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For many newcomers buying your first home is a source of pride, satisfaction, and accomplishment! And, buying a home is an investment that grows over time and provides a great financial benefit. But before jumping in, consider these vital first-time home buyer tips!
Buying your first home is expensive and likely the biggest purchase you make in your lifetime. Buying a house in Canada may be different than in your home country from the process to the types of homes, styles, layouts, materials, and costs. Understanding first-time home buyer basics will help you make the right decision.
Take advantage of free tools and resources to research the housing market before you buy a home. Learn about housing price trends, affordability, and mortgage rates. Researching before you buy a home will help you make a confident decision.
You can use online mortgage calculators that give you approximate costs, and monthly mortgage payments.
You can talk to your lender about getting a pre-approved mortgage certificate.
There are many different real estate companies in Canada and agents to choose from.
A real estate lawyer will review your purchase agreement contract. The wording in these contracts is important and your lawyer will ensure everything is done properly in terms of the law.
Plan for your home closing costs or the costs associated with the date you take possession of your home.
Many newcomers arrive in Canada with savings to buy their first home. A 2019 survey conducted by Royal LePage revealed that newcomers represent a growing segment of the Canadian real estate market. Some of the findings showed that newcomers:
Don’t miss this on-demand webinar designed for newcomers! Learn need-to-know insights on buying your first home in Canada with experts David Frattini & Rouska Bodourova. Understand home-buying costs, best mortgage rates, and how Scotiabank’s StartRight® Program can help. Register now and start your journey today!
REGISTER FOR THE WEBINARIt makes sense that newcomers are eager to enter the housing market in Canada. Indeed, owning your own home is exciting for many reasons. Homeownership can be a great investment and a way to build personal wealth. Young families may want more space with a backyard for children to play. Or, buying a home in Canada may be an important part of your immigration dream!
But rarely do people have enough money to buy a house outright. This is where lenders can help you by giving you a loan, also known as a mortgage. But, you will need enough savings to pay for a down payment before you can get approved for a mortgage.
Essentially, a down payment is a portion you put down towards the value of your home right up front. You subtract the down payment from the home purchase price and supplement the remaining cost with a mortgage. You may have to build your savings if you don’t have enough for a down payment.
In addition to saving money for a down payment, there are other costs to pay such as closing costs. It’s important to factor in the closing costs because they can be expensive and often take first-time homebuyers by surprise. So before you rush into buying a home, it’s important to understand all the costs involved for a first-time home buyer in Canada.
If you have recently arrived in Canada, you’ll discover many exciting things in the city you have landed in. You may love the city and want to make it your home. On the other hand, you may learn that it’s not quite what you had expected. Or, you may land a job in a different city and want to relocate to another region or city in Canada. When you first arrive in Canada, it’s best to continue renting until you’re certain where you want to live long-term. Resettling is expensive.
Renting a home versus buying a home makes sense if you:
A large advantage of buying a house is the sense of pride that comes from owning your home in Canada. In addition, you become a part of a community where you know your neighbours and gain a sense of belonging. And most importantly, you’ll gain financial benefits when you:
In general, it makes sense to buy a home if you plan to remain in the city for five years or more.
Before becoming a first-time homebuyer, you must prepare to meet new financial obligations. These are three important steps to take before you buy a home:
When buying a house as a newcomer, you must build your credit history in Canada. You can build credit by applying for a credit card or a small loan and making regular payments.
Most importantly, you need to save for your down payment. However, you can own your home in Canada with as little as just a five percent down payment and mortgage insurance.
Another important requirement for first-time home buyers is financial stability. You need financial discipline when you buy a home. For example, save money for an emergency fund for unexpected expenses such as a leaky roof, basement flooding, or a burst pipe. Any of these expenses could cost thousands of dollars.
The minimum down payment in Canada is the percentage of the home’s purchase price. And depending on the house price, the minimum down payment amounts vary.
For example, the minimum down payment is:
Until you have enough money for the down payment, continue to rent.
In addition to thinking about financial first steps, you’ll also need to consider other practical questions such as:
As a guideline, financial experts state that you should not pay more than 30% – 35% of your total household income for housing and home-ownership costs such as:
But, that’s a guideline. You may decide to budget more for housing or, cut back on other expenses such as entertainment or dining out.
A mortgage pre-approval means that a lender has stated that you qualify for a mortgage loan based on your current income and credit history. The pre-approval will indicate the:
The lender will assess your financial situation and determine how much they are willing to lend. This will give you confidence when choosing which homes to consider buying. It will also help when you make an offer on a property because the buyer knows you are serious and able to purchase.
When you’re ready to search for a home, you need to consider:
With answers to these questions, you can narrow your search to find the ideal home for your needs. You can also provide this information to your realtor who can help you find your ideal home in Canada. Realtors are trained and licensed to help you find and buy a resale property. You may choose an agent who has sold other properties in the areas that you are considering. Or, you may choose a realtor that a friend or family member recommends.
Talk to the realtor about the important things to you in a home, but keep a realistic approach. Many Canadians buy a starter home” and then work their way up the property ladder. Be ready to accept that your price range may not cover all the features you want in a house.
You do not pay for the services of a realtor. Realtors earn a commission on the home’s selling price. The home seller pays the commission, not the buyer.
Once you’ve found a property you want, you’ll want to make an offer. An offer represents your desire to purchase the property and the amount you’re willing to pay. Your real estate agent can advise on the price you should offer on a resale home based on your local market conditions and recent home sales in the neighbourhood.
After agreeing on a price, the seller will stop showing the property to other prospective buyers because the home is now ‘conditionally sold’ to you, and will begin to take the necessary steps to complete the transaction.
Similarly, you will also need to begin taking steps to fulfill your part of the purchase process, including any conditions you may have listed in your offer such as a home inspection or finalizing financing. These vary by location, and your realtor is a good person to ask about the next steps.
Typically, the offer-to-purchase agreement will include:
This is a detailed description of the residence’s address, including street name, house, lot, and block number. It will also often include a list of additional items included in the sale (appliances, garage door openers window coverings, etc).
Here a clearly-stated purchase price that both parties have deemed acceptable will appear. There will also be a description of the deposit amount here. A deposit demonstrates that you are serious about your offer, and will persuade the seller to not entertain any further offers. The Offer will also often contain the payment method (cheque, credit card, etc.), as well as mention who will hold the deposit.
This is when the property becomes yours and you can move in. By this time, any previous owner is expected to have removed all of their belongings and cleared any of the conditions you may have imposed.
Typically, the seller is responsible for the property until the closing date and guarantees that they have the legal right to sell the property. They also guarantee that all buildings and improvements do not encroach upon neighbouring lands.
This is where you place any changes or improvements to the property that the seller and buyer agree to.
This is where you’ll typically find a list of agreed-upon conditions of sale, the breach of which could result in a nullification of the purchase agreement. This could include a description of financing conditions, property inspection conditions, condominium documents conditions, and the sale of buyer’s home conditions.
In addition to your mortgage, there are several closing costs that you must pay before you can take possession of your house. To “take possession” means the home is now legally yours. First-time home buyers are very often surprised when they learn of these additional costs. Examples of closing costs that you can expect to pay include:
This is the cost for an appraiser to assess the property value. Your mortgage lender may require an appraisal to determine whether the selling price is reasonable for the market.
You must pay the Goods and Service Tax (or Harmonized Sales Tax) on a newly constructed or substantially renovated home. Resale homes do not require a GST payment.
This tax is charged to buyers in most provinces, usually based on the purchase price.
This includes fees charged by your lawyer for services such as conducting a title search, drafting a title deed, and preparing the mortgage, and registration fees. A guideline for costs is typically between 1.5% to 4% of the purchase price of the home.
High-ratio mortgages (those with less than 20% down payment) require mortgage default insurance. The cost is usually added to the mortgage it varies depending on the amount of your down payment.
Special insurance coverage to cover the cost of your mortgage in the event of death or severe illness is available from most lenders.
Hiring a home inspector is voluntary but recommended for resale homes, and usually, the cost ranges from $400-$600. With a home inspection, you may discover issues with the house that will cause you to back out of your offer. Or, the home issues may be manageable and you could ask for a lower purchase price to offset any repair expenses.
You may want to bring in an electrician, plumber, and perhaps a structural specialist to ensure you understand all the home systems. They can also provide cost estimates for repairs if needed. First-time home buyers may not factor in these additional costs.
When you buy a house, a home inspection is critical. Usually, an offer to buy a home is conditional upon an inspection. An inspection will assess the following areas:
Foundation: an inspector will check if there is a leak in a foundation wall and whether insulation is in place. If there’s an active leak, they will determine the condition behind the wall.
Plumbing: the inspector will determine if the drains are installed properly and not leaking.
Windows: the inspector will ensure window seals are not damaged. For example, if one of the windows gets fogged, that tells that the window has to be replaced. Next, the home inspector will look at the frame to see if any openings must be resealed; otherwise, you may get an air leakage.
Furnace: the home inspector will check the quality of the filter and whether it is installed properly. They will check the quality and age of the furnace and whether it’s leaking any water inside or gas, which could be critical.
Mold: an inspector will also look for mold (or termites) in the house because it can result in significant costs to repair later.
When buying a house in Canada consider these vital first-time home buyer tips. Learn the essentials and become informed about everything that’s involved. Homeownership provides great pride, security, and achievement. The more informed you are, the more confident you’ll be about your home purchase decisions!
The cost of accommodation in Canada varies by city and vacancy rates are a key driver of costs. Housing costs are usually the largest portion of a monthly budget, and if you’re a newcomer to Canada, it’s helpful to understand what determines accommodation costs. With this knowledge, you can decide where you want to live and how much you can afford. Other factors that affect the accommodation costs include location, type of housing, and size.
In Canada, the vacancy rate refers to the housing supply and the occupancy rate refers to the housing demand. Though the answer is subjective, a healthy vacancy is considered to be around 3% in general.
The Canada Mortgage and Housing Corporation (CMHC) conducts the Rental Market Survey (RMS) every October in urban areas with populations of 10,000 and more. The RMS estimates the strength of the rental market. The survey targets privately rented structures with at least three rental units, that have been on the market for at least three months.
The CMHC also conducts the Condominium Apartment Survey (CAS) every year in September to estimate the strength of the condo apartment rental market. The cities covered in this survey are Calgary, Edmonton, Gatineau, Halifax, Hamilton, Kelowna, Kitchener, London, Montréal, Ottawa, Regina, Saskatoon, Toronto, Vancouver, Victoria, and Winnipeg.
A vacancy rate of two percent or lower means there is greater competition among prospective tenants as they vie for fewer vacant rental properties.
| VACANCY RATE | WHAT IT MEANS |
|---|---|
| Less than 2% | – High demand with a limited housing supply – Drives rental cost higher |
| 3% | – Healthy balance between housing supply and demand |
| Greater than 3% | – High supply with low demand – Lower housing costs – “Renter’s Market |
The vacancy rate is also a key factor determining the accommodation cost in cities across Canada. With this in mind, you can research vacancy rates to understand rental costs, determine how much you can afford, and budget for rent. Here are the 2023 vacancy rates and average rental rates for a 2-bedroom apartment in several Canadian cities:
| CITY VACANCY RATE | AVERAGE RENT FOR A 2-BEDROOM CONDOMINIUM APARTMENT |
|---|---|
| CANADA 0.9% | $2,049 |
| OTTAWA, Ontario 0.4% | $2,085 |
| VANCOUVER, British Columbia 0.9% | $2,580 |
| HALIFAX, Nova Scotia 1.0% | $1,628 |
| TORONTO, Ontario 0.7% | $2,862 |
| KITCHENER-CAMBRIDGE-WATERLOO, Ontario 0.1% | $** |
| CALGARY, Alberta 1.0% | $1,819 |
| REGINA, Saskatchewan 1.8% | $1,421 |
| LONDON, Ontario 0.1% | $2,050 |
| SUDBURY, Ontario 1.2% | $1,361 |
| WINNIPEG, Manitoba 1.8% | $1,333 |
| WINDSOR, Ontario 2.0% | $1,253 |
| SASKATOON, Saskatchewan 2.0% | $1,449 |
| EDMONTON, Alberta 2.5% | $1,359 |
| HAMILTON, Ontario 2.6% | $2,373 |
| ST. CATHARINES-NIAGARA, Ontario 2.8% | $1,388 |
Finding affordable housing continues to be challenging, especially in Toronto and Vancouver where vacancy rates are below two percent. That’s why we encourage newcomers to consider other cities that often offer hidden advantages to newcomers, including lower accommodation costs.
Housing affordability and supply are essential factors when evaluating your landing city options. In Canada, spending less than 30% of your pre-tax income on housing is considered affordable. Spending more than 30% on housing will mean cutting into your budget for things like food, transportation, and other necessities. And, until you establish stable finances, it’s wise to manage your budget and expenses accordingly.
Major cities like Toronto and Vancouver are expensive when it comes to accommodation. However, you’ll likely find housing prices that are more in line with your budget in other Canadian cities. Carefully researching small and mid-sized cities across Canada before you choose your landing city is the key to your success.
It’s important to research housing and job markets across Canada. Canada is a vast country with regional, economic, and cultural differences. And, the cost of housing (both in the rental and homebuying markets) can vary widely. At the same time, you want to research your profession in different cities to ensure job opportunities match your skills, knowledge, and experience.
This initial research is critical. While you can always relocate to other cities, making a secondary move is expensive. Carefully evaluating your landing city options, housing costs, and career options will help you make smart decisions and achieve financial stability and success! You can easily check out rental costs in cities across Canada at Rentals for Newcomers.
The cost of living can vary across Canada. Groceries, transportation, rent, or home-buying costs can be expensive. Also, consider your lifestyle and the cost of entertainment and dining out.
Considering all of these factors will help you to budget for the cost of accommodation in Canada. And for newcomers, this information can help you to make smart and affordable landing city decisions!
The National Occupancy Standard (NOS) supports the design and evaluation of housing policies and programs in Canada. It is a reference point for “suitable” housing to inform how many people could reasonably live in a dwelling based on the number of bedrooms. While newcomers want to know the “rules” about children sharing bedrooms, the NOS is NOT a rule to determine if a dwelling unit can be rented to a family. Rather, the standard refers to criteria to assess if housing is suitable.
According to the NOS, a private household has suitable housing when there are enough bedrooms for family members based on age, gender, and relationships among household members.
The following criteria can help you assess whether or not a dwelling is suitable for your family:
When homes are overcrowded, it may contribute to health and safety issues, and privacy concerns. Furthermore, crowded households indicate that a lack of affordable housing exists in Canada. Given the current housing supply issue, the Canadian government is introducing housing programs to increase the housing supply and provide cost relief.
The NOS can help you determine the number of bedrooms to ensure suitable housing. The house size depends on your family’s size and structure. For example, if you have a family of six with two parents and four daughters, you can select a three-bedroom room. However, if you have three sons and one daughter, you may need four bedrooms.
However, you’ll also have to consider other factors such as affordability, cultural conventions, and how urgently you require housing. Once you determine how many bedrooms you require based on your family size, you can use this information to begin your housing search. Or, you can work with a real estate agent who can help you search for suitable housing based on this information.
If you have a large family, suitable accommodation will require more bedrooms. This, in turn, will increase the cost of accommodation.
Ideally, it’s up to you and your family to decide how many bedrooms you will need based on your circumstances and budget. It’s also important to know that landlords cannot refuse to rent out their property because of the size of your family. The NOS is not a basis to discriminate against prospective tenants. No organization enforces the standard.
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Sharing a bedroom can contribute to lower housing costs and hydro costs In addition, siblings who share a room spend more time with each other and develop a closer relationship. Children who share a room learn how to compromise and accommodate others. However, when friends come over, sharing a room can cause conflicts among siblings.
Having separate bedrooms requires a bigger home, and higher housing costs. At the same time, hydro and utility costs will increase.
If siblings share a room and are of different ages, their bedtimes might differ. Or, concentrating on studies could become a challenge when siblings have conflicting schedules for study and playtime.
If siblings sharing a bedroom have different standards such as cleanliness, neatness, and organization, it can lead to conflicts. If siblings are of different genders, privacy would be an issue, especially when dressing.
When deciding the size of the house, think about your budget. You should be able to afford the property you will live in, including the cost of utilities. There are ways to create separate spaces by adding curtains and room separators.
To ensure safety, privacy, and sanity, consider the ages of your children, their gender, and their personalities.
Searching for more information about living and working in Canada? Be sure to check out our upcoming free webinars.
When you first move to Canada, it is very likely that you will have a rental house or apartment before you buy a home. Renting a house has many benefits over owning one, especially for newcomers. Not only is renting a home cheaper but it also gives you the flexibility to move to another area. Renting your first home in Canada will also allow you to find the best locations in the city before buying a house.
Even if you don’t own the home, treat a rental like it’s your home to create a happy and pleasant oasis. These maintenance tips will help you keep your rental in top condition. And your landlord plays a key role. A great landlord will ensure that you get any repair or maintenance jobs done quickly. Understanding who is responsible for specific maintenance activities can help you to work together and avoid conflict.
While you are renting, it’s important to keep your home in a liveable condition. While you may not own the rental, you want to make it a pleasant environment. So it’s important to work together with your landlord to keep your rental house in a safe, clean, and liveable condition. Remember, the landlord cares about your rental home as much as you do. So it’s in the best interest of both you and the landlord to maintain it well. This will also serve to build a good relationship with your landlord! And a glowing reference from a landlord about how well you take care of their property can be helpful if you move to another rental house in the future.
Keeping your rental house or apartment in good shape requires the full involvement of both you and your landlord. Your landlord is responsible for keeping your rental home in good shape but they cannot do that without your help. For example, if you notice a leak in the ceiling or the washing machine stops working, it is a good idea to contact the landlord right away. Your landlord will come within a few days at an agreed time to fix the issue. Small repairs can become very expensive problems if not resolved quickly. So your landlord will appreciate you reporting issues early!
There is a good chance your landlord knows the rental home better than you do. They might have renovated it or even lived in it in the past. Because of this, it is a good idea to allow the landlord to come for regular home inspections. Your landlord might see a major fault that you missed such as poor drainage that could cause your walls to rot. These faults can easily be avoided ahead of time if spotted and there is a high chance your landlord will spot one of these faults during an inspection.
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It is also important to know the responsibilities of your landlord. Knowing this will make sure that the relationship between you and your landlord remains equal and cannot be exploited. Your landlord is responsible for maintaining your rental home and making sure it remains in a good, liveable condition. This includes making sure that the rental meets municipal standards and has no faults such as plumbing leaks or appliance breakdowns. Your landlord is responsible for completing maintenance jobs as soon as they arise.
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Another responsibility your landlord has is repairing or replacing any appliances that came with the rental home. However, you may have to pay for the cost of repairing any appliances if you or your guests caused the damage. Or if you rent a furnished home or apartment you are responsible for any damage to the contents. For example, if you break a table that came with the rental home, you will be responsible for fixing or replacing it. However, if the repairs are due to normal wear and tear, the landlord will cover them.
The landlord is also responsible for any heating, plumbing or electricity repairs in your rental home. Utilities, such as water, electricity, and internet may or may not be covered by your landlord. This is something that you will discuss with your landlord before you move into your rental home. These details will also be outlined in your rental house lease agreement.
Keep in mind that most municipalities have by-laws that set minimum standards that landlords must meet related to utilities. So be sure to visit your municipality’s website to learn more.
Your landlord may ask you to enter your rental home or apartment from time to time to inspect its condition or do repair jobs. And as long as they inform you ahead of time, you must legally allow your landlord to enter. However, they must tell you ahead of time, when and why they will be coming. If the timing doesn’t work for you, you can ask to arrange another time.
If you experience an emergency, for example, water starts leaking through your ceiling or roof, or your furnace breaks down in the winter, contact your landlord immediately. Leave a message and note the date and time of your call if you’re unable to reach your landlord. However, if repairs must be performed immediately to protect your health and safety or to prevent property damage, you may be able to authorize the repair work yourself. In this case, be sure to keep all documentation related to the repair and ask the repair company to bill your landlord directly. Or, if you pay any bills, keep track of your expenses so that your landlord can reimburse you.
There are laws concerning tenant rights and giving tenants the freedom to enjoy their rental house without the landlord interfering. However, your landlord does have the right to enter your rental to inspect or do repairs. Each province has its own slightly different laws but the idea is the same. As long as your landlord gives you a 24-hour notice before coming, they can enter your rental.
And really, even if the law didn’t support it, there is no reason to deny entry to your landlord as long as they have a valid reason. Your landlord wouldn’t want to harm your home. After all, even if your landlord isn’t living in your rental home, they still legally own it.
Learn more about your rights as a new renter. For more helpful information about rental housing, be sure to check out Rentals for Newcomers.
There are times when your landlord may need to access your rental house. Here are two common reasons and what it means for you, the renter.
A conscientious landlord will conduct home inspections once or twice a year. There could be major faults in your rental house that you do not identify. There is a good chance that your landlord will find one of these faults and arrange a time with you to come fix it.
The most common reason your landlord will want to enter your rental home is for general repairs and maintenance. This could be anything from replacing an outdated appliance to fixing a clogged drain. As mentioned above, the landlord will complete most maintenance jobs. However, some maintenance responsibilities may fall to you as the tenant. To learn more about how maintenance responsibilities are shared in Ontario, click here. Keep in mind that each province has its own rules and regulations regarding laws on maintenance responsibilities. However, most provinces have many common tenant/ landlord laws.
There are laws concerning tenant rights and giving tenants the freedom to enjoy their rental house without the landlord interfering. However, your landlord does have the right to enter your rental to inspect or do repairs. Each province has its own slightly different laws but the idea is the same. As long as your landlord gives you a 24-hour notice before coming, they can enter your rental.
And really, even if the law didn’t support it, there is no reason to deny entry to your landlord as long as they have a valid reason. Your landlord wouldn’t want to harm your home. After all, even if your landlord isn’t living in your rental home, they still legally own it.
Learn more about your rights as a new renter.
Keeping your rental in top living condition will ensure that you are safe, secure, and comfortable. And working with your landlord to achieve this goal will provide benefits for both you and your landlord!
For more information, tools, and free webinars about rental housing in Canada, be sure to visit Rentals for Newcomers.
One of the first things new immigrants want to establish when they move to Canada is somewhere they can call home. Your ability to buy a home and qualify for a mortgage is tied together if you do not have the funds to purchase a property outright.
You will need to meet certain financial criteria as set out by Canadian banks and financial institutions. This may seem intimidating and even challenging, largely because of misconceptions.
There is a belief that newcomers cannot get a mortgage from a Canadian bank, they won’t qualify if they don’t have a strong credit history or they won’t qualify until they have a couple of years of employment history in Canada. These are not true.
There are many immigrants who qualify for mortgages every day. In fact, did you know that 18% of mortgage consumers are newcomers to Canada?
Financing is available to both permanent and non-permanent residents. However, qualifying for a mortgage will depend on your status. Here is an overview of mortgage requirements:
As a permanent resident, you will have access to a variety of mortgages and programs. You could qualify for a standard mortgage if you have a good credit rating. This means one of the applicants must have a credit score of 680 or higher. You will also require at least a 5% down payment.
If you do not have a good credit score, you can still qualify for a mortgage through a newcomer to Canada program. You will still require a minimum 5% down payment.
If you are paying less than 20% of the cost of the purchase price, you will have to get mortgage loan insurance.
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As a non-permanent resident, you have specific requirements to qualify for a mortgage. For example, you must:
With a good credit rating, you could qualify for a standard mortgage. If you do not have established credit in Canada, you may have to get a letter of reference from your financial institution from your country of origin. You will need to qualify under a new to Canada program.
You will not qualify for a mortgage if you are not a permanent resident, have poor credit, and do not have at least a 10% down payment.
When applying for a mortgage, a lender will review your income. This can be from many sources as long as the income is plausible, such as income from full or part-time employment, self-employment, rental properties, support or alimony payments, or pensions.
The lender will require a letter from your full or part-time employer to confirm income, especially if you have had the job for less than two years. You should have copies of your last two year’s tax returns and be up-to-date with any outstanding taxes.
The lender will also look at your debts, including your proposed house payment, as well as monthly payments for loans, credit cards, car leases or child support. It is important that you include all debts you have on your mortgage application as they can impact your ability to borrow.
Evidence of regular income is another critical factor lenders consider. They are more inclined to favor applicants who have worked at one job continuously for several years or have remained in the same field. However, you can still qualify for a mortgage if you’ve changed jobs recently as long as your new employer can prove your income with a Letter of Employment to confirm your:
They may also ask for recent pay stubs to confirm your rate of pay.
If you’re self-employed or have worked at a job for less than two years, lenders may ask for additional information, such as federal income tax statements, to verify your income.
To qualify for a mortgage, a good credit rating is essential. In addition to reviewing your debt and income, a lender will also pull your credit report. The report details your payment history and how you’ve handled your past obligations. You can get a copy of your credit report before you apply for a mortgage to veryify its accuracy or correct any errors before you apply for a mortgage. However, each credit “pull” will negatively impact your credit score for a short period of time, so avoid pulling your credit too often.
Qualifying for a mortgage ensures that you meet certain criteria set out by lenders. Here are the main steps you will need to take to qualify:
You will have to put money down on any mortgage. The more you save, the better position you will be in to qualify for a mortgage.
As soon as you arrive in Canada, its important to start building your credit history. A strong score will not only help you qualify for a mortgage, but it will also help you get a better rate. You can do this by paying your bills in full each month, use and pay off your credit cards, and maintain a consistent source of employment income.
Lenders want to see proof of a stable financial situation. To do this, you can get a letter of reference from your financial institution, an employment letter from your employers, and show copies of recent pay stubs.
There are plenty of mortgage options. You can choose from traditional banks, to credit unions, and private lenders. You can also enlist the services of a mortgage broker to help you qualify. Brokers work for you, and they will shop around and compare options for you. They can be a big help to find the right mortgage for your specific needs.
A pre-approved mortgage indicates how how much mortgage you can afford and guarantees a mortgage rate (usually for 90 – 120 days) while you look for a home.
A pre-approved mortgage can give you more credibility to sellers and real estate agents, And in bidding wars, common in hot housing markets, it can give you an advantage against competing home buyers. However, be sure to consider these tips:
Understand the difference between pre-qualification and pre-approval. For example, pre-qualification is less formal and confirms that you meet general lending guidelines. And sometimes you can obtain a pre-qualification over the phone or through an online assessment.
On the other hand, a pre-approval is a detailed process and takes more time to complete. You need to complete a mortgage application and provide documents to verify things such as your income, debt, employment, and credit history.
A lender will review your application before they pre-approve you.
Don’t let your guard down after you get pre-approved for a mortgage. Missing or skipping credit card payments, increasing debt, or changing jobs could void your pre-approval.
If rates remain low and you’re still searching for a home, you can reset your pre-approval every 45-75 days. Doing so will not only extend your rate hold but will safeguard you against any mortgage rate hikes before you close. Although, some lenders may restrict rate resets.
Shop around and choose pre-approval terms that offer you the most benefits. For example, opt for the longest rate hold (120 days), and other mortgage features such as the ability to make prepayments, fair penalties, and refinancing options.
Qualifying for a mortgage can be an intimidating process, but it does not have to be this way. There are countless ways for newcomers to get approved for a mortgage. It happens every day. You just need to know the steps and understand the financial criteria you need to meet to qualify. Start working toward qualifying from the day you move to Canada, and you will be a homeowner sooner than you think.
For more information about your financial first steps in Canada, visit our banking in Canada resource page. Get the essential information you need to manage your finances in Canada!
The question “how much mortgage can I afford?” is quite different from “how much mortgage can I get?” So, it’s important to understand the risks involved when a lender offers you a mortgage that is more than you need or expected. When buying a home for the first time, it’s important to consider all of the related costs and expenses. And, when you factor in all of the costs, you’ll be in a better position to answer, “how much mortgage can I afford?”
It may seem like great news to get approved for a higher mortgage amount than you expect. But, this can lead to overspending on housing when you get more money than you need.
Buying a home in Canada is a big dream for many newcomers! But, buying a home that is more than you can afford, can turn that dream into a financial nightmare. If you have a good credit history, and a healthy down payment, your lender may approve you for a mortgage that is higher than what you need. For example, you may have a personal budget of $800,000 to buy your home. And, your lender may pre-approve you for $1,000.000. To get a general idea of how much mortgage you can afford, use this mortgage calculator.
But, does that mean you should borrow that much so you can buy a more expensive home? You need to factor in other costs so that you can answer this key question: how much mortgage can I afford?
This is a common mistake that many first-time homebuyers make. And, this often leads homeowners to a situation where they are “house rich and cash poor”. In other words, they are spending between 30 – 40% (or more) of their total income on:
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When you spend too much of your income on housing, it means you’ll be “cash poor”. And this means you’ll have very little room to afford other expenses such as:
Or, you end up making these purchases on credit, increasing your debt level, and possibly affecting your credit history.
In addition, you need to consider your other expenses such as daycare, saving for retirement, or saving for your children’s education. All important expenses that you may also be saving for.
So, before buying your home, carefully consider how much you can afford and what other financial obligations you have.
Closing costs are typically paid at the end of the homebuying process. Often, people overlook the closing cost that can become expensive. You can expect to pay closing costs in the range of 1.5 – 4 % of the selling price of your home. So, it’s important to include these costs when calculating how much mortgage you can afford.
Closing costs are one-time only expenses that may include:
Getting a home inspection is not required. However, if you are buying a home, it may be a smart thing to consider. A home inspection can provide you with information about the state of the house. You may discover that you will have to spend money on repairs either in the short-term or long-term.
You also want to find out what recent repairs or renovations were completed. A home inspection can provide information about the: insulation; electrical work; and structure.
If the home inspection reveals costly defects, you can try to negotiate with the seller to make the repairs or reduce the selling price.
Homeowners in Canada must pay taxes to fund services such as police and fire, schools, public education, transit, parks and recreation, road maintenance, and many other services. And, property taxes are a major source of revenue for municipalities in Canada.
On top of your mortgage payments, you will have to pay property taxes. Most lenders will collect the property tax and this helps you to avoid a large and unexpected tax bill when your annual taxes are due. So, it’s important to factor your property taxes into your mortgage payments as well.
These legal costs include fees for services that your real estate lawyer will do such as:
This is a tax that home buyers in most provinces must pay. And, It is usually based on the purchase price of the home.
Since your lender has a large stake in your home, they will often require you to purchase insurance against fire and weather-related damage. It is also a good idea for you to purchase ‘contents’ insurance to protect your valuables.
This is special insurance coverage to cover the cost of your mortgage in the event of death or severe illness is available from most lenders.
Your moving costs will vary depending on whether you rent a truck and move your belongings yourself, or if your hire professional movers. If you hire movers, you can expect to pay a minimum of $1,000 depending on the weight of your belongings, travel distance, and even your moving date.
You can reduce your moving costs if you rent a truck, and kindly ask your friends and family to lend you a hand on moving day!
When you set up your utilities, you will be charged a deposit to hook up services and replace the previous owner’s name with your name on the bill.
Many potential homeowners overlook these additional costs, and they can quickly add up. So it’s important to include these costs when considering how much mortgage you can afford.
It’s important to manage all of the costs involved when buying a home. And, knowing how much mortgage you can afford can help you to make the best financial decision for you and your family.
Check out our financial first steps resource page for resources and information to help you achieve your financial goals in Canada!
Knowing your rights as a renter in Canada is essential. When you arrive in Canada, renting suitable housing will be a top priority. And knowing your rights as a renter will ensure that you can enjoy your home free from hassles.
Newcomers to Canada often rent homes for a while before they buy a home. As a newcomer, it’s essential to know:
Renting a home in Canada can be a daunting task. When searching for a rental home, you’ll find that some listings are detailed while others can be ambiguous so it’s important to gather all the information you need. Our Rentals for Newcomers site is a practical and easy-to-navigate site to help you make an easier transition to life in Canada when it comes to finding housing! And you can even determine the average cost of rentals in each city. This is helpful since rental prices change often.
It’s good practice to ask landlords questions about the property before you rent it. This can clarify any doubt and prevent misunderstandings in the future. Here are some important questions to ask before you rent the property:
Moving homes can be expensive. So it’s important to ask the right questions to help you decide if you can afford the property and want to rent it.
Each province and territory has Landlord and Tenant legislation and the rules and regulations vary by province. For example, in Ontario, Canada’s largest province, the legislation is called the Residential Tenancies Act. This legislation is in place to protect renters.
Learn more about how to search for rental housing in Canada. Join our free webinar.
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The Landlord and Tenant Board in Ontario provides information about the Residential Tenancies Act in Ontario and aims to resolve disputes between landlords and tenants. In this way, the tenant has a say and can be heard. And this is an important benefit to renters. The site provides free and accurate information for renters.
Of particular help is a list of various forms that landlords and tenants can use for things such as:
There are specific guidelines when it comes to giving notice. For example, a tenant has to give their landlord a formal written notice using Form N9. This form indicates that you plan to end your tenancy and vacate the property. In Ontario, you must give a minimum notice of 60 days that you intend to leave.
It might seem confusing, so it’s helpful to become familiar with the laws in the province where you live related to your rights as a renter. When you know your rights as a renter, this will protect you from landlords taking advantage of you.
To start, look up the rental laws for the province you wish to locate and visit their website.
Alberta: Residential Tenancies Act
British Columbia: Residential Tenancies
Manitoba: Residential Tenancies Branch
New Brunswick: Residential Tenancies Tribunal
Newfoundland: Landlord & Tenant
Nova Scotia: Residential Tenancies Program
Ontario: Landlord and Tenant Board
Prince Edward Island: Landlord and Tenant Act
Quebec: Régie du Logement
Saskatchewan: Landlords and Tenants
It’s helpful to become familiar with your responsibilities and rights as a renter and those of the landlord. The landlord is the owner of the house or building that you live in. If you rent in a large building such as a condo or apartment complex, there may be a property manager or superintendent to collect rent and manage the building.
Landlord and tenant responsibilities can vary in different provinces and territories. So it’s important to review the requirements for the province or territory where you plan to rent a home.
Here are some of the key tenant responsibilities:
Tenants are not allowed to:
Here are some of the key landlord responsibilities:
Landlords are not allowed to enter the property without providing notice and receiving the tenant’s permission.
Once you find your new home, the next step is to sign a lease with your landlord. The lease allows you to live in a home for which you pay rent.
A lease is a written rental agreement outlining the terms you and your landlord agree to. A lease is a legal document, so it’s important that you read and understand it. You can ask someone to go over it with you, such as a relative, friend, staff member at an immigrant-serving organization, or even a lawyer.
When you sign a lease, you share personal information with the landlord. Signing a lease gives the landlord consent to collect personal information and use it for renting purposes only. Landlords must comply with the Personal Information Protection and Electronic Documents Act (PIPEDA). PIPEDA is Canada’s federal private-sector privacy law.
Most leases include:
Landlords can legally ask:
Landlords cannot ask you:
When you renew your lease, your landlord may increase the rent to offset rising maintenance costs. The landlord can increase the rent at the time of renewal. However, it must be within the province’s rental increase guidelines. To learn more about the provincial rent increase guidelines, click on the links provided in the section: Landlord Tenant Boards in Canada.
One of your rights as a renter is that the landlord must provide you with written notice 90 days before the increase takes effect.
Rents tend to remain the same during the term of the lease. However, a landlord can submit an application to the Board for rent increases during the lease term if the taxes, utilities, and operating costs have increased significantly.
When you know more about renting a home in Canada, you can select housing that best meets your needs. And, knowing your rights as a renter will allow you to live peacefully and with few hassles. Because moving can be expensive it’s important to select the right rental property to save additional moving expenses.
For more information about settling in Canada, check out our upcoming webinars!
Looking for the perfect Vancouver neighbourhood? Trying to find a neighbourhood that suits your lifestyle and needs for a rental? Whether you seek a neighbourhood that is close to work or one with a strong sense of community, you have great choices.
All Vancouver neighbourhoods have a different style to match the rental you desire. Yaletown is a higher-end downtown neighbourhood, whereas Kitsilano is a trendy neighbourhood close to the water. Depending on your preferences for lifestyle and location, the rental rate can vary greatly.
The West End of Vancouver (located on the west side of downtown) is a wonderful and diverse neighbourhood to live in. it is an attractive place for entrepreneurs and business-minded individuals. If you seek a Vancouver neighbourhood situated close to the office while staying within the energy of the people, this is the one for you!
To learn more about moving to Vancouver, Download our FREE ebook today!
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Although Yaletown may be the best place to live in terms of location, it is one of the more expensive and already occupied Vancouver neighbourhoods. Yaletown is definitely one of the trendiest neighbourhoods to live in but will cost you a pretty penny to live there.
According to Vancouver Magazine, Killarney is an area that still has the opportunity to find a home for families. Vancouver is exploding with people, making it hard to find a starter home for many people. This neighbourhood is ideal for young families looking to stay integrated into the Vancouver culture, and is an ideal space to start up!
Located conveniently close to Kits Beach (one of the best city beaches in the world according to a number of international travel magazines), Kitsilano is a popular area to live. Compared to other neighbourhoods, Kitsilano has a mix of outdoor recreation opportunities as well as a focus on organic foods and healthy living.
Fairview is a popular area filled with a number of tourist attractions that draw attention to the neighbourhood. In particular, this Vancouver neighbourhood has Granville Island. Granville Island is a small island located in the middle of the city. Described as an urban oasis, this attraction contains plenty of restaurants, stores, cafes, and other small businesses.
The Kerrisdale neighbourhood is an area filled mainly with residents who have been there for many years. The area is a great option for retired individuals or those looking for a slower pace of life. The neighbourhood is often recognized for its popular Kerrisdale Village (also known as “The Village”). Kerrisdale Village is a shopping area located in the center of Kerrisdale that contains some of Vancouver’s best shops.
Many will know Riley Park because of the Olympic Centre and Nat Bailey Stadium that reside within it. This thriving area is home to various types of shops and food venues to keep anyone engaged and entertained. Of course, Riley Park consists of more than the greenspace and the attractions that make it well known. Riley Park has numerous communities that span from 16th to 41st street.
Close to the international airport in Richmond, the Marpole neighbourhood is a bustle of activity. Being the main gateway to the airport results in higher traffic, but aside from the busy street, it is a great Vancouver neighbourhood to consider. Marpole has a number of residential areas that are family-oriented. The availability of nightlife is less than that of busier neighbourhoods, but instead, the area has more substantial yards and homes.
Being one of the northern Vancouver neighbourhoods, Lynn Valley is a popular area for those looking to be away from the busyness. According to the District of North Vancouver, the central hub of the neighbourhood is gaining momentum and will be undergoing some large transformations. Be sure to check out this neighbourhood soon, as its popularity will only increase!
The University of British Columbia (UBC) has become one of the popular Vancouver neighbourhoods to live in. The school itself is an attractive feature to draw students and teachers to the area. Over the years, the area has become an increasingly popular place to call home. Located in the west of Vancouver, there has been an increase in residential buildings, services, and other shops built.