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Buying Process

Before you can go house hunting, there are some important steps you need to take! The first part of the Buying Process involves finding your ideal home and the second part of process involves the legal steps. Enjoy!

Knowing how much you can afford directly influences the location and the type of property you can purchase.

The first step is to meet with your bank (or mortgage broker) so you know exactly how much your lender will advance for the mortgage. This pre-approval process saves you time and effort before an offer is presented! Your lender will provide written confirmation of securing a fixed interest rate for 60 days or more. If you are a first time home buyer, it’s a good idea to ask your lender about using RRSP’s towards your down payment.

It’s always a good idea to keep a list of professionals in mind. You’ll need a lawyer to prepare the legal documents, and there are other professionals that you should consider using such as a home inspector.

Now that you’re ready to purchase a home and you know your budget, it’s time to begin searching for properties:

  • Do you know which neighbourhood you would like to live in?
  • What type of property are you looking for?
  • Are you looking for a property to own or use as an investment?
  • Are you looking to purchase a condo in a specific building?
  • These are just a few of the questions that I would ask you to help you find your ideal home. The trick is to start with a broad search and then narrow your search to the top 3 to 5 homes.

Once you start looking, it won’t take long until you know exactly what you are looking for.

Once we have found your ideal home, the next step of the process is to prepare an offer:

Market Value – What should you pay for the property? I will provide you with a full market analysis of the surrounding area and/or building activity.  This will give you a relative estimate of the current market value but improvements or features such as new flooring, additions or renovations will add value to the home. For example, in the downtown area, a unit with a parking stall(s) and additional storage/locker will most likely attain a higher purchase price than a similar unit on a higher floor that doesn’t have parking or additional storage space. I will advise you on the best strategies to proceed.

Presentation – I prepare a Contract of Purchase and Sale and negotiate the terms with the Seller on your behalf. It’s my duty to negotiate the best price for you and set the best possible closing dates. I’ll recommend and specific subject clauses. The clauses are written in your benefit so that you have time to do a property inspection, finalize your financing and review all the documents.

There are 2 basic stages to an offer – Acceptance and Subject Removal:

Acceptance – Both you and the Seller have agreed to the terms set in the Contract of Purchase and Sale. Congratulations! What happens next? You need to remove Subjects!

Subject Removal – Now is the time for due diligence. Remember the list of professionals that you prepared earlier?  Now is the time to review documents, contact your lender or mortgage broker to finalize mortgage details, hire a home inspector or other professionals. I will read all the necessary documents, double check facts such as the lot size, zoning, etc. and give you my feedback. Only when you are satisfied with the home, I will prepare a form to remove subjects.

This is the last stage before you officially own your home! There are a number of documents and further information that the lawyer needs to complete the purchase.

Don’t worry!  I prepare, obtain and send all the documents and information well before your appointment. You officially own your home once the funds are transferred to Seller and the Title of the property is transferred to you.

Expect to hear from me every ­3 months. It is my intention that you love your new home for many years to come.

Buying a home is a personal choice that meets all or most of your criteria. My job is to ensure the buying process is smooth and enjoyable!

If you believe what I offer will benefit you and your needs, please give me a call or send me a confidential message.

A Few Other Notes:

On Dec. 11, 2015, the new Liberal gov’t introduced a new rule regarding down payments:

    1. Effective February 16, 2016, the miniumum down payment of a property priced $500,000 (to $1-million) must be 10%.

Previously, CMHC (Canada Mortgage & Housing Corporation) required a minimum down payment of 5% to qualify for mortgage insurance. Now, the down payment of any property that’s priced at $500,000 to a maximum of $1-million must be at least 10% to qualify for mortgage insurance.

If the property is priced below $500,000, the new requirement does not apply.

2 Examples:
1. Property Purchase Price $475,000; minimum down payment = $23,750 (5% x $475,000). No changes here.

2. Property Purchase Price $800,000; minimum down payment today =$55,000 (5% x $500,000 + 10% x $300,000) vs. OLD minimum down payment of 5% = $40,000 (5% x $800,000).

The 2nd example shows how the new requirement can affect the minimum down payment. You’ll now be required to pay an additional $15,000 for a property priced at $800,000.

On July 9, 2012, the federal gov’t introduced these 4 mortgage regulations:

    1. The maximum amortization of mortgages has been reduced from 30 years to 25 years.
    2. Properties can only be refinanced to maximum of 80% of the value of a property (previously 85%).
    3. High-ratio mortgage insurance (downpayment of less than 20%) will no longer be offered on properties valued at over $1 million.
    4. The maximum GDS (gross debt service ratio) will be limited to 39% and the TDS (total debt service ratio) will remain at 44%.

The initial reaction of most mortgage industry insiders has been a fair amount of panic. ie. they believe that the rules will generate a house-price correction that we all want to avoid. In the short-term, yes, there will be some adjustments needed but these new changes were put in place to help prevent credit and housing bubbles while keeping interest rates at stimulative levels.

On January 18, 2011, the federal gov’t introduced these 3 mortgage regulations:

    1. Amortization on insured mortgages over 80% is reduced from 35 to 30 years.
    2. The limit on insured refinances is reduced from 90% to 85% LTV (loan to value).
    3. Lines of Credit (HELOCs or Home Equity Lines of Credit) are no longer insured by the government.

The new changes to mortgages are effective as of March 18, 2011 and the withdrawal of government insured HELOCs will come into force on April 18, 2011. Combined with the Bank of Canada’s decision to hold the key rate at 1 per cent, the new regulations give the BoC more flexibility to leave the rates as is for the short term.

Did you know? There are new mortgage rules in place as of April 19, 2010:

    1. All borrowers must meet the standards for a 5 year fixed rate mortgage.
    2. Mortgage refinancing will be limited to 90% of the value of the property (previously 95%).
    3. Investors are required to pay 20% down payment (previously 5%) for government backed mortgage insurance on non-owner occupied properties.