Navigating the real estate market as a buyer in Canada, especially in southern Ontario, can be both an exhilarating and daunting experience. Whether you’re a first-time buyer or looking to upgrade, these 10 essential tips will guide you to making a sound investment decision.
1. Take Advantage of these Benefits of Buying a Newly-Built, Custom Home
When choosing a family home, instead of looking for one that closely resembles what you’re looking for and figuring out how to turn it into your dream home, consider a newly built, custom home and get a fresh start in a home and a neighbourhood you actually want to live in. Your family’s quality of life will dramatically improve thanks in no small part to the following benefits of a custom-built home.
Tailored to Your Preferences
A newly built home is a blank canvas. Whether you’ve always dreamed of a chef-inspired kitchen with a central island or a sunroom to soak in the morning light, every aspect of its style and layout is built specifically to your aesthetic and lifestyle needs.
Modern building standards in Canada emphasize sustainable construction. Newly-built homes often feature the latest energy-saving appliances, windows, and insulation. Over time, these can lead to significant savings on heating and cooling costs.
There’s a peace of mind that comes with new roofs, brand-new plumbing, and cutting-edge electrical systems. If you partner with a builder like Blythwood Homes, who has the passion, experience, and talent to provide quality construction, the need for near-term repairs or upgrades is practically non-existent, giving you more time to simply enjoy your new space.
New homes often come with smart home features – from lights, shades and thermostats you can control with your smartphone to in-built sound systems. These amenities not only offer convenience but are also typically more energy-efficient.
Healthier Living Environment
New homes are constructed with modern materials that are often less- or non-toxic. With better ventilation systems, tighter seals, and fewer-to-zero volatile organic compounds (VOCs) in paints and finishes, indoor air quality is typically superior in a newly built home. Also, with a custom home, you can design it while considering safety in your home.
Better Resale Value
Generally speaking, with all other factors being equal, a more recently built home with newer appliances and amenities can fetch a higher selling price than a used home if/when you decide to sell.
2. Know Your Budget
Determine what you can comfortably afford. Start by listing all your monthly expenses, excluding rent, and then subtract this from your monthly pre-tax (gross) income. What’s left can give an indication of your potential mortgage capability.
Ideally, only 32% of your gross income should be used for housing [known as a gross debt-to-income or gross debt service (GDS) ratio], and the total of your debts shouldn’t be more than 40% of your gross income [known as your total debt-to-income or total debt service (TDS) ratio.]
The Canada Mortgage and Housing Corporation (CMHC) will only insure a mortgage if your GDS and TDS are no more than 39 and 44%, respectively. Mortgage insurance is mandatory if you’re paying less than 20% of the purchase price as a down payment. It is also often required for first-time homebuyers and higher-risk borrowers.
Also keep in mind that you will have:
- Upfront Costs: Beyond the mortgage, consider property taxes, insurance, and maintenance fees.
- Closing Costs: Typically, around 4% of the purchase price goes towards closing costs. Factor this into your final budget.
3. Research the Neighborhood
Your home’s location impacts your daily life and future property value. When researching a potential neighbourhood, consider the following:
Spend some time in the area during the day and at night to know what a typical day in your neighbourhood is like. Be sure to visit local parks, cafes, and community centres to gauge the area’s atmosphere.
Online databases or local police stations can provide insights into a neighbourhood’s safety. Many municipal police services provide “crime maps” on their websites that show you the number and types of crimes that were committed in a specific neighbourhood.
Look into any proposed developments in the area. For instance, plans for new parks, shopping centers, or transit lines can significantly boost property values. The municipality’s website will often highlight future projects; if not, its town planning offices can inform you of any planned developments.
4. Partner With a Real Estate Agent
Having a skilled, seasoned real estate agent by your side during what is likely to be your most important purchase can be invaluable. These are some of the benefits:
- Their Vast Network. Your ideal home might not be publicly listed yet. Agents often get wind of new properties before they hit popular listing sites like REALTOR.ca (formerly MLS.) This inside information can put you ahead of other potential buyers.
- Skilled Negotiation. An experienced agent knows the ins and outs of the market and can expertly negotiate on your behalf. Whether it’s getting repairs done before the move or shaving off a few thousand from the asking price, their expertise can save you money.
- Navigating Paperwork. The homebuying process involves a lot of paperwork. From offers and counter-offers to tax forms and property disclosures, your agent will ensure every ‘i’ is dotted and ‘t’ crossed.
- Localized Knowledge. Local agents bring a depth of knowledge about the neighbourhoods you’re considering. They can provide insights on school districts, future development plans, property tax fluctuations, and more. This information is instrumental in making a well-informed decision.
5. Get Pre-Approved for a Mortgage
Securing a mortgage pre-approval should be one of your first steps in the homebuying journey. Here’s why:
- Interest Rates. A pre-approval can come with a locked-in interest rate for a certain period, usually 60 to 120 days. This means if rates climb in the following months, you will be guaranteed the rate you were pre-approved at. That confirmation is crucial, given that interest rates often fluctuate.
- Confidence in Your Search. Knowing how much a lender is willing to offer gives clarity. You’ll filter out homes beyond your budget, focusing on properties you can genuinely afford. This not only streamlines the search process but also prevents the heartbreak of falling in love with a home that’s out of reach.
- Faster Purchase Process. With a pre-approval in hand, you can act quickly when you find the right home. Since you already have the lender’s commitment, the financing step in the homebuying process becomes considerably faster, which is necessary in southern Ontario’s competitive markets.
6. Consider Resale Value
Even if you assume you’re purchasing your forever home, it’s prudent to consider its future resale value. Here’s what to keep in mind:
Classic Over Trendy
While trendy design elements are attractive, homes with classic architectural elements tend to have a more enduring appeal. For instance, a home with a timeless brick facade might fare better in the resale market compared to one with a trendy stucco exterior.
Land, unlike certain structures, usually appreciates over time. When considering properties, assess the value of the land itself. What is the lot size? Is it in a developing area? Does it have unique features like waterfront or park access? These can significantly influence future valuations.
Versatile Floor Plans
Homes with adaptable floor plans and spaces that can easily be converted to accommodate different uses cater to a broader audience.
7. Home Inspection is Crucial
Underneath a fresh coat of paint or the beautifully staged furniture could lie potential issues such as faulty wiring or foundational cracks. A professional inspector can identify problems that aren’t immediately visible but can lead to significant expenses in the future. Also, knowing the lifespan of essential components like the roof, HVAC system, or water heater can help you anticipate and budget for future replacements or repairs.
Furthermore, a detailed inspection report can be instrumental during the negotiation phase. If certain repairs are needed, you can either request the seller address them or ask for a reduced price to accommodate the fixes.
8. Think Long-Term
While immediate needs are vital, your new home should also cater to prospective life changes by offering:
- Expansion Possibilities. If your family might grow, or if you might take in aging parents, does the property allow for additions or renovations? Could the basement be turned into a separate living space?
- Location Longevity. A bustling city center might be great now, but would it be ideal for raising children? Conversely, a quiet suburb might feel isolating if you’re used to urban amenities.
- Elderly-Friendly Features. If you plan on aging in place, consider factors like ground-floor bathrooms, minimal stairs, and wider doorways. These are also some of the features to look for in a home if you’re buying because it’s time to downsize.
9. Understand the Market
The Canadian real estate market experiences fluctuations throughout the year. Spring usually sees a surge in listings, while the fewer winter listings tend to represent motivated sellers aiming to close deals before year-end.
10. Read the Fine Print
Real estate transactions involve intricate contracts. It’s imperative to understand key aspects of an Agreement of Purchase and Sale, such as:
- Cooling-Off Period. Several Canadian provinces have a stipulated period where buyers can rescind their offer without penalties. Familiarize yourself with these regulations, especially if you’re having second thoughts.
- Inclusions and Exclusions. From appliances to light fixtures, the contract should clearly detail what stays with the house and what the sellers intend to take.
- Conditions and Contingencies. Whether related to financing, inspections, or the sale of your existing property, any conditions that could alter or nullify the deal should be transparently laid out.
Buying a home in Canada is a significant investment. By researching, planning, and seeking expert advice, you can navigate the market confidently. Remember, a well-informed decision today leads to a happier home tomorrow!