FREQUENTLY ASKED QUESTIONS
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When starting the home-buying process, you can choose to contact either a realtor or a mortgage lender first—both are great starting points. By connecting with a mortgage lender, you’ll get a clear idea of your budget and a pre-approval, which strengthens your buying position. If you reach out to us first, we can connect you with one of our trusted mortgage partners, who will guide you through the financial steps and help determine your ideal price range.
For example, if you’re pre-approved to buy a home for $450,000 and find a property listed at $415,000, your realtor can communicate your pre-approval amount to the seller’s agent. This shows that your financing is solid and could allow you to offer a shorter conditional period, giving you a competitive edge and a smoother buying process.
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We recommend contacting a real estate agent first. We can tour your home and provide suggestions on small improvements or repairs that could increase its value and help avoid issues during the sale process. We can give you an estimate of your home’s current market value and its potential value after completing those recommended changes.
With this information, you can then approach your bank and share your agent’s report to help guide financial decisions. If you plan to buy another home, the bank can start the pre-approval process based on your expected sale price, giving you a clearer idea of your buying power.
This entire process can be started up to six months before listing, providing ample time to prepare. Throughout this transition, your real estate agent will work closely with your mortgage broker to make the process more efficient, especially if you’re buying and selling at the same time.
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This decision depends on your unique situation and often comes down to whether you need to sell your current home before qualifying for a new mortgage.
For some people, especially those with little left on their mortgage, it may be possible to buy a new home without selling first. However, in today’s market, we generally recommend preparing and listing your home first, or at least getting it ready to sell. We can come by to assess what needs to be done before listing, which might be as simple as decluttering or could involve minor improvements, like updating flooring. Small changes can make a big difference in attracting buyers, and we’ll advise you based on what buyers are looking for in the current market.
By preparing and listing first, you’ll be in a stronger position to make an offer when you find a home you love. We’ve seen clients miss out on homes because they wanted to look around before listing, only to learn that an offer came in while they were still considering it. It’s disappointing to fall in love with a property but not be ready to make an offer.
Many sellers worry about listing first and then feeling pressured to buy just because their home has sold. To ease this concern, we can include a condition in the offer that allows you to find a suitable new home before finalizing the sale. This way, you can secure a buyer for your current home while having time to find the right next property—keeping the process as stress-free as possible.
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When making an offer, there are five main elements to consider:
Purchase Price: This is the amount you’re offering for the home.
Closing Date: This is the date you plan to take possession of the home and receive your keys from the lawyer. We’ll work together to select a date that aligns with your needs.
Conditions: Conditions are terms that need to be met for the sale to proceed. Common conditions include a home inspection to understand the property’s condition and a financing condition to confirm that your lender approves the mortgage for this property. If you or the seller need time to buy or sell another home, we can add that as a condition as well.
Deposit: A deposit is required to show your commitment to the purchase. This amount is held by the listing brokerage and only transferred to the seller upon closing. The deposit is part of your down payment, not in addition to it. You’ll receive a receipt from the brokerage confirming the deposit, which you can provide to your bank. This is usually provided within a few days of offer acceptance, so it’s important to have these funds readily available. The deposit is fully refundable throughout the conditional period.
Inclusions, Exclusions and Rental Items: Inclusions are items the seller agrees to leave behind, such as appliances (e.g., washer, dryer, dishwasher, fridge, and stove). If the seller wants to exclude certain items, like a chandelier, this should be noted in the offer. Additionally, if there are rental items like a hot water tank, furnace, or air conditioning unit, the seller must disclose this. You can choose to assume the rental contract or negotiate for the seller to pay it off before closing.
In some cases, additional items like furniture may be included, but this is uncommon in most areas outside of larger cities.
These are essentially what go into making an offer. We’ll help guide you through each step to ensure your offer is clear and covers all necessary details.
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No, you don’t always need to make a 20% down payment. If you're purchasing a primary residence (not an investment property), you can put down less. However, if your down payment is less than 20%, you will typically need to pay an insurance premium to the Canada Mortgage and Housing Corporation (CMHC).
This insurance is a percentage of the purchase price, with premiums typically ranging between 2.8 – 4%. By putting down 20% or more, you can avoid this premium. Keep in mind that this applies as long as the home is your primary residence, and there are additional qualifications to meet.
For example, your credit score must meet certain requirements, your debt-to-income ratio must be within acceptable limits, and you must pass a stress test, which assesses your ability to handle potential interest rate increases of up to 2%. These specifics can be confirmed with your mortgage broker during the pre-approval process.
For homes priced at $500,000 or less, a minimum down payment of 5% is required. For amounts over $500,000, you’ll need 10% for the portion above that amount. If the home costs over $1,000,000, a 20% down payment is necessary, even for primary residences.
For example, if you’re buying a home for $700,000, you would pay 5% on the first $500,000 and 10% on the remaining $200,000.
All investment properties require a 20% down payment, regardless of the purchase price. If you’re buying a property to rent out, you must have that 20% down.
Additionally, the insurance premium will be included in your mortgage payments. It's a good idea to discuss this with your mortgage broker to determine the premium you will pay.
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Yes, down payment rates for commercial properties are generally different. Typically, lenders require a minimum down payment of at least 25%, and sometimes even more.
There are additional considerations when purchasing commercial properties. For instance, most banks require an environmental test report to ensure that the land has never been contaminated. This is especially important if the property was previously used for purposes such as a gas station.
The underwriting rules for commercial mortgages are distinct from those for residential mortgages, making it a completely different process. There are various financing options available for owner-occupied commercial properties and specific businesses operating out of these buildings.
It's essential to discuss your options with a mortgage broker, as they can provide tailored advice and run specific numbers based on your financial situation.
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It depends on several factors, including the business's profitability, how long it has been operating, and the specific industry. For example, obtaining financing for restaurants can be more challenging than for other types of businesses.
There are various financing options available, such as the Business Development Bank of Canada (BDC), which offers specific programs for business financing. Additionally, banks like RBC provide business banking services. Ultimately, the required down payment will vary based on the performance of the business and its financial history.
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Whether you can convert a property into a restaurant depends on its zoning. If the property is already zoned for restaurant use, you're good to go. However, if it's not zoned for the type of business you want to operate, you'll need to apply to the city for a minor variance. The costs associated with this process can vary based on the specific type of business you intend to open.
Regarding environmental tests, there are different phases to consider. Phase 1 involves researching the property's history to see what types of businesses have operated there in the past. For example, If the property was previously a gas station or a laundromat, you would likely need to conduct a Phase 2 assessment, which includes digging and testing the soil for contaminants.
It's essential to understand these requirements and processes as they can impact your ability to operate your desired business from that location.
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There are many unconventional ways to secure funding for building a home. While you can go the traditional route with a bank, they often offer construction mortgages that provide funds in phases. As you complete different stages of the building process, the bank will release more money for you to pay contractors. Typically, this is broken down into five phases: starting with the foundation, followed by framing, and then moving on to the interior work.
Another option is to discuss payment arrangements directly with your contractors. Some may agree to wait until your home is built and you have secured a mortgage before requiring payment.
You can also consider establishing an account with local lumber yards, such as Emard Lumber in Cornwall. They may perform a credit check similar to a mortgage broker and allow you to purchase all your materials on credit. This way, you don’t need to pay upfront; once the house is built and your mortgage is in place, the mortgage lender can pay off the account.
Additionally, Cornwall has a network of affluent individuals who may be willing to invest in your project. Networking can be incredibly valuable, as many people are open to loaning money for home construction. You can negotiate terms with a lawyer, including agreements that allow them to take ownership of the house if the project doesn’t succeed. While this option may come with a higher interest rate than a bank, it can be worth it to pay a bit more initially, as you’ll be building equity in your home over time.
It’s essential to consider the long-term benefits. Paying a little extra in interest can be a small price to pay for getting your foot in the door. Even if you don’t qualify for the lowest interest rates, you’ll still have the opportunity to build value in your property.
Many people focus too much on the immediate costs, overlooking the potential equity they could build in the future. Remember, renting means you’re not investing in anything that will come back to you.
Our biggest piece of advice is to network. Remember, the more resources you tap into, the better your chances of finding the funding you need to build your home. -
When you’re buying or selling a house, you’ll interact with several key professionals throughout the process.
Realtor: As your realtors, we will guide you through the entire transaction, helping you navigate the market and negotiate the best deal.
Mortgage Agent: If you’re buying a home, you’ll typically work with a mortgage agent who can help you secure financing. We can refer you to one of our trusted partners.
Lawyer: Your lawyer will review the purchase contract and handle the closing of the transaction. They will conduct a title search to ensure the property has a clear title before it is transferred to you.
Home Inspector: Before finalizing the deal, you will also need to hire a home inspector during the conditional period. The inspector will assess the property for any potential issues. This cost is typically $500-600. If you are purchasing a rural property you will also need to have a septic system inspection done, which can be an additional $600-700. This is a cost assumed by the Buyer and it optional but highly recommended.
Insurance Broker: It's essential to discuss insurance options for your new home, and your insurance broker can assist you with this. A good option to save is a home and auto bundle.
Some buyers choose to contact their lawyer during the conditional period to review the terms of the agreement, while others prefer to wait until the deal is firm. We can also include a clause in your offer that allows for legal review.
In summary, you will typically work with these five professionals: your realtor, mortgage agent, lawyer, home inspector, and insurance broker. We have contacts for all of these services to help ensure a smooth transaction.