Would you like to become an owner, but wondering where to start in order to carry out your project? This article summarizes in five minutes of reading all the steps to take to access the property you want.
- Assess your borrowing capacity
Estimate how much your financial institution could give you to buy your property. By analyzing your financial statement, your advisor can help you assess your borrowing capacity. You can also do this using an online calculator.
- Determine your down payment
Evaluate the initial amount that you will deposit when granting the loan.
Why make a down payment?
The down payment decreases the amount of your loan and, by the same token, reduces the interest payable when making your payments. It is important to assess your needs and your budget before determining the amount of your down payment.
How much do you have?
Do you have at least 20% of the purchase price? If you make a down payment of 20% or more of the purchase price of your property, you may be eligible for a conventional loan and avoid the costs associated with mortgage loan insurance.
Twenty per cent of the purchase price seems out of reach? When mortgage financing represents more than 80% of the value of the property, banks are required by law to purchase mortgage loan insurance from the Canada Mortgage and Housing Corporation (CMHC) or Glenworth Canada. In this case, a mortgage insurance premium is payable1, and this can be added to the sum of the financing. The smaller the down payment, the higher the premium.
How to raise your funds?
Your funds could come from your cash, investments, donation, and inheritance or even you’re RRSP.
Have you considered the Home Buyers’ Plan 2 (HBP)? The HBP is a federal government program designed to facilitate household access to the property. If you have registered investments (RRSPs), you could benefit from the HBP by withdrawing up to $ 35,000 from your RRSP and using it as a down payment for your property.
Your withdrawal is not taxable.
You start to repay the amount withdrawn from your RRSPs from the 2nd year following your withdrawal.
You have 15 years to reimburse the full amount of your withdrawal.
You don’t have $ 35,000 in your RRSP, but you want to take advantage of the HBP to the full? An RRSP loan could help you, talk to your advisor.
- Anticipate additional costs
Certain additional expenses related to the purchase of a house are to be expected. Among these, here are a few that are worth considering:
- Apply for a mortgage pre-authorization
To increase your bargaining power and give your offer to lend credibility, apply for a mortgage pre-authorization online or from your advisor before you start looking for your property. This will allow you to establish your borrowing capacity, to certify the amount of mortgage you can take – a price range of accessible properties will be defined to better frame your approach – and even to guarantee the proposed interest rate. by the bank for 90 days.
- Find your property
You can start your research! What type of accommodation will you choose? Will you live in town or in the countryside? Will you buy a new house or an existing house? Here are some important questions to answer.
You can do your own research or hire a real estate agent who can help you find an existing home. If you buy a new house, you will have to deal directly with Zoom Property (or with its sellers).
- Make your offer to purchase
The offer to purchase is a document gathering all the information necessary for the conclusion of the sale agreement. Your real estate agent, your notary * or your lawyer will take care of drafting it. The document will gather, among other things, the following information:
You may have to adjust your offer after a counteroffer from the seller, i.e. review your conditions so that both parties are satisfied.
- Get your mortgage
Here are the main steps to apply for a mortgage. During your first meeting with your advisor, he will explain each of these steps in more detail and will support you throughout your home buying process.