Confused by the mortgage process?
START here. You’ll find everything you need to know.
The mortgage process can be a smooth and almost uneventful process, or an unnerving one. Either way, a great deal depends on preparation as well as the selection of the Right Broker™ and mortgage lender.
4. WHAT SHOULD YOU BUY?
Your Current and Future Needs
Before you start searching for a home, you need to think about your needs both now and in the future. Here are some things to consider:
- Size requirements. Do you need several bedrooms, more than one bathroom, space for a home office, a two-car garage?
- Special features. Do you want air conditioning, storage or hobby space, a fireplace, a swimming pool? Do you have family members with special needs?
- Lifestyles and stages. Do you plan to have children? Do you have teenagers who will be moving away soon? Are you close to retirement?
Try to buy a home that meets most of your needs for the next 5 to 10 years, or find a home that can grow and change with your needs.
Choosing a Location That Is Right for You
Even if the home you choose has everything you need, the location might not be appropriate. When deciding where to live, you should take the following things into consideration:
- Whether you want to live in a city, a town or even in an out-of-town location
- Where you work and how easy it is to commute
- Where your children will attend school and how they will get there
- Whether you need a safe walking area or recreational facilities such as a park nearby How close you would like to be to family and friends
New Home, Previously Owned or Build Your Own?
When thinking about the kind of home you want, the first thing you should consider is whether you want a previously owned home (often called a resale) or a new home. Here are some characteristics that may help you decide:
New Home:
- Personalized choices. You may be able to upgrade or choose certain items such as siding, flooring, cabinets, plumbing and electrical fixtures.
- Up-to-date with the latest codes/standards. The latest building codes, electrical and energy-efficiency standards will be applied.
- Maintenance costs. Lower maintenance costs because everything is new and many items are covered by a warranty.
- Builder warranty. A homebuilder's warranty is usually available in all provinces (except Nunavut and the Northwest Territories). This can be important if a major system such as plumbing or heating breaks down. This warranty does not apply if you build the home yourself.
- Neighbourhood amenities like schools, shopping malls and other services may not be complete for years.
- Taxes such as the Goods and Services Tax (GST) (or, in certain provinces, the Harmonized Sales Tax (HST)) will apply. However, you may qualify for a rebate of part of the GST or HST on homes that cost less than $450,000. For more information about the GST New Housing Rebate program, visit the Canada Revenue Agency website.
- Extra costs. You may have to pay extra if you want to add a fireplace, plant trees and sod, or pave your driveway. Make sure you know exactly what's included in the price of your home.
Resale Homes:
- Easy access to services. Probably established in a neighbourhood with schools, shopping malls and other services.
- Landscaping is usually done and fencing installed. Previously owned homes may have extras like fireplaces or finished basements or swimming pools.
- No GST/HST. You don't have to pay the GST/HST unless the house has been renovated substantially, and then the taxes are applied as if it were a new house.
- Possible redecorating and renovations. You may need to redecorate, renovate or do major repairs such as replacing the roof, windows and doors.
Building Your Own Home:
Some people prefer the challenge and flexibility of building their own home. On one hand you can get exactly what you want in terms of size, design, location, quality of material, level of energy-efficiency, etc. However, you should expect to invest lots of time and energy.
Deciding on the Type of Home to Buy
There are many types of homes to choose from and each has its advantages and disadvantages. Think about your needs before making a decision. Don't forget to look beyond the walls. The environment surrounding your home can be almost as important as the environment inside of it.
Single-family Detached:
The most popular style and the most solid investment. It is a freestanding home which sits on its own lot thereby offering a greater degree of privacy.
Semi-detached:
A single-family home that is joined to another one by a common wall. It can offer many of the advantages of a single-family detached home and is usually less expensive to buy and maintain.
Duplex:
Two units — one above the other or side-by-side. The owner usually lives in one unit and rents the other.
Row House or Townhouse:
One of several types of single-family homes joined by common walls. It offers less privacy than a single-family detached home but still provides a separate outdoor space. These homes can cost less to buy and maintain.
Link or Carriage Home:
Houses joined by garages or carports, which provide access to the front and back yards. Builders sometimes join basement walls so that link houses appear to be single-family homes on small lots. These houses can be less expensive than single-family detached homes.
Manufactured Home:
A factory-built single-family home that is transported to your chosen location and placed on a surface-mounted foundation. The term manufactured home has replaced the term "mobile home".
Modular Home:
Also a factory-built home constructed in compliance with local building codes. The home is typically shipped to your location in two or more sections. It may or may not have a longitudinal sub-frame.
Condominium:
Refers to a form of legal ownership as opposed to a style of construction. Condominiums can be high-rise residential buildings, townhouse complexes, individual houses and low-rise residential buildings. Condominiums are also known as stratas in British Columbia or syndicates of co-ownership in Quebec.
This information that will help you understand the mortgage process better.
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