If the global pandemic has taught us anything, it’s that it’s important to feel good at home. While the telecommuting and confinement increases the time spent at home and that mortgage rates are at the lowest in history, the purchase of a first home or a new property touches the minds of many Quebecers.
The excitement that has taken hold of the real estate market makes you want to take the plunge and buy a house? Promutuel Insurance is there to support you in this important life project. To prepare for it well, we have put together the 10 essential steps in the process of buying a new home.
A little more about the recent boom in the real estate market
A successful buyer is an informed buyer!
At the very beginning of the health crisis, either in mars 2020, the Bank of Canada lowered its key rate to support the economy. This decision, in addition to the increase in the time spent at home, greatly influenced the real estate market in Quebec. More specifically, from June 2020 to today, the number of sales has increased by an average of 43%, compared to the same period in 2019.
And what about the price of houses? The median price of single-family homes in November 2020 was 23% higher than that recorded in 2019. One thing is certain, a lot is happening in the Quebec real estate market!
The 10 Steps of the New Home Buying Process
Have you made your decision and are you going ahead with the purchase of a new property? Be prepared to tackle this exciting, but sometimes intimidating, process by familiarizing yourself with the 10 main steps to follow to buy a house presented below:
1. Determine your budget
Before you begin your search for the home of your dreams, you must first determine your budget. Several factors come into play here: your down payment, your family income, your current debts and associated monthly payments, your estimated fixed costs related to the house (property taxes, electricity, mortgage payments, utilities, etc.), closing costs and your lifestyle.
Your down payment is your savings, minus the emergency contingency fund which, generally speaking, should allow you to live without an income for three months.
You also need to consider your borrowing capacity. Banks use several calculations to determine this, including your gross debt ratio (RET), the portion of your gross annual income that goes towards your mortgage expenses. RET should not be more than 30-32%.
To help you through the process of buying your home, the Canada Mortgage and Housing Corporation (CMHC) provides you with a free workbook and checklists. Practical tools to facilitate your procedures!
2. List your criteria (needs, sector, number of rooms, etc.)
Once you have determined your budget, establish your selection criteria. What are your needs? In which sector would you like to live? How many bedrooms do you want? Prioritizing them will also help you make an informed decision when the time comes.
Your criteria will allow you to assess the type of property that best meets your needs and desires. For example, if you want to have your aging parents near you, buying a multigenerational home might be the perfect solution. If proximity to the city center is your number one criteria, a condominium has great advantages.
3. Shop around for your mortgage
Having a pre-approved mortgage before you start your search will allow you to act quickly when you find the property of your dreams. This is particularly important in today’s competitive market.
There are different rates and types of loans available, so it’s important to compare them carefully to make the right choice for your needs. Using the services of a mortgage advisor can make this process easier. Did you know you don’t have to pay the mortgage advisor? Rather, the lender with whom you contract your mortgage will pay it in the form of commissions.
4. Choose your notary
The notary will play a key role during the entire process of buying your home. He can help you draft the offer to purchase, in addition to reviewing and exchanging all the important documents for the purchase of your property. It is often the buyer who chooses the notary, but the seller can also decide to involve his own notary. Regardless of which professional is chosen, the law requires them to be impartial and independent.
5. Start the research
After determining your financing, your criteria and having surrounded yourself with professionals, it’s time to start looking for the perfect home. Even if the decor of a property appeals to you, pay attention to details such as finish, noise, light, foundations and warning signs such as traces of pests, water infiltration, etc.
If you decide tobuy a house in winter, dress warmly and take the time to inspect the exterior of the house, despite the weather and snow.
6. Make your offer to purchase
Have you found the house that meets all your criteria? It’s time to make your offer to purchase, also known as a “promise to purchase,” to the seller. To help you set a price, consider urgent or necessary work and, of course, the asking price. In a context where the bidding is increasing in Quebec, submitting an offer well below the asking price could cause you to lose the house of your dreams.
Regardless of the amount of your offer to purchase, be sure to include it as conditional on inspection. You will thus avoid unpleasant surprises and will be protected in the event of hidden defects.
7. Have the property inspected by a professional
Before you make the biggest investment of your life, you need to make sure that the property that makes your heart beat has no major flaws. To do this, hire a certified home inspector. As a potential buyer, you can prepare for this inspection by providing the selected inspector with a list of the items that gave rise to doubt during the visit.
Read the inspection report carefully. If he reports problems that require emergency work and your offer is conditional on inspection, you can ask the seller to do them before purchase, lower the price of your offer to purchase, or cancel your offer. offer, without consequence.
8. Sign the deed of sale
The inspection did not reveal any defects? Good news! You can now sit down with your notary, complete the various documents and sign the deed of sale. This is also the time to pay the purchase price that you agreed to with the seller.
9. Take out home insurance
Buying a home is the biggest investment there is. To be able to enjoy it with peace of mind, it is important to protect it against disasters and other potential incidents. From the exchange of the deed of sale and payment, the house belongs to you and becomes your responsibility. Home insurance must be negotiated before finalizing the purchase because, upon signing, the notary will require, on behalf of the mortgage lender, proof of insurance to release the funds.
Home insurance also provides you with liability insurance that protects you if someone sustains bodily injury or property damage on your property. Plus, purchasing home insurance soon after purchasing your home will also give you peace of mind during your move.
10. Sit back and celebrate
More than a colossal step before being able to open the bottle of champagne: the move. A few weeks usually separate the signing of the contract and the taking possession. Take this opportunity to plan your move, make your address changes and contact essential service providers. The better your move is planned and coordinated, the faster you will have a glass of champagne in hand.
Best of luck in the process of buying your new home!
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