Buying a house

Buying a home is likely the biggest investment you’ll make in your life. And like with any big decision, there are a lot of things to consider before taking the plunge. This step-by-step guide is here to help you understand the mortgage process and shed light on every step of the home-buying journey. 

Your Guide to Home-Buying

Common mortgage questions

As a first-time home buyer, it’s good to familiarize yourself with the benefits you may be eligible for. These include a potential land-transfer tax refund and only having to have 5% ready for a down payment. It’s also important to understand that you must budget for the cost of owning a house as well as your mortgage. Reading this guide is a great place to start, but a Scotia advisor is also a great resource to have.

There are some options available to you should this occur. In certain situations, you may be eligible for a mortgage deferral. This would let you put a pause on your payments for a period of time. After this grace-period, you would still be responsible for paying back all your missed payments. To better prepare yourself for this situation, you may want to consider mortgage protection insurance.

Switching your mortgage can save you money. However, if you renew your mortgage before the end of your term you’ll have to pay a penalty. Working with an advisor can help you figure out if the benefits of switching early outweigh the cost of the associated fees.

Before meeting with an advisor, you can get an estimate of what you can afford with the Scotiabank mortgage calculator. It’s a free, easy to use tool that will give you a good idea of the costs associated with your mortgage. Keep in mind that the mortgage payments are only one piece of the puzzle. There are many costs associated with home ownership that you’ll also have to budget for.

Yes, it’s quite common for partners, or even friends, to buy a house together as co-owners. You can choose to do this as either joint tenants or tenants-in-common. With joint tenancy, the property belongs to both. For instance, if a partner in a joint tenancy were to pass away, their share of the investment would go to the remaining partner. In a tenants-in-common situation, each tenant owns a portion of the property which can become part of their estate.

Since a mortgage can take about 25 years to pay off, many people sell their homes while they still have an outstanding balance. What this means that when you sell your home, the money you get back from the sale will be minus the remainder of your mortgage.

Yes, a lawyer is necessary to have when buying a house. Their responsibilities include drawing up the mortgage documents, calculating the land transfer tax, exchanging legal documents with the seller, and closing the transaction. You may also need any or all of: insurance broker, home inspector, appraiser, and a land surveyor. 

Ready to get started?

Now that you know the basics, you’re all set to meet with a Scotia advisor.  

Book a meeting at a branch near you. 

Meet Meera Gandhi, a Scotia advisor

Photo Meera Gandhi, Scotia Advisor

Many people have experienced what you’re going through right now, including Meera. She’s here to give you professional advice based on her personal experience with buying a home in Canada.

Start early 

I usually tell my customers that the most important thing is to work with your numbers six months to a year in advance of when you want to buy a property. How long it takes to get your finances in order will depend on your situation, but it helps to start as early as possible. 

Work with the right professionals 

The best lesson I learned through purchasing two homes in Canada is that when it comes to a mortgage, I'm going to work with professionals. I want the best real estate agent by my side to help negotiate my house pricing. I also want to work with a mortgage professional who will make sure that this is the loan amount I am going to be approved for. 

Lower your debt to service ratio 

When someone wants to buy a home, one of the first things we look at is their debt to service ratio. This ratio is defined as the amount of  debt a person can have as compared to their amount of income. Our customers are required to have a 40-44% debt to service ratio. 

When I run this application for a potential home buyer, I let them know what they will get approved for. If they are looking to spend more on their mortgage, then they will have to come up with a larger down payment or reduce their debt load, if applicable. Let’s say there is a shortfall of $15,000, then we have to go back and work on an alternate plan. We might have to move out the home buying goal for another six months and figure out how and where they can save more money. 

Don’t skip the pre-approval 

I remember with our first house, we didn't even have a pre-approval, and we struggled with the mortgage. Honestly, there were three places we applied, and we didn't get the amount we were looking for. We couldn't get the approval and we had to let that house go. 

Don’t overspend on your dream home 

If you can't get the house of your dreams with your current budget, you should consider a different option because you likely don’t want to move into a house the will stretch you too far financially. You should enjoy the home you worked hard to earn instead of overextending yourself.  If you're paying your mortgage payment alone and can't afford anything else, then you don't have the  flexibility to relax and do things that you enjoy with your family. 

Understand the fees 

When we bought our first house, we had saved the down payment in a cashable GIC. We had done our math, but we hadn't included the extra fees that come with buying a home, such as, closing costs.  

I had to wait for an extra six to eight months to buy a home because I didn't have enough funds. But that doesn't mean that I wasn’t able to later buy a place, and in five years’ time, was able to buy a second home too. It doesn't matter how soon you will buy your first place, it all depends on how much you will save and how well you’re able to plan to make your dream of a home come true! 

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