8 Things to Know When Buying a House in Canada

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Buying a house is not only one of the most expensive purchases you will ever make, but it’s also a really exciting life event. I wrote an article a while ago on my experience with buying and selling two houses in 3 years (spoiler alert: I hated everything about it). With that in mind, I’m sharing a few lessons that I learned to help you through the whole process.

They are not in chronological order; I went with the flow, while binge-watching Forensic Files.

NOTE: while some things are similar in the United States, I only know about the market in Canada!

The (COVID19) elephant in the room

We are living in an unprecedented period with the global pandemic. The first thing you should do is contact your realtor to learn what are their policies regarding visits and the COVID-19. Depending on the region and the social distancing rules, you may only be able to visit virtually.

Down payment

Once you start looking for a house, you must first have a down payment of at least 5% of the total amount of your house. It sucks when you don’t have any money set aside, I know. Knowing how much you afford for a mortgage will help you determine how much this represent.

In Canada, if your down payment is less than 20%, you also need to pay the Canada Mortgage and Housing Corporation (CMHC).

Get preapproved for a mortgage

Before starting the buying process, stop at the bank or at a mortgage brokerage to get preapproved. This will give you an idea of how much you can afford.

Being preapproved for a mortgage could also help you if there are more than one offer on the house you want to buy. If you can prove right away that a bank approved your mortgage, you have more chances to get the house.

Mortgage insurance

The bank or the mortgage broker will tell you that you must get insurance on your loan, and they will sell you their insurance (and add it to your mortgage).

You should know that if you already have a life insurance policy with the minimum amount of the cost of your house, you don’t need the mortgage insurance. Before turning down this mortgage insurance, check with your life insurance company.

Save money for the notary or lawyer

You must go to the notary to officially purchase your new home. It’s expensive. The buyer is usually in charge of the notary fees. Make sure to set aside a certain amount for that.

Realtor commission

The seller usually pays for the real estate agents’ commission (for the buyer’s realtor AND the seller’s). However, review your real estate agent contract to avoid any bad surprises!

List your needs for your new home

Before you start visiting, make a list of what you want in your new house.

• Are you a growing family that needs more bedrooms?
• Or maybe a professional working from home who needs a home office in a closed room?
• Do you want a basement? A huge kitchen? A fireplace? A pool? A big backyard?
• Do you want to live in a specific region or a specific neighborhood?
• A farmhouse? A townhouse? A condo? A single-family house?
• Do you want a brand new house or a fixer-upper?
• The washer and dryer on the main floor?
• 3 bathrooms?

By writing a list of what you want, your realtor will be able to make you visit houses that suit your specific needs.

Visiting houses

Visit more than one house. It’s okay if you end up buying the first house you visited; love at first sight happens with houses too! However, visiting more than one place will at least give you the peace of mind of knowing you made the right choice, and you will know that your decision was not on a sudden impulse.

To get an idea of what’s on the house market, I strongly suggest that you check out Centris in Canada or Zillow in the US before starting visiting.

Check out the heating system and fireplace

If there’s a fireplace in the house, you should have it inspected by professionals to make sure it complies with local by-laws, and that it’s safe for use. Also, make sure the heating system works well and that it’s approved by the Building Code (the old knob-and-tube wiring is definitely not safe).

Another important point: check if the hot water tank is on location or not, and how old it is. You might need to change it if it’s over 15 years old.

Always get an inspection before buying a house

After making an offer on a house, have it inspected. If you don’t have it inspected before you buy it, you might not be able to sue the previous owners in case of a major problem. You really want to know if there is mold in your potential house and when the windows were changed.

Even if there is a lot of renovations to do, whether they are major or minor renovations, the inspection report will be a nice guide to refer to when you start working on your house.

Don’t forget the land transfer taxes

Once you bought a house, after a few weeks, you will have to pay for land transfer taxes. Make sure to set aside money for it because it’s surprisingly expensive!

If you want to have a general idea of how much this will be, check out the Land Transfer Tax calculator on RateHub!

And all of the other expenses

Don’t forget about property taxes, school taxes, renovations, home insurance, a will to protect your partner and your kids. You might also need to buy important homeowner stuff, such as a lawnmower or a snowblower!

I hope this will give you a general idea of the process of buying a house. It can get stressful but try to enjoy the search for your new home as much as possible.

Are you looking to sell your house? Make sure to read my post about the 8 things you need to know about selling a house.