Dec 18, 2024
Buying Your First Home in Canada in 2024
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I’ve recently shared our timeline on how we moved here in Canada, family of 3 landed as Permanent Residents and bought our permanent home in just about 8months.
And people often ask me how were able to buy our home in just a short period of time. "Wala pa nga kayong isang taon dito sa Canada, pano kayo nakabili agad?"
But I think a question more important is...
How you (Yes. YOU!) can buy your first home in Canada too?
Hence, in his article, I'll share these simple steps on how you can buy your first home in Canada.
1. Browse the Real Estate Market
GO straight to it. Don't hesitate and don't delay. Browse what's listed on the market. See what's on sale in your neighbourhood or in your preferred location.
I personally use Zillow to see what's on sale, but you do what works best for you.
"But why go straight to browsing the market?", you asked. "I'm not even ready and I don't think I can afford it yet."
If you're not yet ready, well, it's never too early to get an idea of what a typical home in your neighbourhood looks like. You'll get to compare it with the one that you're renting(or staying) right now. But the most important thing, is to get you excited and get you motivated. To start dreaming, then plan and soon own your very own home. To officially call yourself a HOME OWNER.
Claim it!!!
BRO! I'm not even in Canada yet!!!
It's the same thing! Go and start browsing the housing market. If you are still an aspirant, hoping to migrate to Canada, then make it a part of your research to look for your achievable dream home.
Maybe you're still undecided. Then, it will help you decide whether it's worth it or not to move here.
Even if you're 100% sure you want to move here. But after looking at the housing prices, maybe that'll change your mind. I don't judge. It is expensive.
After getting an idea of how much homes cost here, maybe it can save you the time, effort, and resources, and decide to move somewhere else. You just avoided being "scammed" by Canada. (Like what the heartbroken people say)
Or maybe if you are just like me and you see how close to nature you can be, mountain view right outside your house, then you can begin your journey with the End Goal in Mind.
Like they always say, "Keep Your Eyes on the Prize."
Lastly, if you are READY to buy a home, then the MORE you need to browse what's listed.
The more you need to familiarize yourself with the prices and conditions.
You need to have already wondered: Why are some houses with less living space priced higher? Why are those older homes more expensive? Why are these newer homes cheaper? Why is this suspiciously a lot cheaper than other homes listed in this area?
And you should at least have already answers to some of these most common and basic questions. I can tell you now but it can be confusing. Hence let's go to the next step for now.
Keep reading and it will all makes sense later on.
2. Save Up For the Downpayment
Saving is tough. Saving without a goal is even tougher.
But worry not!
That's why you need to start with a motivation. You need to keep browsing for homes, to literally keep your eyes on the prize! And of the price.
Now that you have an idea of how much your ideal home is, then we can calculate how much downpayment you may need. Typically, as a first time home buyer, you can get pre-approved with as low as 5% downpayment.
Meaning, if you are looking to buy a 2bd-1bath home in Edmonton, AB,
Zillow listings on Edmonton, AB
Then the price (as of the May 2024) will be around C$300k . Hence, you can get pre-approved with as low as C$15,000 as downpayment.
The same 2bd-1bath can go around C$600k in and around Toronto, Vancouver and Victoria. Which means you will need at least C$30,000 for downpayment.
So how will you save up for the downpayment?
Saving money can be very challenging in general. Even outside Canada it is challenging. But much more challenging in Canada just by looking at the grocery prizes. 😵
But what I like about Canada (arguably) is the availability to earn more.
Unlike back in the Philippines, where you are paid with fixed-minimum-monthly salary, obliged to work even after business hours and stressed by the commute back and forth from work, working a second job is nearly impossible.
But here in Canada, if you have an open work status, then you should definitely find a second job. Look for a part time job, or even a second full-time job if you're really committed to it. Working for another 8hrs a week is not that hard. And even if you're only making $15/hr, you can save an additional $6,000 a year. Work for additional 16hrs a week and, in a year, you will have saved that downpayment. Yes in just a single year.
Well working minimum-wage for 16hrs a week is only $12k annually. But when you start getting busy, you'll also start avoiding those impulsive expenses you are making during your free time, and save a lot more. If NOT, then just make it 24hrs/wk part time jobs. It's NOT that hard once you get used to it.
Make sure to directly deposit your 2nd income into a separate bank account (or better on an FHSA) that you can't touch. Not literally, but at least you can't touch until it's time to make the down payment.
If you're already working a second job, and still can't save enough for downpayment, then you are probably working minimum-wage jobs and it's time to look for a higher paying ones. I personally started working a minimum-wage job when I landed in Canada. But I keep switching jobs until I finally got above the median wage. And all jobs I worked, I didn't have prior experience. So lack of experience is NOT an excuse when you have an open work permit. In fact, maybe clinging to your experience is the one stopping you from earning more.
If you're already working 2 jobs and earning a lot on both, and you're still not able to save for a downpayment, then you must have a bad spending habit. Try to search for the meaning of instant vs delayed gratification. Maybe you're not thinking long-term enough.
OR maybe you're just realizing now that you have saved enough. Then delay no further, let's move to the next step. (Even if you haven't saved enough, there's no harm in knowing the next step.)
3. Get pre-approved of a mortgage
Before you go on your journey looking for lenders, let me first set your expectations straight and clarify something.
As a first time home buyer, you can apply for a mortgage for as low as 5% downpayment. BUT a lender can only approve a loan depending on your income. Other factors such as debt, assets, interest rate, etc., are also considered. But ultimately, it will highly depends on your income.
Rough estimation on how much a lender can approve is 4 times your annual income. I'll empahsize that this is a "ROUGH" estimate. Hence, it could be more or a lot less.
If you and you're partner are making $100k annually together, then a lender may be able to lend you $400k. And with the $25k downpayment, you can search for a home that's about $425k
If you and you're partner together are making $150k annually, and have saved $30k for downpayment, then you can start looking for a home up around $600k.
Well, now that's clear, let's talk about where you should apply for mortgage.
You can either apply through a broker, or directly to the lenders.
What's the difference?
Time wise? When you apply through a broker, the broker does the work for you in looking for the best deal and/or the best interest rates. They search through the lenders and banks, and find which best suits your needs. Applying directly to lenders means you have to do all those work. Meaning you have to book and attend appointments one by one. Collect and compare their rates. And also check the terms and condition yourself to understand all this details. Then you decide which one best suits your needs.
Cost wise? There's no difference. In fact, you might even be better off with a broker. They, not only, save you time talking to lenders, but they also know more lenders to talk to. Hence, more rates and offers to compare.
Sure, the broker will earn commision after successfully helping you with your mortgage application, but it's the lender who's going to pay that commision, NOT you.
Why will the lender pay the broker?
It's because the broker brings in the client.
But if the Lender is paying the broker, then the broker is working FOR the lender. NOT for me. How am I suppose to trust the broker to find me the best deal?
You're NOT suppose to proceed with the application if you are NOT getting the best deal. Hence, no matter how much the lender is offering to pay the broker to have you as their client, if they are not giving you the best offer, then there won't be any transaction. And no transaction means no commision for the broker.
So, the broker needs to provide you with the best deal. otherwise you should NOT make the transaction.
Once you've been pre-approved of a mortgage and you now know how much you can afford, then it's time to look at those properties in person.
If you need a recommendation for a broker, you can email me your interest below.
Inquire for Broker Recommendation
or email to: filipinoaspirantstocanada@gmail.com
4. Hire a Real Estate Agent
Now it's time to look for a Real Estate Agent. Talk to a few before deciding on which one to go with. Sadly, since about 2020, being a Real Estate Agent has been popularized to make a lot of money. And since then, there has been a significant increase of people aspiring to make money in real estate. Hence, the market has been diluted with unexperienced agents who just want to make quick money.
If you do not know how to find a good Agent, then looking for recommendations will definitely help a long way. Ask a friend or me. Even their purchase is not recent, if their agent is good, he is most likely still in business.
If you are looking to buy a property in Vancouver or Vancouver Island, then I can highly recommend the agent who helped us. He is one of the best agent that personally helped us with our purchase. You can email me using the link below.
Inquire for Real Estate Agent Recommendation
or to filipinoaspirantstocanada@gmail.com
If you can't find recommendations, then this is why it's important to have questions in mind long before you are ready for your purchase. Ask your agent with every questions you have, especially the ones I've mentioned in step 1. After asking them these questions, you'll get a good sense of which ones has expertise and are accommodating to quiries, vs which ones are just trying to make a quick money off of you.
Don't be afraid to ask them how long they have been in the real estate business as agents. Don't be afraid to reject the new ones. I would highly recommend you go with the ones with experience. New agents can gain their experience with buyers who already know what they are doing. And YOU as a first-time home buyer is better off with someone who can really help you.
Once you found your Real Estate Agent, these are the steps you'll go through with them. And even if you haven't found a good one yet, you can start going through these to test the knowledge and experience of the agents you meet.
Start booking and view homes. Don't be shy, book as much as you want. Book as much as you can. It's part of your agent's job to show you around. Gain as much knowledge as you can about the home you are viewing. Gain as much knowledge as you can on other homes so you can personally compare them.
I want to emphasize that you should book viewings, AS MUCH AS YOU CAN, even if they are out of your pre-approved mortgage budget. (but NOT ridiculously out of your budget.) Get an idea what factors are making this home more expensive. After learning about those factors, you might now realize that there was a home that you previously saw that could have been worth more but are on sale under market value. And that is exactly what I would recommend you going after.
Or maybe you will come into realization that none of these homes, that is with-in your budget range, is your ideal home. Then, you may rather delay your purchase. Save more and work harder to increase your budget. Buying a home is a such a big step in life, and you do NOT want to settle with one that you are not comfortable living in for at least 5 years.
I just want to emphasize that you do NOT want to be working with agents who are in this to make a quick commission off you. Don't think you are wasting your agent's time. If they ever make you feel so, then they might NOT be the right agent to work with. You are entitled to finding a good home for your family. If you are being forced into a decision, I personally think you should cut them off and find a better one. There are plenty out there who are more willing to do a better job.
5. Make an Offer and Claim Yourself to be the Proud owner of That Home
Once you successfully found the house you will call home, the one you are comfortable living in for at least 5 years, then it's time to make an offer. Your good agent will help you in this process and also the next ones after, which are:
- Writing conditions
- Working with your mortgage broker to finalize your loan
- Working with home inspectors
- Meeting with a lawyer for the transfer documents and all legal requirements
- Closing (Possession of the property)
I could make a brief description about these next steps, but might end up confusing you instead. I don't think anyone reading this is is at this point already anyway, hence there's no point in overloading you with all these information. Besides a good real estate agent can do a better job that I can. Hence, I'll save you the time. If they can't explain these things to you to your confidence, then find another one.
Also please clarify with your Agent what are the other possible expenses, like Property tax, property transfer tax, HOA, etc., that you need to be aware of and prepare for.
And that's it!
Those are the 5 simple steps to take to finally buying your first home in Canada. Simple, easy to understand 5 step process. I understand that each step can be very challenging on their own, but nothing that you cannot overcome.
If you are a Filipino Aspriant to Canada, a member of our group who's still working on his dream to migrate to Canada, let this article be an inspiration and a guide for you. A guide for every decision you make to be aligned with your goal. To be an inspiration that you not only deserve a permanent residency status, but also your own PERMANENT HOME.
Happy Victoria Day!
Spring and Summer season is when the real estate market gets busy the most. Hence, Victoria Day is a great reminder to be victorious, and will be a great reminder of your victory.
And if you need Broker and/or Real Estate Agent recommendation, please use the link below to email us.
Inquire for Broker Recommendation
Inquire for Real Estate Agent Recommendation
or just email us at filipinoaspirantstocanada@gmail.com
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