Buying Your First Home in Canada: A Checklist

July 1, 2021

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Those who are new to Canada often look at buying their first home here as a way of putting down real roots in the country. Owning your home gives you a sense of permanency that will make you truly feel like you’re part of the country.

Of course, the entire process can be more than a little overwhelming. 

To feel confident about taking that first step, it’s important to understand what the process is all about. Most newcomers will rent a home for a while as they get settled, but by following these steps, you’ll get closer to buying your first home.

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Learn About the Costs of Homeownership

The costs of owning a home in Canada may be different than the costs in other countries, especially when it comes to some of the costs of owning a home, like utilities and taxes.

First, you have to consider your monthly mortgage payment. This is the money that you have to pay back to the bank including money towards the principal balance and money toward the interest. The monthly payment will also include some money toward property taxes and homeowners’ insurance.

Homeowners in Canada also regularly pay for utilities like gas and electric, sewage and garbage removal, and water. And while not technically required, most Canadians also pay for phone services (cell phone, landline, or both), internet, and cable television.

It’s also important to note that Canada’s climate means snow and low temperatures in the winter (at least for most of the country!), which also leads to a higher heating bill. Some people choose to pay a company to remove snow, while others do it themselves. Some also choose to have someone else do landscaping and yard work, though others enjoy yardwork. If you prefer to hire out these household tasks, the little costs can all add up.

If budget is a big concern, you can find ways to minimize these expenses, but it’s important to know about them as you get started.

Buying Your First Home in Canada: A Checklist Mortgage Application Image

Talk to a Mortgage Broker and Get Pre-Approved

A mortgage is a loan that you take out to pay for a home. It’s smart to meet with a mortgage broker to go over your options.

For instance, decisions about mortgages are typically based on a combination of credit history and salary, along with job history. As a newcomer to Canada, you will not yet have a Canadian credit score, and you won’t have a long job history within the country. This may mean that the lender requires you to make a higher down payment, or you may need to wait until you’ve built up some Canadian credit. 

Related article: Credit Scores Explained: What Is A Good Credit Score in Canada?

During the mortgage pre-approval process, the bank looks at all of your financial information. They will then tell you how much you’ll be allowed to borrow and how much interest you’ll pay on that money.

Save Up Your Down Payment

The mortgage lender should have told you how much of a down payment you will need. Canadians typically need at least five percent of the cost of the home, but as we just mentioned, new immigrants may need more.

We suggest having at least 20 percent for the down payment on a home. For instance, if you want to buy a $300,000 house, you’ll need to have at least $60,000 saved. Since it can take a long time to save up this money, you’ll want to get started as soon as possible.

Keep in mind that if your down payment is less than 20% you will also need to factor mortgage insurance into your payments. 

Make Sure You Know Your Budget

With the mortgage pre-approval, you’ll know how much the bank will lend you, but you should also think about whether that amount of money makes sense for you

Simply because you can get a mortgage for $500,000 doesn’t mean you need to purchase a $500K home! Look at what you and your family need, and go from there. It doesn’t make sense to purchase at the top of end of your budget if you don’t need it.

Once you know how much you’re willing and able to spend, you have a great starting point for shopping for your home.

Buying Your First Home in Canada: A Checklist Exterior Home Image

Research All Your Home Options

Think about the type of home you want. The first thing people usually think about is whether or not they want a resale (used) home or whether they want something brand-new.

Resale homes typically have a lower price point, but they need repairs or renovations and don’t come with a new home warranty. A brand-new home can be more expensive initially, but it has a lower price point when you factor in the cost of repairs. Immigrants may especially prefer the hassle-free lifestyle that comes with a new home.

You should also think about how much space and privacy you need, especially in connection with your budget. A good rule of thumb is the smaller the home, the lower the price. Some home styles – condos, townhomes, and duplexes – are connected to other homes and have a lower price. Large, separate homes are higher in cost and offer more privacy. You have to balance what’s right for you.

Buy the Home That’s Right for You

Now that you know all of this and have your down payment saved up, you’re ready to start shopping for your home. Look carefully at all of your options, then select the option that has everything you need.

Still have some questions about buying your first home in Canada? Our Area Managers can help put you on the right track. Come out to speak to someone today.

Related article: Title Insurance in Alberta: Everything You Need to Know

Click here to download Everything You Need to Know About Buying Your First Home in Canada now

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