Three – Time to Buy
As with all parts of the process, finding a knowledgeable realtor that you trust is important. Too often we see people using a realtor simply because of a personal connection and while sometimes that works out, it can also present challenges.
No matter your connection to a realtor, always ask for trusted referrals. Due diligence is important, as buying a home may be the single largest transaction of your life. Don’t be afraid to challenge your realtor and ask hard questions. At the end of the day, they work for you.
When you choose the right realtor and are ready to make an offer, be sure that you are protected through proper processes. This can include but is not limited to, having approved financing, ensuring any strata documents have been reviewed, the home has been appraised accurately and a third-party inspection has been completed.
All of this is important as at this stage your realtor will send us the required paperwork to initiate the formal mortgage approval process.
If all your ducks are in a row, everything should go smoothly and you could be signing that day.
Pro-Tip: Be Cautious Subject Free Offers
We don’t want to frighten you or get you off track, but if you do want to learn more about it, we suggest reading this article on our blog to educate yourself of the pros and cons. Being well-informed will help you make decisions that fit you best.
The final part of the purchasing process is for our team to review the mortgage structure and rates to ensure everything is still aligned. We then submit to the lender and secure your financing.
Once approved, and we’re happy with all the terms, we’ll advise you that the financing condition can be satisfied, after which you can safely provide your non-refundable deposit to be held in Trust. You receive the Mortgage Commitment paperwork to review and sign and – boom – you’ve just bought your first home (something we call a firm sale).
Step Four – Completion: Taking Possession of Your First Property
The big moment. You get to take possession of your first property. It’s something to feel proud about, although we know for some people it can be bittersweet knowing that you now have a mortgage.
(It behooves us to point out that technically possession and completion are not actually the same thing. Possession means you can move into your home, while completion means money has changed hands.)
Completing the sale is a legal process that works differently in different provinces. Your Notary (in BC) or Lawyer (in AB, ON, BC) will arrange to have you sign all the real estate documents, typically a week prior to possession. You’ll provide a bank draft for the remainder of your down payment, as well as other important documentation such as property insurance.
Pro-Tip: Start Your Paperwork Early
We suggest starting on the paperwork process right after your mortgage is approved, as it can take some time and must be in place before a lender will advance the mortgage funds. Different properties have different insurance requirements – something that a trusted expert in the field can help you with.
Costs for a First Time Buyer
The biggest closing cost any prospective homebuyer will encounter is Property Transfer Tax / Land Transfer Tax. You, the first time home buyer, are exempt from this tax if you meet the qualifying criteria and price point.
Please refer to our transfer tax calculator to determine how much tax you will or won’t pay.
In BC, you have the option to use a notary or lawyer, whereas in AB and ON you must use a lawyer. The cost will range from $850 to $1,500.
Property inspections will help you identify potential issues that you would otherwise be unknown. They can run you anywhere from $300 to $800 and will give you peace of mind. Additionally, it may give you a reason to re-negotiate on price if there are defects requiring remediation.
Generally, the appraisal will be covered. If for some reason it’s not, it will cost $250 to $400, although ultimately it will depend on the structure of your deal. The majority of insured mortgages (less than 20% down payment), will not require one. Conversely, conventional mortgages (greater or equal to 20% down payment) generally do. The latter will be covered if the mortgage is large enough to absorb the cost.
New Home Purchases – Is the Process Different?
New home purchase are subject to Government Sales Tax, depending on the province.
No GST is payable on residential resale or ”used” properties which are the bulk of what you’ll find on the MLS real estate site. We’ll help you calculate the net price when we’re working on your deal so it doesn’t come as a surprise. Otherwise, the process is virtually identical. You may or may not have a realtor representing you, but that’s for you to decide.
How Pre-Sales Qualification Works
These can be tricky. Mortgage commitments and rates are only good for 120 days. Basically, we can qualify you at a point in time based on your current employment and credit situation, but if your circumstances change prior to completion you may not qualify when the moment arrives. Additionally, the government and regulatory bodies in the Canadian mortgage industry constantly change underwriting guidelines and rules. If they change in such a way that your specific deal is impacted, you may be out of luck. That’s the risk of pre-sales.
So, at the end of the day if you’re interested in purchasing a pre-sale, we’re happy to ensure you qualify up front, but can only lock in your rate and official approval when the time permits.