So much goes into buying a new home… years of saving, planning, and Pinterest boards. When the time comes to purchase a new home, knowing how best to prepare and what to expect can help to reduce a lot of stress. If you’re planning on purchasing a home in Alberta, there are a few things you’ll need to do (and a few handy tips you should know about) before you get to kick back in your new home!
1. First things first, you will need a down payment – you will typically be required to put down at least 5% for a purchase price of $500,000.00 or less. If you plan on buying a home priced between $500,000.00 and $1 million, you will need to be able to put down 5% of the first $500,000.00 plus an additional 10% of the remainder of the price above $500,000.00. For homes priced at $1 million or higher, the minimum down payment is generally 20%.
2. Be prepared for additional costs – In addition to the down payment, it’s a good idea to set aside an additional 2-3% of the value of your property to cover the costs associated with buying a home such as:
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- Inspection fees
- Home insurance
- Title insurance (if applicable)
- Lawyer fees
- Adjustment costs, and more.
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3. Get your paperwork ready – Hoping to move through the mortgage approval process quickly? Make sure you have copies of the following…
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- Employment information such as a pay stub, T4, or letter from your employer;
- Documentation of any additional sources of income (i.e. investments or businesses);
- Records of any savings or investment statements from the past 90 days;
- If you are using the Home Buyer’s Plan* you will need proof of withdrawal from your RRSP;
- If you are using a financial gift from a family member, you will need a letter stating the gift is not a loan;
- A list of all your debts and assets; and,
- A void cheque
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4. Apply for a mortgage pre-approval – It won’t cost you anything and if you find a home you like you’ll be able to move quickly if you have pre-approval. You won’t be committed to a single lender, but you will know exactly:
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- How much you can afford to spend!
- How much your maximum monthly mortgage payment could be.
- What mortgage interest rates are available
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5. Now for the exciting part – finding “the one”! – Here are our top tips when looking for your new home:
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- Find a real estate agent that specializes in the type of house or neighbourhood you’re looking for and be sure to check their reviews!
- Write down a list of “must-have” and “nice-to-have” features for your future house.
- Research the market in your ideal neighbourhood to make sure home prices align with your maximum purchase price.
- Be prepared to move quickly in a highly competitive market.
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6. Make an offer – Things will move fast at this stage! If the housing market is hot, your offer may be one of many— so be prepared to continue your search. If your offer is accepted, you will need to finalize your mortgage financing through your mortgage broker and arrange for a home inspection (if this has been added as a purchase’s condition). Keep in mind that the offer might be amended based on the home inspection.
7. Seal the deal! – Your offer has been accepted and the property has passed inspection, now the only thing left to do is have a Real Estate lawyer to complete the transaction and ensure everything is above board. Your lawyer will…
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- Confirm that there is a valid title;
- Review all legal documents, such as the Purchase and Sale Agreement and, in the case of a condo purchase, the Estoppel Certificate;
- Ensure that property taxes are up-to-date and that no claims are listed against the property;
- Arrange financing with your lender; and
- Hold the funds in a trust account until all the terms and conditions are satisfied.
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Once everything is in place, you’ll receive the keys from your real estate agent, and officially become the owner of your new home.
Did you know?
The Home Buyers’ Plan (HBP) is a program that allows you to withdraw from your registered retirement savings plans (RRSPs) to buy or build a home.
Found the house you want but it needs some TLC? When buying a home, it’s possible to borrow money for renovations with the same conditions and rates as the purchase of your house. You’ll often get a better rate than you would if you took out a personal loan to pay for your home renos!
There you have it, the key steps (and hopefully some helpful tips) on how to prepare for buying your new home!
Please note: Litco Law is no longer able to accept new clients for Real Estate legal services. If you have questions about our services or need assistance in another area of law, please feel free to contact us.
