house appraisal process | THE PURCHASE OF A FIRST HOME IN 9 STEPS

THE PURCHASE OF A FIRST HOME IN 9 STEPS





Buying a first home requires thinking and, most importantly, planning. By following the proposed steps, we put all the chances on his side to successfully complete this project. More details for each step are available by clicking on each link, or by visiting www.nbc.ca.

 1. Evaluate your borrowing capacity

Knowing your ability to borrow before starting your research is a great way to avoid disappointment and help you keep up with your budget.

By analyzing your balance sheet, your National Bank advisor can help you assess your borrowing capacity. You can also have a taste using our online calculator.

2. Determine your down payment

This is one of the important steps when buying your property. Indeed, this exercise allows you to evaluate the sums to accumulate to concretize your project.

The following chart gives you an idea of ​​the down payment amount based on the value of the house:

Value of the house

Down payment of 5%

Down payment of 20%

Down payment of 25%

$ 100,000

$ 5,000

$ 20,000

$ 25,000

$ 150,000

$ 7,500

$ 30,000

$ 37,500

$ 200,000

$ 10,000

$ 40,000

$ 50,000

$ 250,000

$ 12,500

$ 50,000

$ 62,500


Access to property with a down payment of only 5%

Did you know that you can get a mortgage by making a down payment of 5% of the purchase price through an insured loan [1] by Canada Mortgage and Housing Corporation ( CMHC) or by Genworth?

On the other hand, if you are able to make a down payment of 20% or more of the value of the coveted property, you automatically qualify for a conventional (non-insured) loan. This way you avoid the costs associated with mortgage loan insurance [2].

Note that it is important to assess your needs and budget before determining the amount of your down payment. Do you plan for short-term expenses? Do you have savings in case of unexpected events?

3. Anticipate additional costs

Buying a property does not just mean mortgage payments! Better to anticipate other expenses in advance.

And since these fees can affect how much you plan to spend on your down payment, it's important to consider this in your buying process. The following fees are examples: Assessment and inspection fees
Transfer duties
Legal fees
Sales taxes (if applicable)
Municipal and school taxes
Moving expenses)
Home Insurance
Adjustment of property taxes paid in advance by your seller
Fees for connection to services (electricity, cable, etc.)
It is conservative to provide a minimum of $ 5,000 for all of these fees. It would also be relevant to consider a hardware budget. Even the most turnkey properties usually require a few visits to your favorite hardware store, if only for decorating, painting, or minor retouching!

4. Apply for a pre-authorized loan

Ask for a pre-authorized loan [3] and shop for your home with peace of mind.

Free and without obligation
Allows you to determine your purchasing power
Increases your bargaining power by telling the prospective seller the seriousness of your approach
Ensures an interest rate of up to 90 days which protects you from a possible rate increase that may occur during the search for your home
A counselor travels to meet you at a time and place that's convenient for you
5. Find your property

Ask yourself a few questions before setting your search criteria.

Are you of the city, suburb or countryside type?
New or existing house?
What type of property is best for you (house, condo, duplex, etc.)?
Do you want to build your house?
Things to keep an eye on when visiting a house
6. Make your purchase

The offer to purchase is a legal document that irreparably binds you to respect all the conditions that appear in it. It is therefore important to prepare the offer carefully and a qualified real estate broker can assist you in this process. In general, the following details must be included:
Purchase price of the house
Real estate or items included or excluded in the purchase price (eg awning, appliances, swimming pool, fireplace tools, etc.)
Conditions relating to the offer to purchase (inspection, etc.)
Financial details
Date of taking possession
Request for a recent certificate of location of the property
Expiration date and time of the offer
A real estate agent can help you find an existing home. If you buy a new house, you will have to deal directly with the builder (or with his sellers).

7. Choose your mortgage solution

Even before choosing the mortgage that best suits your situation, you should learn more about the general characteristics of this type of loan.

Insured loan or not?

Depending on your initial down payment, you have access to two options: the conventional mortgage loan or the mortgage loan insured by Canada Mortgage and Housing Corporation (CMHC) or by Genworth, a private insurer.

You qualify for the conventional loan if you pay 20% or more of the value of the property. On the other hand, if your down payment is less than 20% of the value of the home, you must opt ​​for an insured mortgage loan, and the insurance premium you have to pay can be added to the amount of your loan.

Open or closed term?

The term of your mortgage covers a given period of time and, at maturity, the terms of the loan must be renewed.

The closed loan is not refundable before maturity and can vary from 3 months to 10 years. However, for greater flexibility, certain early redemption options are available at no charge.
The open, six-month or one-year term loan allows you to repay your loan at any time, in whole or in part, at no cost. Even if the interest rate is higher than that of a closed loan, the open loan is to be considered if you are thinking of selling your home in the near future or anticipate an upcoming drop in interest rates.
Amortization of 15, 20, 25, or 30 years?

The total repayment of your loan can be spread over a period of up to 30 years for a conventional loan and 25 years for an insured loan. The longer your amortization period, the lower your payments. In return, your interest costs are higher.

Weekly, biweekly or monthly payments?

You can choose the frequency of payments that suits you, depending on your budget. By choosing weekly or bi-weekly payments, you make the equivalent of one additional monthly payment per year (provided that these repayment frequencies are available depending on the product chosen). In the end, your interest will be significantly reduced.

Life Insurance or Critical Illness and Disability Insurance?

For a few extra dollars a month, you have the option of repaying your loan in the event of death, disability or serious illness. It is very little to have peace of mind! And for your convenience, the cost of insurance premiums is added to your mortgage payments.

Discover your optimal mortgage solution

You can determine your optimal mortgage solution in less than five minutes. Just answer the following few questions. This will help you to choose the mortgage product that best suits your most important needs.

The first step is to objectively determine what is the priority need that you want to fill, while the second step is to verify, according to your financial capacity, which of the proposed solutions is best suited to your situation. It's your turn !

Make your prequalification
Write down the amount of your loan and the maximum payment that the National Bank advisor has calculated for you and compare these two data with your budget to determine your comfort zone. Keep these two amounts as minimum and maximum parameters. For example, I want $ 600 and the bank allows $ 800.

Set your financial goals
Too often, the attractiveness of a mortgage rate can make the buyer forget his financial goals. You should avoid committing yourself for longer than you would need, as this increases the total cost of borrowing and moves you away from your priority needs.

What is the priority need which of the following best fits your financial goals for mortgage?
Stable payments: you do not want variations in your family budget.
Payment security: you want to take advantage of interest rate fluctuations without exceeding a pre-established maximum amount.
The flexibility to complete your future projects, if you have irregular income or want to renovate or sell your home.
Accelerated repayment of your loan: You want to repay your loan in a predetermined period that corresponds to your retirement, a specific project to achieve or your proactive attitude to financing.
Determine the optimal solution according to your needs and your repayment capacity
If you have opted for stability or security of payments, can you absorb variations on your mortgage payment of up to 10%? For example, your ideal payment is $ 600, but you can go up to $ 660.

If so, choose a variable rate mortgage.
Otherwise, choose a capped floating rate or fixed rate mortgage.
Do you have a down payment or equity on your property of more than 20%?

If so, choose the All-In-One MD1.
If not, choose a short-term mortgage that will be the same period you start your project.
If you have opted for accelerated repayment, do you have a down payment or equity on your property of more than 20%?

If so, choose the All-In-One MD1.
Otherwise, reduce the amortization of your loan renewal and consider the possibility of increasing your payments up to double without penalty. You can also give installments in capital during the year, without penalty and up to 10% of the amount borrowed.
For complete details on our mortgage products, visit the Financing Solutions section.

8. Get your mortgage

Here are the main steps of applying for a mortgage loan. During your first meeting with your advisor, he will explain in more detail each of these steps and will support you throughout your process:
Determining Needs with the Custom Mortgage Plan
The request for financing
Mortgage insurance (if your financing exceeds 80% of the value of the coveted property)
Evaluation of the building
Funding approval
Registration by the notary [i]
The signing of the legal documentation
The mortgage loan disbursement
Continuity of the file (administrative changes, renewal, assessment of loan insurance requirements and other financial needs)
9. Get your keys!

That's it ... you are almost at the end of your process.

A few days before you take possession of your property, National Bank will send the amount of your loan to your notary or your lawyer.

For your part, you must give the amount of your down payment and pay the legal costs related to the deed of sale.

Your specialist will complete the transaction and, depending on the transfer date, will give you the keys to your new home or make an arrangement with the seller.





[1] In the case of a duplex, the minimum down payment is 5% and 10% for a triplex or quadruplex.

[2] The insurance premium can be added to the total amount of your mortgage. The CML or Genworth file analysis fee, as well as the applicable taxes on the premium, must be paid separately.

[3] Subject to credit approval by National Bank of Canada. Certain conditions apply.

MD1 All-In-One National Bank is a registered trademark of National Bank.