Buyer Guide
Resources to help you through your buying journey
4 STEPS TO BUYING
Whether you already have enough saved up for a down payment or are just getting started, here are the main steps along your buying journey.
Step 1
Review Your Financial Plan
If you don't have a financial plan, there is no time like the present to get started. A financial plan will differ for each household based on the unique goals, motivations, and desires of those involved. For example, if you have never owned a home before, your personal financial plan needs to incorporate the various federal incentives available to Canadian first-time buyers, such as the new First-Time Home Buyers TFSA or RRSP Home Buyers Plan.
By understanding and outlining your lifestyle goals, you can best determine what you need to do today in order to achieve them. If your aim is to save $50K for a down payment over the next year, finding a low-cost living accommodation, such as your old bedroom at your parent's house, will be a primary driver behind your success. Alternatively, if you are pursuing career, travel, or higher education aspirations, understanding how much you can afford on a monthly basis for rent will likely be the main objective of your financial plan.
For those looking to buy in the near future, a review of your projected income, expenses, and cash available in savings, will serve as the basis for what you can afford for each of your preferred locations. Check out our Budgeting Best Practices article here to learn more.
Step 2
Browse Properties of Interest
My mother was a lifelong browser, despite never moving out of the family home I grew up in. Back then, real estate listings were in the newspaper, so it was a bit more difficult for everyday Canadians to stay on top of their local market. Nowadays, there a a variety of helpful real estate websites for casual or serious browsers to take advantage of. In recent years, property sold data has also become publicly available, so your don't need to have a realtor license to know what has been selling in your neighbourhood or how the market may be shifting in your favour. Depending on your specific geography, some websites are better than others, so check out our overview on Best Real Estate Websites in Canada.
But just like the newspaper, looking at a house on a screen can be misleading. If you are serious about buying, even if you're years away from your financial plan for a down payment, don't be afraid to mix-in the odd open house or in-person showing. You can always book a showing through the listing agent or your own realtor, who will be happy to accommodate your request and touch base on your prospective home search. By combining online listings and historical sold data with in-person showings, you will be better prepared and more importantly, know what you value in a property (i.e. the must-haves versus the nice-to-haves).
Step 3
Get Pre-approved for a Mortgage
Not only are pre-approved buyers better prepared, they are more competitive. This is because any purchase offer that is conditional on financing approval is subject to a waiting period, usually 10 days, that could result in the buyer not being able to proceed (aka square one for the seller). When compared to an offer with mortgage pre-approval, which provides a seller with more information on the buyer's financial capacity, buyers that are pre-approved have a significant negotiating advantage.
If you have reviewed your financial plan and are in a position to buy, speak with your bank or mortgage broker about what type of rate you could get and how much they are willing to lend you. If you are following best practices, you should shop around, as some lenders may offer you slightly more attractive financing terms.
Most mortgage pre-approvals in Canada are good for 2 to 6 months, which means you will be able to close on offers during this time period with a guarantee on what interest rate you'll be able to lock-in. It is highly beneficial and free for buyers, so it's a must-have if you are looking to buy in the immediate future.
Step 4
Happy Hunting!
With a financial plan reinforced by your mortgage preapproval, you know what you can afford and what your maximum purchase price should be. This helps you stay disciplined and avoid making emotional decisions.
Since you've also been browsing homes on realtor.ca and other helpful online websites, you've got a great idea of how much homes are going for in your areas of interest. If you're really sharp, you and your partner have also been booking in-person showings, so you can fully understand what you love (and hate) about each property you save in your watchlist. This helps you understand what homes you would have been able to afford, where they ranked on your list, and how the market may be changing.
Once you find a home that you want to bid on, your realtor will take the lead and protect and promote your best interests along the way. So best of luck, and when that purchase offer gets accepted, step 5 is an easy one - make a moving checklist!
