The folks at Side Gigs and Side Bar organized a webinar on how to buy a property in Canada last weekend. If you missed the webinar, we have your back. We will summarizing some of the points discussed and leave you to watch the video. The realtors on the panel are from Alberta and Ontario. The responses might be biased towards these two provinces. Some of the points are covered are stated below.
Is this the right time to buy a property in Canada?
Many people are concerned about the current economic situation especially as it concerns buying a home now. The panelists did justice to this question. It is currently buyer’s market in Calgary and seller’s market in Toronto. So, it all depends on the location you are targeting. Even though Toronto is a seller’s market, there are still a lot of opportunity to own a property. In fact, some great deals are still available.
Also, interest rates for mortgages are at their lowest by far. Prime rate itself has dropped. So, if you have a source of income, you should definitely consider buying a property now.
Most banks and mortgage providers require that you have a job to be able to qualify for a mortgage. However, there are allowances given to self-employed people. While you may only need to show 3 months income if you are employed, a self-employed person may be required to show 3 years income filing.
The minimum down payment amount required is 5% if you have a job in Canada. If you want to use a foreign income, you may be required to drop up to 25% of the cost of the property. Please note that this applies for first time residential home buyer only, If you are buying a second home, you will be expected to drop at least 20% of the total cost. Whether you are a first time home buyer or second time, you are expected to have had this down payment for at least 90 days. Otherwise, you will be expected to explain the source of the money.
Are Gifts Allowed To Be used as Down Payment?
Yes, gifts from family members are allowed. Most times, you will be required to get a letter from the family member that gave you the gift. You will also need a letter from their banker confirming the money came from their account.
Can I use Line of Credit for Down Payment?
If you are looking to a buy a property now, you can use line of credit for your down payment. The challenge is that you have to have the line of credit prior to applying for a mortgage. You can’t say you will secure the mortgage approval now and apply for the line of credit after. It has to be obtained prior to starting a mortgage application.
If you are looking to buy a property now, it is advisable that you use a realtor and possibly a mortgage broker. You are not going to pay for their service. Everything is covered by the seller and the mortgage lender. Some of them might even get you a good deal you will not be able to get on your own.
You can watch the full recording of the webinar below now or bookmark this URL to watch later. You can also read these tips for Buying Your First Rental Property.