With the rapid development of the Chinese economy, more and more domestic real estate investors are looking overseas. Canada, with its beautiful natural environment, comprehensive welfare system, and good community facilities, has become one of the most favored investment countries for investors.
As an overseas investor, it is important to have a basic understanding of the steps involved in buying a house in Canada. In fact, it is very simple and can be completed in ten steps. During these ten steps, you may need the assistance of related institutions such as lawyers, financial companies, and insurance brokers.
Here, we provide a simple summary of the home buying process. Following these steps will make your home buying experience smooth and enjoyable. We hope this information is helpful to you.
1. House Viewing
You can find a buyer's agent who will inform you of your desired price range, area, style, and other conditions. Your agent will identify properties that meet your needs and will help you schedule viewings with the sellers' agents to see the interiors of the houses. Your agent will list all the properties that meet your criteria and arrange viewings with the respective sellers' agents.
2. Making an Offer
When you are satisfied with the house you have viewed, you can ask your agent to make an offer to the seller. The offer will outline several key points, such as:
1. Your budget for purchasing the house;
2. The conditions of your purchase and the date for removing those conditions;
3. The closing date;
4. The possession date (the date you can officially move in);
5. The amount of the deposit (to be paid after the conditions are removed).
3. Negotiation
The seller may modify your price and conditions, and some sellers may not accept your price and conditions. If you receive a counter-offer from the seller, which may modify your proposed price and conditions, you can still propose another price and conditions until both parties reach an acceptable agreement. Once both parties agree on the price and conditions, the property contract is considered "conditionally accepted."
4. Bank Loan
As soon as you express your intention to buy a house, even before confirming a specific property, you can start looking for a loan from banks. It is advisable to consult multiple banks to find one with lower interest rates and better repayment conditions (such as restrictions on early repayment or limits on annual repayments). Once you finalize the interest rate and conditions with a bank, this rate and conditions will be reserved for you for 90-120 days. If the interest rate decreases during this period, the new lower rate will apply. If the interest rate increases, you will maintain the originally agreed rate. During this reservation period, you can continue searching for a house, so this step should run concurrently with the first step.
5. Down Payment
The Canadian government encourages new immigrants to purchase homes. New immigrants without jobs or insufficient income can obtain up to 65% financing. Therefore, you should calculate how much your down payment will be. For example, if you want to buy a house worth CAD 200,000, you will need a down payment of CAD 70,000. Once you have the "conditionally accepted" contract, the bank will begin the assessment process and will check if your condition removal date allows sufficient time for the bank to complete its work. If not, you can still propose an offer to the seller to change the condition removal date.
6. Home Inspection
Typically, the buyer's agent will help you find a home inspector. In front of the seller's agent, if the issues do not affect the structure of the house or cause living inconveniences, the inspector will gently inform you of minor issues. Only significant problems, such as leaks or electrical issues, will be communicated with caution. When you accompany the inspector, you should personally operate all utilities and let all faucets run for more than 10 minutes to check if the drainage is smooth, and look for signs of leaks in the ceiling, corners, and window edges. If you are buying a high-end condominium or townhouse, do not forget to request the most recent three years of property management meeting records from the seller.
7. Condition Removal
You must complete the loan and inspection work before the condition removal date. If you decide not to buy the house before the condition removal, you can cancel the contract without any penalty. Once all buyer conditions are removed and the condition removal document is signed, the purchase contract becomes officially valid, and you must pay the deposit. Some sellers' agents may require a portion of the deposit to be paid at the time of the offer, but you can insist on waiting until the conditions are removed to make the payment.
8. Deposit
Once the deposit is paid, if you do not purchase the house, it will be considered a breach of contract, and the deposit will be forfeited to the seller.
9. Closing
After the conditions are removed and the contract is established, your agent will find a notary or lawyer to handle the transfer procedures. This notary or lawyer will directly contact your loan bank. Before the closing date, you must sign documents at the notary or lawyer's office. On the closing date, the down payment (which must be deposited into your account and authorized for the notary or lawyer to withdraw) and the loan will be transferred from the bank to the notary or lawyer's account, and then to the seller's account, with the amount authorized to be withdrawn from your account excluding the down payment.
1. There is also a property transfer tax (charged for new homes, with varying regulations in different regions).
Canada encourages first-time homebuyers. If you have never purchased a home anywhere in the world, you can apply for an exemption from the property transfer tax, which the bank will assist you with, although the process and documentation can be cumbersome. Some individuals may attempt to exploit this by owning property overseas but claiming they have never bought a home in Canada; this risk is to be borne by the individual.
2. Additionally, there are lawyer fees.
Generally, the transfer fees with a loan range from CAD 650-800 (it is advisable to compare), while selling a house costs about CAD 200-300. If there is no loan, the lawyer fees are lower.
3. There are also some adjustment date fees.
For example, if the 15th is the adjustment date, management fees (if it is a condominium or townhouse) and property taxes (if the seller has prepaid) or other taxes paid for the entire year must be reimbursed to the seller from the adjustment date. On the possession date, which is generally at noon on the following day, your agent will hand you the keys, and you can start moving in.
4. Post-Condition Removal Tasks
Once the condition removal contract is officially established, you can start preparing for your move in accordance with the closing date and inform all relevant institutions of your new address and its effective date, such as:
ICBC Driver's License
CCTB and CCRA (Welfare and Taxation Bureau)
MSP (British Columbia Medical Services Plan)
Banking Institutions
Credit Cards
You can also pay to apply for an address change with the post office, allowing them to forward any mail that has not been updated to your new address.
6 months for CAD 33
Additionally, it is important to apply in advance to the following entities for the start date of the new address account and the termination date of the old address account:
1. Utility Company
2. Television and Internet
3. Gas Company
4. Telephone Company
Otherwise, you may happily move into your new home but find yourself in a situation of unauthorized use of electricity and gas.
10. Do You Need a Buyer's Agent?
If you are not familiar with the home buying process and laws, it is advisable to find a good and enthusiastic buyer's agent. If you are well-versed in all procedures and laws and are confident in assessing and inspecting the condition of the house, you can contact the seller's agent directly for the property you are interested in. In this case, you should focus on the price. When there is a significant gap between your price and the seller's price, the agent may negotiate with the seller to agree to your offered price and refund the commission that was originally to be paid to the buyer's agent to the seller.
If you are familiar with the entire transaction process and understand how to protect yourself in the contract, you will find that the buyer's agent is merely showing you the house. You may also discover that the buyer's agent, in front of the seller's agent, will always say that the house is good and the price is reasonable, and then help you write the offer. Moreover, regarding the price you offered, both agents may sometimes reach a target price for the transaction beforehand, persuading you to increase your offer when the seller is not agreeable. In fact, sometimes your offer may not even be presented to the seller and may have been privately negotiated away by the agent.
Of course, there are also very enthusiastic agents who genuinely consider the buyer's interests. However, regardless of whether you have a buyer's agent or not, always remember not to rush into buying a house, and to stick to your price without being swayed by the agent's suggestions to increase it.