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Real Estate Purchase: Financing Terms

Real-Estate-Purchase-Financing-TermsFor many of us, buying a home is a major and significant event in our life, more of a rite of passage than a simple administrative and financial procedure. The road to achieving this milestone can feel uncertain and is often full of obstacles and surprises. And yet, there’s nothing to it! Beyond its symbolic meaning, buying a property is actually quite simple—at least on paper. The various steps are very clear and well-defined.

No need to panic, just read the article below and you’ll learn everything you need to know about real estate purchases, and who knows, maybe you’ll feel ready to take the plunge yourself!

Buying and financing a property in 7 steps:

1. Assess your mortgage affordability:

At this stage, the simplest step is to visit a financial institution and speak with a mortgage advisor, who can then help you determine your ability to repay a mortgage loan. Your advisor will establish the amount you are able to put toward repayment each month. Various online tools are also made available to you through different banking and financial institutions, and can help you calculate the estimated costs. This first contact with the world of mortgage loans will give you a clearer picture of the process, and will help you move on to the next step. You’ll have a better idea of your budget, which will guide you in your search.

2. Determine your down payment:

The math is simple: the bigger your down payment, the less you’ll need to borrow. In Quebec, it is recommended to have a down payment equivalent to at least 20% of your property’s value. Thanks to this down payment, you’ll qualify for a conventional (meaning uninsured) loan, which will help you avoid extra costs. However, be sure to properly assess your needs and budgets, since there can always be unexpected surprises or expenses to take into account. The 20% down payment can come from various sources, such as donations, inheritances, liquid assets, investments, or even your RRSPs. If you don’t have the 20%, the law requires banking institutions to obtain mortgage loan insurance from the Canada Mortgage and Housing Corporation (CMHC) or Genworth Financial Canada. In this case, a mortgage insurance premium must be paid. The smaller the down payment, the higher the premium.

3. Anticipate additional costs:

Remember that there are many additional expenses related to purchasing a home. Here are some of the biggest expenses—be sure to keep these in mind!

    • Mortgage transaction fees: inspection fees, taxes on the mortgage loan insurance premium, and federal and provincial sales taxes (with the purchase of a new house)
    • Property taxes: municipal and school taxes, welcome tax (Quebec), etc.
    • Other expenses: moving costs, home insurance, labour, etc.

4. Request a preauthorized loan:

Getting preapproved will lend more credibility to your purchasing offer and will increase your negotiating power. You can speak with a mortgage loan advisor at your financial institution before you even begin your search.

5. Find your property:

And that’s it: you’re all set! Time to spring into action! Determine what type of housing you want (house, condo, duplex, etc.), and where (city, countryside, suburbs), and then start your search! You can do it on your own by looking through various websites or newspapers, but you can also get a helping hand by consulting with a real estate agent.

6. Make your purchase offer:

Found a real gem? The house of your dreams? Then it’s time to get down to business and make your purchase offer. Your offer must contain the following information:

    • The purchase price
    • The property’s transfer date
    • The transaction’s included and/or excluded assets
    • The conditions relating to the purchase offer (inspection, etc.)

7. Obtain your mortgage loan!

The much-anticipated (and sometimes slightly dreaded) moment has arrived! Thanks to all the previous steps, this final stage should technically be nothing more than a simple formality. Now that you’ve found your ideal home, it’s time to go back to see your advisor so you can make your dream a reality.

Here are the highlights of this final stage:

    • During your first meeting with your advisor, you were able to assess your needs and establish a mortgage financing solution best suited to your budget. You were also able to determine if you should resort to a mortgage insurance (to reiterate, this is only necessary for buyers with a down payment of less than 20% of the value of the property. See step 2.)
    • Then, for the funding application, you’ll need the following documents:
        • The purchase offer
        • The confirmation of employment and income
        • The confirmation of down payments and assets
        • The assessment of loan insurance needs
        • Any other required documents (e.g. lease, proof of other income, etc.)
    • To ensure a fair market value of the property you wish to purchase, it is important to conduct an assessment. The appraiser will be contracted by the bank and certain fees will be involved.
    • Your loan has been granted! You’re going to be a homeowner!
    • You now have to formalize everything with a notary. The seller must provide the notary with:
        • The location certificate (there may be unique cases where the certificate is not provided by the seller)
        • The municipal and school tax accounts
    • On your end, you will need to sign:
        • The deed of sale
        • The mortgage deed
        • A document certifying the adjustment of municipal and school taxes
        • The credit agreement
    • The bank has transferred the funds to the notary to pay the seller. You’re now officially a homeowner!!!
    • Following this final step, your advisor will continue to look after you and will be there to address all your questions and needs, so don’t hesitate to get in touch.

A Neighbourhood Love: The Village

From the Gay Village to the Quartier des Spectacles, and passing through the downtown area of Ville-Marie, Maurice Nantel shines a light on Montreal’s dazzling beauty.

Along with Place des Arts, the Gay Village shares the title of Quebec’s most significant cultural centre. A stroll through this neighbourhood will quickly show you why! On top of being one of the largest gay neighbourhoods in the world, the Village highlights urban diversity and a uniquely colourful visual style.

Village were a small city in itself where people go to live the good life.

The neighbourhood is home to all of Quebec’s francophone television stations—such as Radio Canada, TVA, and Télé-Québec—as well as many radio stations, which contribute to the cultural vitality of the neighbourhood. Adding to this landscape and diverse visual identity is the Molson Brewery, one of the oldest industrial companies in Canada.

Elements that may seem contrasting actually create a rich harmony in the unique area of the Village, which spans all the way to the Quartier des Spectacles. Thus, it is possible to gather oneself in the stunning St. James United or St. John The Evangelist churches, then head east for a bistro-style gastronomic feast at 1000 Grammes, to finally cap the night with a one-of-a-kind cabaret show at Cabaret Mado.

Life is sweet when wandering through the Village’s pedestrian-only Aires Libres, or when letting yourself get carried away by the hypnotic lights of the Place des Arts corridor. Even in the depths of the Place des Arts metro station, creativity is all around you! Just look up and you’ll notice a carefully designed architectural style, as well as several works of art. As for Beaudry’s metro exit, the columns were designed in the shape of a rainbow, evoking the iconic symbol of LGBTQ pride, and making you feel the warm atmosphere of the neighbourhood! In short, it’s Montreal in all its diversity!

Follow us on Facebook and Instagram to discover other neighbourhoods in our beautiful city, seen through the perceptive eyes of Maurice Nantel of Studio WôWô.

Buying Before Age 30

Acheter immobilier avant 30 ansThe tightening of mortgage rules, announced by the Federal Government last fall, caused quite a stir and has raised a lot of concern. For buyers, generally speaking, this means that they must either save a bit more or set their sights on a more affordable home.

But let’s take a closer look at the impact on buyers under the age of 30. Burdened by the reimbursement of student loans or other debt, and faced with entry-level wages, must they give up their dream of home-ownership?

 

The good news is, the answer is NO! Owning a home before age 30 is still possible.

Here’s how:

Firstly, it is important to save! Indeed, for both first-time and seasoned buyers, a down payment is still required! Ideally it should represent as much as 20% of the value of the property. However, there is no need to panic should that not be possible. Mortgage loan insurance is available from the Canadian Mortgage and Housing Corporation (CMHC) or from Genworth Financial Canada. The down payment is then set at a minimum of 5%.

Additionally, one must set aside 3% of the value of the house to cover start-up costs (notary, welcome tax, renovations, etc.)

The question is, how does one save that much money? Here are a few ideas:

  • Collect spare change, that is, put aside all the coins from your daily errands. You’ll notice small change adds up quickly!
  • Automate, or rather, set up a monthly automatic transfer of a fixed amount to be deposited into a savings account, and include this in your budget.
  • Avoid wasting: buying used items, making your own lunch, and clipping coupons are all ways to avoid spending uselessly.

Another important point to consider when aspiring to home-ownership, is paying one’s debts! In fact, all debts will be considered when calculating borrowing capacity.

Furthermore, the fewer debts there are to pay, the more money there is available for saving. The debts to be reimbursed first and foremost are consumer loans (credit card or credit margin, personal loan, etc.)

Regarding student loans, accelerated payments are rarely advantageous since student loans are usually amortised over a period of 10 years, the applicable rate is low, and interest payments are tax deductible. This surely makes some people happy! So consider paying off all of your credit cards!

These are the fundamental principles to consider for any aspiring home-owner under age 30. You’ll find more information in the blog article Desjardins, Comment acheter sa première maison avant 30 ans.

Change your address in 5 minutes

You found your property, everything is signed, and all that’s left is to move! Regular movers will argue that it’s insignificant, but changing your address is often quite physical, and can be an administrative burden due to the numerous steps necessary to ensure that everyone knows your new address!

changement adresse MovingWaldo

Have a good night’s sleep and don’t worry about your upcoming move, we discovered a wonderful service that will make your life easier! It’s MovingWaldo, a free and practical website, which was created here in Quebec!

The way it works is simple, you just need to let MovingWaldo know your new address. Then, choosing from their directory of over 500 suppliers, select those who need to be alerted to your change of address. Verify everything, give your approval, and you’re done! You’ll have load­­s of time to prepare your housewarming party!

Don’t hesitate to explore the MovingWaldo website, which also offers useful tips and tricks to help you manage your move in the most effective manner. We bet that our customers will appreciate this new service, which is both helpful and fun! One final piece of good news and then we’ll let you move in peace. MovingWaldo is currently holding a contest for those who are not renewing their leases this year!

adresse via capitale

 

Professional Liability Insurance Fund of the Quebec Real Estate Brokerage

Spring has finally arrived! And like many people at this time of the year, real estate fever has taken hold. A desire for change and novelty drives you to seek out a completely different living environment- a new home. You may be wondering if taking on a broker to help you in the sale or purchase of your next property is really worth it.

In the “For” column you have many useful benefits: expertise, efficiency, time-saving, access to a network of real estate professionals, etc. But there’s one factor you are probably unaware of that you absolutely must add to that list. And that’s the FARCIQ !

What exactly is the FARCIQ ? It stands for Fonds d’Assurance Responsabilité professionnelle du Courtage Immobilier du Québec. In English it means the Professional Liability Insurance Fund of Quebec Real Estate Brokerage. FARCIQ is responsible for dealing with public claims as well as instructing license holders of the process for managing their titles. The FARCIQ therefore ensures the professional liability of all real estate brokers and mortgage agencies in Quebec.

Its role is divided into three parts:

• First, it provides protection in the event of misconduct, error, negligence or omission that may be committed by a brokerage licensee in the course of his or her professional activities.

• Secondly, it ensures compensation for the resulting loss when professional liability occurs.

• Finally, it addresses the needs and concerns of the brokers with respect to their liability insurance while helping them to prevent risks associated with professional mistakes. It also provides them a service that offers assistance and advice to answer all their questions and cover all their cases. No matter what your buying or selling situation may be, you can be assured that your broker will have the right information and knowledge to ensure that your transaction takes place in the best possible conditions.

In addition, this insurance, mandatory since 2006, is reserved for real estate brokers or mortgage holders who possess a permit issued by the OACIQ (Organisme d’autoréglementation du courtage immobilier du Québec), a self-regulating body for Quebec Real Estate Brokerage. This organization legally protects the public that uses Real estate brokerage and mortgage services.

That’s why, when you’re dealing with a professional broker, you (and all your transactions) get double protection! Reassuring isn’t it?

That should tip the balance on the “For” side!

For more information, visit:  www.farciq.com