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The Buying Process
The Buying Process

Starting Your Search
Here are some ways to begin looking for your new home:

  • Word-of-mouth
    Tell everyone that you are looking for a new home. Sometimes, surprising things happen. For example, you might hear about a home that is just becoming available on the market.
  • Newspapers and real estate magazines
    Check the new homes section in daily newspapers. Also you may look for free real estate magazines available at newsstands, convenience stores and other outlets. All these publications are free and give pictures and short descriptions of homes for sale.
  • The Internet
    Visit real estate websites, such as realtor.ca. These websites give information and pictures of a wide range of properties and let you search by location, price, number of bedrooms, and other features.
  • "For Sale" signs
    Look for “For Sale” signs that interest you by driving, biking or walking around with your neighbourhood. This is a better way to find homes that are being sold by the owner instead of listed with an agent.
  • Visit new development sites
    You can see available models and get information from builders if you are looking for a newly built home.
  • Work with a realtor
    For most buyers, the key to finding the right home is a realtor.

Useful Tips for Your Search

  • Keep records
    Visit lots of homes before choosing a realtor or are looking by yourself. Some things to compare are the home's energy rating, utility costs, property taxes and major repairs. These will affect your monthly housing expenses. You can ask to see copies of utility and other bills. To make sure you get all the information you need to compare homes, use the CMHC Home Hunting Comparison Worksheet.
  • Check out the property's current financing
    It may be possible to take it over from the vendor if the existing mortgage on the home is favourable. It may even be possible to get a vendor take back mortgage, to help close the deal.
  • Think twice
    If a home seems perfect, look deeper. Go back and take a closer, more critical look at it. Also, better to visit it on different days and different times of the day. Chat with the neighbours. Don't be distracted by attractive surface details.
  • Energy Rating
    Some houses and most new homes in Canada have an Energy Rating that describes the energy efficiency of the home. Usually, an energy-rated home has a sticker with the rating on the electrical panel. The energy rating is on a 0 – 100 scale. The higher the rating, the more energy-efficient is the home, and the less it costs to operate.
  • CMHC statistics and analysis
    CMHC has the latest statistical information and analysis of housing trends. Information for local, provincial and national markets tracks by our Market Analysis Centre. 

Making an Offer to Purchase
You need to give the vendor an Offer to Purchase (sometimes we called it an Agreement of Purchase and Sale) after you have found the home you want to buy. On preparing your offer, it is very helpful to work with a realtor (and/or a lawyer/notary). The Offer to Purchase is a legal document and should be carefully prepared.
These items are typically included:

  • Names
    Your legal name, the name of the vendor and the legal civic address of the property.
  • Price
    The price you are offering to pay.
  • Things included
    Items that you think are included in the sale in or around the home should be specifically stated in your offer. Some examples might be window coverings and appliances.
  • Amount of your deposit
  • The closing day
    The date you take possession of the home is called the closing day. Usually 30 – 60 days after the date of agreement. But, it can be 90 days, or even longer.
  • Request for a current land survey of the property.
  • Date the offer expires
    It is no longer valid and the offer becomes null and void after this date— Date the offer expire.
  • Other conditions
    Satisfactory home inspection report, a property appraisal, and lender approval of mortgage financing are include in other conditions. This means that the contract will become final only when the conditions are met.

What Happens After You Make an Offer to Purchase?
Imagine that your realtor has helped you prepare an Offer to Purchase. All the details of the sale includes in this offer. To be extra cautious (since you know an Offer to Purchase is legally binding) ask your lawyer to look at it before showing it to the vendor. The realtor presents the offer to the vendor. What can you expect to happen next? There are three possible responses.

  • Response 1
    Your offer accepts by the vendor and the deal is concluded and you move on to the next steps in the buying process.
  • Response 2
    A counter-offer makes by the vendor. It might ask for a higher price, or different terms. You can also sign the offer back to the vendor, offering a higher price than your original offer, but lower than the vendor's counter-offer. The deal is concluded if the vendor accepts this counter-offer.
  • Response 3
    The vendor makes a counter-offer and will asking for a higher price or different terms. If a counter-offer is returned to you at a higher price, before you start negotiating, ensure that you know exactly how much you can afford. You don't want to get caught up in the heat of the moment with costs you can't afford. Because the price is still too high, you reject the counter-offer, or you can't agree to the conditions. The sale doesn't go through, and your deposit is returned.

Getting a Mortgage

Go to see your lender once your Offer to Purchase has been accepted. And your lender will verify (and update, if necessary) your financial information and put together what's needed to complete the mortgage application. Also, your lender may ask you to get a property appraisal, a land survey, or both. Getting title insurance may also be asked. The various types of mortgages, terms, interest rates, amortization periods and, payment schedules available will tell about by your lender.
Depending on your down payment, you may have a conventional mortgage or a high-ratio mortgage.

Types of Mortgages

Conventional Mortgage

A mortgage loan that is equal to, or less than, 80% of the lending value of the property is a conventional mortgage. The lending value is the property's purchase price or market value − whichever is less. In a conventional mortgage, the down payment is at least 20% of the purchase price or market value.

High-ratio Mortgage

You will typically need a high-ratio mortgage if your down payment is less than 20% of the home price. Mortgage loan insurance usually requires in a high-ratio mortgage. CMHC is a major provider of mortgage loan insurance. Your lender may add the mortgage loan insurance premium to your mortgage or ask you to pay it in full upon closing.

Mortgage Term

Your lender will help and tell you about the term options for the mortgage. The term is the length of time that the mortgage contract conditions, including interest rate, will be fixed. It can be from six months up to ten years. A longer term (for example, five years) lets you plan ahead. It also protects you from interest rate increases. So, you have to think carefully about the term that you want, and don't be afraid to ask your lender to figure out the differences between a one, two, five-year (or longer) term mortgage.

Mortgage Interest Rates

Mortgage interest rates are fixed, variable or adjustable.

Fixed Mortgage Interest Rate

A locked-in rate that will not increase for the term of the mortgage is called a fixed mortgage interest.

Variable Mortgage Interest Rate

variable rate fluctuates based on market conditions. The mortgage payment remains unchanged.

Adjustable Mortgage Interest Rate

Both the interest rate and the mortgage payment vary, based on market conditions.

Open or Closed Mortgage

Closed Mortgage

It can’t be paid off if it is closed mortgage, in whole or in part, before the end of its term. You must make only your monthly payments in a closed mortgage − you cannot pay more than the agreed payment. It is a good choice if you'd like to have a fixed monthly payment. With it you can carefully plan your monthly expenses. But, a closed mortgage is not flexible. There are often penalties, or restrictive conditions, if you want to pay an additional amount. If you decide to move before the end of the term, or if you want to benefit from a decrease of interest rates, a closed mortgage is not a good choice.

Open Mortgage

An open mortgage is flexible, means that you can usually pay off part of it, or the entire amount at any time without penalty. If you plan to sell your home in the near future, and you want to pay off a large sum of your mortgage loan, an open mortgage can be a good choice. Most lenders let you convert an open mortgage to a closed mortgage at any time, although you may have to pay a small fee.

Amortization

It is the length of time the entire mortgage debt will be repaid. Many mortgages are amortized over 25 years, but longer periods are available. The longer the amortization, the lower your scheduled mortgage payments, but the more interest you pay in the long run. You will have to renegotiate the mortgage four times (every five years), if the mortgage is amortized over 20 years.

Payment Schedule

A mortgage loan is repaid in regular payments − monthly, biweekly or weekly. By reducing the outstanding principal balance more quickly, more frequent payment schedules can save some interest costs. The more payments you make in a year, the lower the overall interest you have to pay on your mortgage.

New Home Warranty Programs

Each province has new home warranty programs.

British Columbia

See the Homeowner Protection Office at www.hpo.bc.ca for the most up-to-date list of warranty programs. These include:

Lombard Canada New Home Warranty Program: www.lombard.ca

Travelers Guarantee Company of Canada (formerly London Guarantee Insurance Company): www.travelersguarantee.com

National Warranty Program Ltd.: (includes Royal and Sun Alliance) www.nationalhomewarranty.com

Pacific Home Warranty Insurance Services Inc. (Echelon General Insurance Company):

www.pacificwarranty.com
Willis Canada Ltd (Commonwealth Insurance): www.williswarranty.com

Alberta

Progressive New Home Warranty Program (Echelon General Insurance Company):

www.progressivewarranty.com
National Home Warranty Program Ltd.:

www.nationalhomewarranty.com
New Home Warranty Program of Alberta:

www.anhwp.com
Blanket Home Warranty Ltd.: www.blankethomewarranty.ca

Saskatchewan

Progressive New Home Warranty Program (Echelon General Insurance Company): www.progressivewarranty.com
National Home Warranty Program Ltd.: www.nationalhomewarranty.com
New Home Warranty Program of Saskatchewan: www.nhwp.org
Blanket Home Warranty Ltd.: www.blankethomewarranty.ca

Manitoba

Progressive New Home Warranty Program (Echelon General Insurance Company): www.progressivewarranty.com
National Home Warranty Program Ltd.: www.nationalhomewarranty.com
New Home Warranty Program of Manitoba: www.mbnhwp.com
Blanket Home Warranty Ltd.: www.blankethomewarranty.ca

Ontario

Tarion Warranty Corporation: www.tarion.com

Quebec

Garantie des maisonsneuves de l 'APCHQ: www.gomaison.com
Garantie des maisonsneuves de l'ACQ: www.acq.org
La garantie des maîtres bâtisseur: www.maitresbatisseurs.com

New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador

Atlantic Home Warranty Program: www.ahwp.org
Lux Residential Warranty Program: www.luxrwp.com
Progressive New Home Warranty Program (Echelon General Insurance Co.): www.progressivewarranty.com

Closing Day

“Closing day” is the day when you finally take legal possession and get to call the house your home. The final signing usually happens at the lawyer or notary's office.
These are the things that happen on closing day:

  • The mortgage money will give to your lawyer/notary by your lender.
  • You must give the down payment (minus the deposit) to your lawyer/notary. You must also give the remaining closing costs.
  • Your lawyer/notary
    • Pays the vendor
    • Registers the home in your name
    • Gives you the deed and the keys to your new home

Moving

Hiring a Mover

Friends or relatives may be able to recommend a professional moving company when planning your move. Ask the mover for an estimate and outline of fees and don't forget to ask her or him for references. Ask them to come to your home once you've chosen a mover, to see what will be moved in case the estimate needs to be changed.

You'll want to ensure that your belongings are insured during the move. Your home or property insurance may cover goods in transit. You can call your broker or insurance company to be sure. Ask if you are fully covered. Many moving companies offer additional insurance coverage. Don’t forget that professional movers are not responsible for items such as jewelry, money, or important papers. Move these materials in good place to keep them safe.

If you decide to do your own packing, keep in mind that you will need the proper materials, and that packing can take up a lot of time.

Moving Day

On moving day, go through the house with the van supervisor and give him (or her) any special instructions. The condition of your goods on an inventory list will note by the supervisor. Go through the house with the supervisor to make sure the list is complete and accurate. Mark off the items on the mover's list as they are unloaded when the van arrives at your new home. If you paid for the movers to unpack boxes and remove packing materials, remember that they will not put dishes or linens into cupboards.

Moving day is almost always tiring. But, planning ahead will make the transition as smooth as possible.

Moving Costs

The amount you spend depends on your decisions about many things. Here are some to think about:

  • Do you want to hire professional movers?
  • If so, will it be a large company, or a smaller local moving company?
  • Will you need to buy insurance to protect your items in transit?
  • If you plan to move yourself, will you rent a vehicle?
  • Will your current auto or home insurance policy cover your items during the move?
  • Will you have to pay utility companies a fee to connect their services in your new home? Are there other utility charges (such as a deposit)?

Post-Closing Costs

Changing the Locks

You'll want to change the exterior door locks for security when you move into your new home. After all, you want only the people you choose to have the key to your new home. You can change the locks yourself, or call a locksmith to do the job.

Cleaning

At moving time, both your old home and your new home should be given a thorough cleaning. Whether you're buying cleaning supplies and doing it yourself, or hiring someone to clean for you, the costs can really add up. Make a plan for the expenses.

Decorating

You also might want to re-paint, replace some light fixtures, refinish the floor, re-carpet, or do any number of other re-decorating tasks. Carefully plan your budget, and consider postponing some projects for a period of time.

Appliances

You will have to buy new appliances when you move into your new home if your offer to purchase didn't include them, and if you don't have your own. Some appliances might have installation charges.

Tools and Equipment

You can no longer call the landlord to do repairs when you already got your own home. You'll need to own some basic hand tools and possibly some gardening and snow clearing equipment. And you can handle your own home by yourself.