The Property Banks Buyers Guide to Canada
As one might expect from a country as sophisticated and well
regulated as Canada the Canadian real estate purchase process is
straightforward and well documented and both the vendor and
purchaser’s rights are legally protected.
In this home buyer’s guide for Canada we detail the entire property
buying process for the international real estate investor interested
in purchasing property assets in Canada.
Anyone requiring a mortgage to purchase property in Canada should
consider getting pre-approval before they begin looking for their
ideal property investment. With pre-approval of a home loan in place
it makes the entire purchase process quicker and smoother as any
offer made to a vendor will be more welcome when the vendor knows
that the funds are available to hand or have been agreed at least in
principal with a lender. Furthermore a real estate purchaser in
Canada will get a good idea of how much they can afford to borrow
when they approach a lender for pre-approval and this can make the
hunt for a suitable home to buy that much simpler when the buyer has
a fixed budget in mind.
In terms of the real cost of buying Canadian real estate
unfortunately there are many extra expenses that an investor can
incur and a real estate buyer should be aware of at least the
following fees and charges and question their real estate agent and
lender about which they may have to pay:
Mortgage insurance and loan application fees
Appraisal fees
Deposit of around 5% paid when an offer to purchase is accepted
Down payment of around 25% less the 5% deposit
Estoppel certificate fee
Home inspection fee
Land and deed registration fees
Prepaid property tax refund
Home insurance
Survey costs
Legal fees
Title insurance
In Canada it’s essential to establish a good rapport with a real
estate agent. Unlike in many emerging property markets around the
world Canadian real estate agents are licensed and work hard for the
buyer by assisting with finding the ideal investment property in
Canada, preparing and submitting offers to purchase, entering into
negotiations with the vendor and ensuring that the real estate
investor’s path through the property buying process is smooth and
straight forward.
The other person to establish a good rapport with is a lawyer (or
notary if buying in Quebec) who will work on behalf of the real
estate investor and protect their legal interests throughout the
process.
Once you begin the property seeking process either on the ground and
face to face or remotely via email, fax and telephone communication
with your real estate agent it’s essential to keep in mind how you
want your Canadian real estate investment to work. If you’re buying
to let out think about your target rental market and what they will
be looking for from a property and its location. If on the other
hand you’re hoping to buy to renovate and resell for profit then
look at the property prices for quality homes in a given location to
give you an idea of how high you’ll be able to resell your renovated
property for and how cheaply you need to purchase a refurbishment
project to make the best profits.
Once you’ve located the best real estate for your particular
investment purposes you have to submit a legal document to the
vendor known as an ‘Offer to Purchase’ or ‘Agreement of Purchase and
Sale’ and it’s usual for the real estate agent and lawyer to get
involved with the preparation of this document. The document is a
cross between a straight offer and a conditional contract as it
states the price you’re prepared to pay plus the terms under which
you’re offering to purchase including how much deposit you’ll pay,
when you want to close the purchase etc., it’s usual for this
document to go back and forth between vendor and purchaser for
revisions but once the offer is agreed upon and the conditions of
the offer are met the ‘Offer to Purchase’ becomes final.
The final step is reaching closing day when the real estate legally
becomes the property of the real estate investor, final monies
change hands and the title deeds can be registered in the name of
the purchaser.