Finances

Steps to buying a house

Are you finally ready to buy a house? Before you throw yourself into house hunting and making important decisions, take some time to think.

What type of property are you interested in?

When it comes to choosing where to live, there are many options. It all depends on your ability to get a loan. Choices include: buying a rental-property, a new or existing single-family house, a semi-detached house, building a new house or one from a construction company. For example, if you choose to have a new house built, there are a series of questions you should ask before signing a construction contract:

  • Is your contractor a recognized and approved expert?
  • What is the reputation of the people working with him?
  • Is he a member of the Canadian Home Builders’ Association (CHBA)?
  • Is he part of a New Home Warranty program?
Take the purchase offer seriously

You work hard to earn your money, but are you maximizing the way you spend it? Could you save even more money? If you have found your dream house and feel ready to make an offer, be cautious. Your Residential Purchase Agreement is one of the most important documents that you will have to sign. It’s the legal sales contract between the seller and you. Once the contract has been accepted, it becomes legitimate and you have to respect its provisions. Your real estate agent can guide you in making your purchase offer. For a bigger guarantee, you should ask your notary or lawyer to review it before you sign, especially if it contains special provisions.

Do you know your maximum loan amount?

Apply for a loan BEFORE you make an offer. A pre-approved loan allows you to make an offer with the certainty that you will have the needed funds. It will also allow you to know how much you can borrow to buy your new home. Your pre-approved mortgage terms are guaranteed for 90 days1 (120 days if the new house is part of a residential development project). Also, if mortgage rates decline, you will be able to negotiate a new rate when making your purchase offer. Having a pre-approved loan confirms your solvability in the eyes of the real estate agent and the seller, which gives you more power to negotiate.

Do you have to make a deposit?

The seller may ask for a deposit when you make your purchase offer. You are free to accept, reject or challenge the amount requested. However, making a deposit demonstrates how serious you are and could play in your favour during negotiations. If a final purchase contract is signed, the deposit can be used for a down payment. If the doesn’t go through, you will get your deposit back.

Because building a house implies many months of construction work, contractors often ask for a deposit in order to protect themselves and partially pay for fees. Some may even ask for small payments throughout the construction process.

Sound advice: have a specialist inspect your home

For your own peace of mind, only make a conditional purchase offer after obtaining a favourable inspection report. If the approved home inspector’s conclusions are satisfying, go ahead with the purchase.

Otherwise, if important defects are revealed, you can withdraw your offer or renegotiate a price that will allow you to undertake the necessary work on the house.

1. For residential buildings of 1 to 5 apartments only.

Joëlle Ménard

Laurentian Bank Director, Granby

Are you buying a house or already are an owner with a ton of projects ? Our expert is here to answer all your questions. Joëlle Ménard, Grandy branch Director, has been working at the Laurentian Bank for the past 20 years.

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