Nothing beats the feeling of getting hold of the keys to your first Canadian home. Just walking through the first door and knowing is yours is satisfactory, and as time goes by, each room becomes filled with memories both good and bad.
Meanwhile, the process of getting your first home in a new country is quite stressful. The essence of this article is to assist you in understanding how to navigate the Canadian real estate market.
But we want to let you know that it is possible since thousands of Canadian residents have gone through it. Additionally, when it comes to homeownership rates, immigrants have recently surpassed their Canadian-born counterparts.
What part of Canada would you want to live in?
It is no longer news that Canada is a big country, and wherever you decide to live will have a great influence on the process of buying your home. For instance, the cost of a home is significantly cheaper in smaller cities and rural areas than in some of the larger cities in Canada.
As of the year 2018, the average cost of all types of homes in Canada was CAD $472,000, nevertheless, Toronto and Vancouver have a great impact on the figure because the cost of a home in these two big cities is higher than the average for the whole country.
This means that if you choose to live in any of these big cities you have to get yourself ready to pay the price, but if you if you’re willing to live outside the major cities, you will still be able to find a nice Canadian home at an affordable price. A lot of immigrants settle for cities where there are still big immigrant communities such as Winnipeg, Ottawa, and Edmonton, but the cost of housing is much lesser when compared to Toronto and Vancouver.
These two big cities house thriving industries and big communities, therefore, you have more chances of securing yourself a job and interacting with specific cultural communities.
In a situation whereby you can’t have access to these two big cities, you can as well settle for one of the neighboring cities. Most newcomers for example who would love to be close to Toronto can settle for Markham, Mississauga, or Hamilton because in as much they are close to Toronto, they offer better affordability as regards buying a home as well as big immigrant communities thereby giving you the opportunity to connect with other newcomers who’ve had a journey similar to yours.
Another thing that may have some level of influence on your choice of where to live is your place of employment or where your school is located that is if you migrated to Canada with a temporary status, on a work permit or study permit. Later, after being issued a permanent residence permit, some people may want additional space for themselves and their families.
Aside from whatever we write about, we will need you to take your time, discuss with your friends, your coworkers, your neighbors to get a glimpse of how they were able to buy their own homes.
Now that you have made up your mind on where you want to reside, the next step to take is to decide the type of home that is most suitable for your budget and your needs.
What is the kind of home you want to buy in Canada?
There are different types of homes in Canada, and each of them has its price.
Condo/Condominium: A condo is best described as a unit within a larger building, so, if you’re purchasing a condo, you don’t have to buy the whole building or the entire property. Condos are always the best available option in busy city centers.
Single/Detached: A detached home is best described as a structure situated on its property, and does not share any wall with neighboring properties. Once you buy it, you own both the land and the building. Records show that this is most costly type of housing in Canada.
Semi-Detached: It is similar to a detached home but the only difference is that it shares a wall with a neighboring home.
Townhouse: It is a home that is joined to other homes on both sides, and you can find them in most major cities
Duplex/Triplex: This is a single building that has been shared into several, different units. A lot of buyers prefer this type of home, because they can rent out the other units and by so doing, offset the cost of the property.
How much do you have to spend on housing alone?
Canada just like several countries uses a mortgage system to organize the buying of homes and properties. Before you proceed to buy a home, ensure that you understand these concepts.
All about mortgages in Canada for newcomers
What is obtainable in the mortgage system is that a home buyer will pay a down payment and then complete the payment for the home using a mortgage. A mortgage is defined as a financial loan from a lender, a bank in most cases, used to fund the buying of a home. Over some time, the home buyer repays the mortgage with an interest.
Below we will discuss the basics of mortgages.
The least possible down payment for a new home in Canada is 5% of the total cost of the home. Although, we will strongly advise that you make a larger down payment than this because if you can pay up to 20% and above, you do not have to worry about mortgage insurance.
You may not have the credit history as a newcomer to Canada that will enable banks and other lenders to approve a mortgage with only a small down payment, but if a newcomer can afford a higher down payment, usually around 35%, many banks, and lenders will be willing to offer mortgages for the newcomer.
Another alternative is to establish a credit history by waiting until you have worked in Canada for a couple of years, you can then apply for a mortgage via the regular channel, with a lesser required down payment.
For instance, if you wish to purchase a new condo in downtown Toronto, and the price of the condo is CAD $750,000. Here are the options available to you as long as your down payment is concerned:
- The first option – 5% down payment – $37,500
This option shows the least down payment percentage required in Canada. Once you can pay this amount, you will have a sizeable mortgage and be needed to pay for mortgage default insurance.
- The second option – 20% down payment – $150,000
If you can afford the down payment of 20%, it means that you have a good chance of being exempted from having to pay for mortgage default insurance.
- The third option – 35% down payment – $262,500
Newcomers are required to pay this down payment percentage by some banks to get a mortgage before they have established credit history in Canada.
We have lots of available mortgage lenders in the Canadian market.
Every Canadian major bank provides mortgage options for home buyers, this is why a lot of homebuyers decide to work with one of these financial institutions. Canada’s major banks as a result of their enviable presence and their credibility over time are a trustworthy option for mortgage lenders, though we have other mortgage lenders who can give you a good mortgage option.
One of your first questions for a lender when buying a home within your first two years in Canada should be whether you can qualify for a mortgage without established Canadian credit history or not.
Step-by-step guide on how to buy your new Canadian home as a newcomer
It may seem as though buying a new home is a daunting task, especially if you are new in the country. Sadly, this is true, nevertheless, if you adhere to these steps, you will be able to easily get started.
The first step is to know the amount of money you can afford to spend on a home in Canada
The first step to take is to commence by employing the use of the affordability calculator tool from the Canada Mortgage and Housing Corporation (CMHC) which is a corporation possessed by the Canadian government to help Canadians with the home buying process.
All you need to do is to put your financial information, and the CMHC will determine the highest amount you can afford to spend on a home.
The second step is to start searching for your new Canadian home
Once you have determined the amount of money you can spend, then you can start looking for a home!
Recently, you have to go online to find the majority of real estate listings, websites such as Realtor, Purple Brick, and Property Guys.
In Canada, most homebuyers prefer to work with a real estate agent when they want to buy a home. This is because real estate agents have over time acquired industry knowledge and expertise that gives them the ability to identify issues that may rise up with prospective properties and how to navigate the negotiation process with sellers. Therefore, working with an agent if you don’t have a lot of real estate knowledge will be a smart idea. Nevertheless, do not forget that you have to pay a fee to the agent for their services.
Moreover, you may not need a real estate agent if you are confident in your knowledge of the industry, your ability to weigh your options and negotiate on your behalf, but note that there are certain risks involved when you choose to buy a home without a real estate agent. Ensure you weigh the risk before going ahead to buy a home without an agent.
The third step is to make an offer on your new home in Canada
You are ready to make an official offer only when you find a home that you’re interested in. The real estate agent you are working for will assist you in putting together an official offer. But if you are doing it alone, you just have to make an official offer for a property.
Sometimes, your offer may not be accepted, don’t be discouraged if that is the case. Know that buying a property in Canada is competitive, especially as regards certain areas like Vancouver. We promise you that you will get what you want if you stay committed to the process.
Once they accept your offer, and you can close the deal, you just have to contact a lender to formalize your mortgage.
Summarily, buying a home in Canada can be quite tasking, but going through this article, we believe that you have gotten the basic information you need about buying a home in Canada.