Complete Home Buyer's Guide For Canada (eBook)

NOTICE TO READERS ix
ACKNOWLEDGEMENTS xi
FOREWORD xiii
1 GETTING FINANCING 1
What Is a Mortgage? 1
What are the types of mortgage loans? 3
Amortization Period 5
Term 6
A Pre-Approved Mortgage and Its Advantages 6
What documents do I need to provide to a lender? 7
Understanding Where You Stand with the Lender 8
Criteria for the self-employed or those earning commissions 8
Changing jobs 8
History of bankruptcy 8
Credit Report 8
Acquiring a co-signer or guarantor 9
Minimum age to purchase a home 9
Calculating affordable mortgage payments 9
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Correlation between interest rates and borrowing capacity 9
Lenders might not look at your income and other financial obligations 10
Where Do I Get a Mortgage? 10
The Difference between a Bank’s Mortgage Specialist
and an Independent Mortgage Broker 10
Letter of commitment 11
Down Payment 12
How much of a down payment do I need to buy a home? 12
Can I use the money in my RRSP to make a down payment? 13
Can I take out a loan to cover the down payment? 13
Purchasing property with only a small down payment 13
What Do I Need to Know about the Housing Market? 14
2 SEARCHING FOR A HOME 17
What Types of Housing Structures Are Available? 18
Factors to Consider When Looking for a New Home 19
Community 19
Neighbourhood 19
Transportation 20
Dwelling 21
Schools 21
New Home Warranties 21
Resale homes and new home warranties 22
Pros and Cons of Resale or Older Homes 23
The Difference between Freehold and Leasehold Interests in Land 23
Co-ownership 24
What Is the Best Time of Year to Buy a Home? 24
How long does it take to find a house? 25
Real Estate Agents 25
Responsibilities of the realtor 25
What is my relationship with a real estate agent? 26
The exclusive buyer’s agent contract 28
What time-saving technological services are available from a realtor? 28
Can I “switch” real estate agents? 30
iv Complete home-buyer’s guide for Canadians
Contents v
Homes for Sale by Owner 30
Landlord and Tenants 31
Purchasing a home with a tenant in an unauthorized accommodation 31
Your landlord offered to sell you the property you are renting 32
Choosing Your Team of Professionals 33
Do realtors provide referrals to other professionals? 34
A Realtor’s Commission and Allowable Bonuses 34
Who pays for the realtor’s commission? 34
What do realtors do to earn their commission? 35
Are realtors allowed to receive bonuses or other gifts from
financial institutions? 35
Where Do I Start Looking for Properties? 37
What is a hot sheet? 37
Pricing the Property 38
What is a fair price when I’m placing an offer? 38
Pricing properties per square foot 39
How sellers price their homes 39
What to Look for When Viewing Properties 39
Seller’s motivation 40
Prior offers 40
Property condition 40
Moving dates 40
Restrictions 41
Health, safety, and environmental concerns 42
Zoning 45
Land title search 46
City assessment 46
Fixtures and chattels 46
Area 46
Documentation to Review before Purchasing a Condominium 47
Protecting Your Legal Interests 48
3 MAKING AN OFFER 51
What Should the Offer to Purchase Include? 51
After the Offer Has Been Presented, What Are the Seller’s Options? 56
Competing or Multiple Offers 57
What Is an “All Cash Offer”? 59
What Happens When Identical Offers Are Made? 60
What Is a Back-Up Offer? 60
Can I Place Offers on Two Different Properties? 61
Contract 61
Can I back out of a signed contract at any time? 61
In what circumstance should I not go ahead with the contract? 61
What do I do once the contract has been signed by both parties? 62
4 REMOVING SUBJECTS 67
Subject Clauses 68
Why do I include subject clauses in the contract? 68
The most common subject clauses 68
Removing Subjects 68
What does it mean to remove subjects? 68
How long do I have to remove subjects? 70
Building Inspection 70
What should a building inspection include? 70
Condominium unit inspection 73
What areas of a condominium may need repair? 74
Single-detached home inspection 74
What should I look for when purchasing a single-detached home? 75
What if I don’t want to have a building inspection done? 76
Can I get a relative to inspect the building? 76
Building inspection for a remodelled property 76
Cost of building inspection 76
Can the realtor pay for the property building inspection? 77
Building inspection failure 77
Protect Yourself from a “Leaky Condo” 78
What is a special assessment? 78
Buying a Former “Grow House” 79
Oil Tanks Can Cause a Potential Problem 80
vi Complete home-buyer’s guide for Canadians
Contents vii
How can I know whether a home’s underground oil tank is leaking? 80
Provincial standards for oil tanks 80
Items to Watch out for in a Land Title Search 81
Removal of All Subjects before the Subject Removal Date 82
The Deposit 82
Can I make the down payment in two equal payments at different dates? 82
What if the deposit cheque is an NSF? 82
Where does my deposit go? 83
5 CLOSING AND COMPLETION DATE 85
What Happens at Completion? 86
Lawyers or Notaries Public at the Closing Stage 89
The role of the lawyer or notary public 89
Choosing a lawyer or notary public 90
The difference between a lawyer and a notary public 90
Adjustment Date 91
Additional Costs You May Incur on Closing 91
Property transfer tax or land transfer tax 91
Transaction levy 93
Property taxes 93
Utilities 94
Maintenance fees 94
Condominium surcharges 94
Forms 94
Confirmation 94
Appraisal fee 95
Survey certificate 95
Mortgage application fee 95
Mortgage default insurance 95
Fire and liability insurance 96
New home fees 96
Legal fees 96
Title insurance 97
Interest adjustment 98
Are any of these fees negotiable? 98
Tax Exemptions and Financial Grants Available to Home Buyers 99
GST on new housing rebates 99
Home Owner Grant 99
Tax deferral 100
Home ownership assistance programs 100
Mobile Home Ownership Program 101
Mobile Home Upgrade Program 102
What Is the Possession Date, and When Does It Occur? 102
The Previous Tenants or Owners Left the Property in a Mess 102
What If There Is a Flood in the Apartment or the Appliances Do Not Work
on Possession Date? 103
Summary 103
APPENDIX 1 105
APPENDIX 2 115
APPENDIX 3 119
GLOSSARY 123
SAMPLES
1 Mortgage Application Form 2
2 Commission Agreement 29
3 Buyer-Agent Fee Agreement 36
4 Property Condition Disclosure Form 43
5 Agreement Of Purchase and sale 52
6 Addendum 55
7 Summary Appraisal Report 63
8 Abbreviated Building Inspection Report 71
9 Buyer’s Statement Of adjustments 87
CHECKLISTS
1 The Contract 65
2 Subject Removal 84
3 Service Arrangements 88