Finding the right agent
You want to find the right home, in the right location, at the right price - and you want to do it quickly, with minimum hassle. The best way to do that is to work with a professional realtor who understands your wants and needs, your time frame and your financial boundaries.
Why work with an agent?
Working with an agent
Let your real estate agent do the searching for you. The best buys aren’t in the newspaper ads; most great opportunities are on "hot sheets" that are available every morning to salespeople with access to MLS information.
An agent’s job is to:
Qualifying for a mortgage
Your Royal LePage agent can arrange to have you pre-qualified for a mortgage before you start shopping for a home. It’s easy, and you’ll avoid possible disappointments down the road if you fall in love with a place, then find out you can’t afford it. Plus, once you do find the perfect home, it will mean you can make an offer immediately.
Here’s how mortgage approval works: the amount of money you qualify for, plus the amount of cash you can put down equals the amount you can afford to spend on a home. Most lending institutions won’t allow more than about 30% of your income to support a mortgage. If you have other debts, they usually won’t allow your debts and your mortgage to exceed 40% of your income.
Finalizing your mortgage
Once you’ve found the home you want to buy, you’ll need to finalize your financing. You’ll need to provide your lender with the following documents:
1. A copy of the real estate listing of the property. If the home is still to be built, the mortgage lender will need to see the architect’s or builder’s plans and details on lot size and location.
2. A copy of the offer to purchase or the building contract, if this document has been prepared.
3. Documents to confirm employment, income and source of pre-approval.
4. If you have a pre-approved mortgage, it’s a simple matter of finalizing a few details with your mortgage specialist.
Protect yourself with a home inspection
That gorgeous house on the corner lot may look great, but it could be hiding all sorts of expensive, annoying problems, from a leaky roof to faulty wiring to a mouldy basement.
Make sure your home is solid and secure inside and out before you buy it. A home inspector will determine structural and mechanical soundness, identify problem areas, provide cost estimates for any work required, and generate a report. It’s a great way to avoid headaches and costly problems that can turn a dream home into a money pit.
If you decide to go ahead and buy a home with issues that have been flagged by your inspector, you can base your offer on how much potential repairs and upgrades may cost.
Home inspection costs range according to size, age and location of the home. Your Royal LePage sales representative can recommend a reputable home inspection service or arrange for an inspector to visit your property.
Glossary of terms
Amortization period: The actual number of years it will take to pay back your mortgage loan.
Appraised value: An estimate of the value of the property, conducted for the purpose of mortgage lending by a certified appraiser.
Assumability: Allows the buyer to take over the seller’s mortgage on the property.
Closed mortgage: A mortgage that locks you into a specific payment schedule. A penalty usually applies if you repay the loan in full before the end of a closed term.
Condominium fee: A payment among owners, which is allocated to pay expenses.
Conventional mortgage: A mortgage loan issued for up to 75% of the property’s appraised value or purchase price, whichever is less.
Down payment: The buyer’s cash payment toward the property that is the difference between the purchase price and the amount of the mortgage loan.
Equity: The difference between the home’s selling value and the debts against it.
High-ratio mortgage: A mortgage that exceeds 75% of the home’s appraised value. These mortgages must be insured for payment.
Interest rate: The value charged by the lender for the use of the lender’s money, expressed as a percentage.
Land transfer tax, deed tax or property purchase tax: A fee paid to the municipal and/or provincial government for the transferring of property from seller to buyer.
Maturity date: The end of the term of the loan, at which time you can pay off the mortgage or renew it.
Mortgage: The financial institution or person that lends the money.
Mortgage insurance: Applies to high-ratio mortgages. It protects the lender against loss if the borrower is unable to repay the mortgage.
Mortgage life insurance: Pays off the mortgage if the borrower dies.
Mortgagor: The borrower.
Open mortgage: Allows partial or full payment of the principal at any time, without penalty.
Portability: A mortgage option that enables borrowers to take their current mortgage with them to another property, without penalty.
Pre-approved mortgage: Qualifies you for a mortgage before you start shopping. You know exactly how much you can spend and are free to make a firm offer when you find the right home.
Prepayment privileges: Voluntary payments that are in addition to regular mortgage payments.
Principal: The amount borrowed or still owing on a mortgage loan. Interest is paid on the principal amount.
Refinancing: Paying off the existing mortgage and arranging a new one or renegotiating the terms and conditions of an existing mortgage.
Renewal: Renegotiation of a mortgage loan at the end of a term for a new term.
Second mortgage: Additional financing, which usually has a shorter term and a higher interest rate than the first mortgage.
Term: The length of time the interest rate is fixed. It also indicates when the principal balance becomes due and payable to the lender.
Title: Legal ownership in a property.
Variable rate mortgage: A mortgage with fixed payments that fluctuates with interest rates. The changing interest rate determines how much of the payment goes towards the principal.
Vendor take-back mortgage: When the seller provides some or all of the mortgage financing in order to sell their property.
Understanding land transfer taxes
If you’re buying a home in a large Canadian centre, you’ll need to add land transfer taxes to your list of closing costs.
Unless you live in Alberta, Saskatchewan, or rural Nova Scotia, land transfer taxes (or property purchase tax) are a part of the homebuying process. These taxes, levied on properties that are changing hands, are the responsibility of the purchaser. Depending on where you live, taxes can range from 0.5% to 2% of the total value of the property.
Many provinces have multi-tiered taxation systems that can seem complicated. If you purchase a property for $260,000 in Ontario, for example, 0.5% is charged on the first $55,000, 1% is charged on $55,000 to $250,000, while the $250,000 - $400,000 range is taxed at 1.5%. Your total tax bill? $2,375.00.
Land transfer taxes by province
Up to $200,000 X 1% of total property value
From $200,000 up X 2% of total property value
Up to $30,000 N/A
From $30,000 to $90,000 X 0.5% of total property value
From $90,000 to $150,000 X 1% of total property value
From $150,000 up X 1.5% of total property value
Up to $55,000 X 0.5% of total property value
From $55,000 to $250,000 X 1% of total property value
From $250,000 to $400,000 X 1.5% of total property value
From $400,000 up X 2% of total property value
Up to $50,000 X 0.5% of total property value
From $50,000 to $250,000 X 1% of total property value
From $250,000 up X 1.5% of total property value
1.5% on total property value
Outside Halifax County
Check with local municipality