How long does it take to buy a home in Canada?

How long does it take to buy a home in Canada?

When you are a first-time home buyer in Canada, there are many things that people do not tell you. This can result in numerous challenges or unexpected delays for home buyers. In this article, we will provide you with an in-depth look at the home buying process, including estimated timelines, to help you prepare for the purchase of a home.

Mortgage pre-approval

While you may be eager to begin looking at houses right away, the first step you should take is to obtain mortgage approval from a broker. This may not sound as exciting, but it is extremely beneficial. Based on your income, tax-free savings account, credit report, debt, and other factors, a mortgage broker will tell you how much you can afford to spend on a house. This will give you a budget and help you stay financially on track while looking for the right home for you.

Pre-approval can take anywhere from a few days to several weeks. The time it takes to get pre-approved for a mortgage is determined by several factors, including your credit report and current financial situation, and how busy your mortgage broker is.

It’s also important to remember that you are not required to accept the first mortgage offered to you. Mortgage brokers’ interest rates may differ. Look around for the best mortgage for you.

How to get pre-approved faster

Before approaching mortgage lenders, you should work on improving your credit score and paying off any outstanding debts. This includes credit cards and student loans. It may not be possible to pay them off completely before attempting to purchase a home, but even a payment or two could increase your chances of receiving a loan sooner.

Lenders will look at your credit history to see if you are a trustworthy person to lend money to. Having a diverse financial portfolio and a good credit score is one of the best ways to increase your trustworthiness. It is simple to diversify your portfolio by obtaining additional lines of credit, such as a credit card.

To improve your credit score, use your line of credit and pay it off quickly. This can speed up the pre-approval process and help you qualify for a mortgage with lower interest rates!

Hire a real estate agent

Hiring a real estate agent is the next step in the home-buying process. They are industry professionals with extensive knowledge of real estate and the local housing market who can assist you in purchasing your first home. Ask your family and friends for recommendations to find the best realtor for you. Who have they previously hired, and how was their working relationship with them? Most of the time, your friends and family will be able to provide excellent advice on which realtor to hire as well as information on what costs to anticipate when hiring them.

Hiring a realtor can take some time, depending on how long you spend considering your options and how long it takes them to respond. We recommend starting this process as soon as possible in order to find one that feels right for you. People typically interview 2-3 realtors before selecting the best one for them.

Go to open houses

This is by far the most exciting part of the home-buying process. Potential buyers will look at properties for sale in Canada to see if they can see themselves living there. This period can last several weeks or months and should not be rushed. Purchasing a home is a significant step in anyone’s life, but it is especially significant for those who have never purchased a home before. Remember to be honest about what you want in a home and how much you can afford. Nonetheless, some compromise will be required; otherwise, you may be looking for a new home for the rest of your life!

Make an offer

It’s time to make an offer on a house you’ve decided to buy after you’ve found one you like. If accepted, an Offer to Purchase is a legally binding contract that specifies how the transaction will take place, including the names of the parties involved, the property description, the unattached goods (appliances, etc.), and attached goods (fixtures, etc.) included in the home purchase. It also specifies the property’s cost.

Realtors will assist their clients in developing a competitive offer based on the asking price and their current financial situation (including your mortgage loan). Some may even advise clients to draught a personal letter to include with the sellers if they are in a bidding war.

Writing a personal letter to the person from whom you want to buy a home has become increasingly popular among Canadian homebuyers. This letter comes with the package deal. Most buyers do this because they believe it will help them connect with the seller and increase their chances of having their offer accepted.

Within hours, an offer can be prepared and sent to the seller. The seller must then respond to the offer. A response is usually received within hours or days.

Close the deal

Buyers will immediately pay a deposit to their sellers as “good faith money” after an offer is accepted. This payment demonstrates to them that they are serious about purchasing the property. This deposit is typically 1-2 percent of the purchase price and should be given to the seller’s realtor in trust.

The buyers and realtors will then collaborate to complete the Agreement of Purchase conditions, such as receiving financing or conducting an inspection. These conditions must be met within a three-day period.

Every buyer should have a home inspection performed on their new home. A home inspection allows buyers to assess both the visible and hidden conditions of their new home. It may also reveal any hidden issues that they were unaware of at the time of the offer. It is best to conduct an inspection before finalising the purchase to avoid any unexpected costs or issues.

After the offer’s conditions are met, realtors will finalise the transaction, and buyers will need to meet with a real estate lawyer to process the paperwork, which includes your mortgage. A final closing date – also your move-in date! – will be assigned at this point.

Lender underwriting and finalization

Lender underwriting is the final step in obtaining a mortgage in Canada. This is the stage at which a lender takes your initial approval for a home loan and draughts your actual contract. Your lender creates the terms of your mortgage loan based on the value of your home, your credit history, your income, and other factors. This contract will include the interest rate you were given as well as your mortgage payments.

This procedure could take anywhere between a day and a week. This will depend on how busy your lender is and whether they need to request additional documentation from you. Following the completion of underwriting, a lender will request that several conditions be met before the loan is approved and finalised.

Prepare for closing

Lawyers will assist you in closing by completing your conditional mortgage instructions. This is a checklist of tasks that must be completed before the mortgage is finalised and funds are released. This will typically include any additional documentation that must be sent, such as proof of insurance.

Your mortgage lender will require you to obtain home insurance as part of the loan terms. This insurance protects both you and your lender from any fees incurred as a result of damage or theft. To meet the requirements of your mortgage, your lawyer will ask you to bring information about your policy to a pre-closing meeting.

Mortgage default insurance is also required for anyone who does not put down a 20% down payment on a home. If the borrower/buyer is unable to make payments, this insurance will compensate the lender. Fortunately, most banks can provide this.

Anyone who has received conditional approval for a home loan can expect to complete their conditions and receive verified approval within 1-2 weeks.

Closing day

The closing date is the day your new home’s title is officially transferred to you. Only paperwork stands between you and your new home after weeks or months of hard work. Any closing costs that were not included in your loan must be paid on this day as well. This may include legal fees as well as property taxes such as the land transfer tax.

Land transfer tax may be included in your closing costs depending on where you buy a house in Canada. This tax is a fee for transferring ownership of the property from the previous owner’s name to yours.This tax differs in provinces, but first-time buyers in Ontario can enjoy paying less or even no tax at all thanks to the province’s LLT rebate.

Prepare to buy a home in Canada

In general, first-time buyers in Canada can expect the process to take 30 to 60 days. This is determined by a variety of factors, including their financial situation and the length of time it takes them to find a home. However, there are steps that can be taken to expedite the purchasing process, such as:

  • Increasing your credit score and improving your financial situation
  • Obtaining a mortgage pre-approval before purchasing a home
  • Getting a realtor involved early in the process

Contact our experts for personalized advise and real estate investment planning. Call 416-878-0749 or Register here.

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