What to consider before looking
Before you even start to look for a home, the first thing to do is seek financial advice and qualification. Check your credit rating by calling either Trans Union of Canada at 1-800-663-9980 or Equifax Credit Information Services Canada at 1-800-465-7166.
Visit a financial institution and get pre-approved for a mortgage to figure out how much you can afford. “With the new mortgage rules, it's more important than ever to obtain a pre-approved mortgage even before starting your search,” says Linda. Not only will a pre-approved mortgage reward you with interest rate protection during your home search, it will help give you a realistic perspective when determining your options.
Seek qualified, professional help in through a real estate agent. This helping hand won’t cost you a dime since the seller pays the commission. Find an agent with a successful and proven track record who understands your situation and tastes and who you are confident can negotiate the best possible deal -- and has your best interests at heart. If you're thinking of buying new from a builder instead, your real estate agent will be happy to investigate the many builders who co-operate with brokers and take you personally to several sales offices. Experienced realtors can assist with negotiations too.
The home search
Understand the best location for your investment and weigh your options. Even if you have a pre-determined notion of what kind of home you would like, keep an open mind and be prepared to see a variety of housing styles -- everything from a new downtown condo to a 30 year-old bungalow in the suburbs. Land Transfer Tax and the potential replacement of large ticket items such as the roof, windows or furnace may play a part in making such a decision Tip: first-time homeowners get a rebate of up to $2000 for Land Transfer Tax.
Keep the future in mind. Linda warns, "Buyers need to be aware of future developments that will positively or negatively affect resale value. For example, if there is a large vacant lot surrounding a subdivision of homes, consider if it will this site be a future school, strip mall or gas station. Your realtor will be able to research this for you."
Consider estate sale/power-of-sale properties. If you consider yourself fairly handy and are looking for a fixer upper, then estate sale and power-of-sale properties are something to think about. In an estate sale, the standard clauses on the 'agreement of purchase and sale' are kept to protect both buyers and sellers. In a power-of-sale, several standard clauses are scratched out, no inclusions are allowed and the properties are sold as-is.
Don't forget the taxes
The HST (Harmonized Sales Tax) is a new tax that applies to goods and services that previously would have only been subject to GST or PST. "Don’t worry," says Linda. "The new HST tax shouldn’t affect the typical spring market with respect to resale housing -- but it is important that both buyers and sellers know what to expect so they can budget accordingly."
1 The new HST is 13%; an 8% increase on services on top of the current 5%.
2 Buyers of resale properties will need to budget for the new 13% Harmonized Sales Tax for services including:
- Home inspections
- Legal fees
- Moving costs
- Condominium fees (while condo fees will include HST, expect that the fees may increase to cover all services including utilities)
- Labour on home renovations. If you're selling your home in 2010, renovations need to be started and completed by June 30th, 2010 to save the 8% on labour service.
- Landscaping and snow removal
- Legal fees
- Real estate commissions
- Moving costs