Source CMHC Canada Mortgage and Housing Corporation
Step 3: Which home is right for you?
Home Buying Step By Step – Step 3 Which Home is Right for You?
Once you have a good idea about your finances, you’ll need to think clearly about the home you’d like to buy.
Your Needs — Now and in the Future
Try to buy a home that meets most of your needs for the next 5 to 10 years, or find a home that can grow and change with your needs.
Here are some things to consider.
How many bedrooms do you need?
How many bathrooms do you need?
Do you need space for a home office?
What kind of parking facilities do you need? For how many cars?
Do you want air conditioning? If so, what type?
Do you want storage or hobby space?
Is a fireplace or a swimming pool high on your list?
Do you have family members with special needs?
Do you want special features to save energy, enhance indoor air quality, and reduce environmental impact?
Lifestyles and stages
No matter what type of housing you choose, you must have a clear idea of your needs today, as well as your possible future needs. These are some examples of questions homebuyers might ask:
Do I plan to have children?
Do I have teenagers who will be moving away soon?
Am I close to retirement?
Will I need a home that can accommodate different stages of life?
Do I have an older relative who might come to live with me?
The CMHC worksheet Home Features Checklist can help you think about what you need today, and what you may need in the future. Complete the worksheet and print it.
FlexHousing™ is a housing concept that incorporates, at the design and construction stage, the ability to make future changes easily and with minimum expense, to meet the evolving needs of its occupants.
What Location Should You Choose?
Location is a critical factor. A home with everything you need, in the wrong location, is probably not the right home for you. Here are some things to consider about location.
- Do you want to live in a city, a town or in the countryside?
- How easy will it be to get to where you work? How much will the commuting cost?
- Where will your children go to school? How will they get there?
- Do you need a safe walking area, or recreational facility, such as a park, nearby?
- How close would you like to be to family and friends?
Download a copy of the Your Next Move: Choosing a Neighbourhood with Sustainable Features fact sheet.
What is a Sustainable Neighbourhood?
A sustainable neighbourhood meets your needs, while protecting the environment. Homes in a sustainable neighbourhood are located near shops, schools, recreation, work and other daily destinations. This helps reduce driving costs and lets residents enjoy the health benefits of walking and cycling. Land and services, like roads, are used efficiently. Sustainable neighbourhoods also feature a choice of homes that are affordable.
In your search for a sustainable neighbourhood, here are some questions to ask:
- Easy transportation
- Are stores, schools, recreation facilities, restaurants, and health services within walking or cycling distance? Will your children need to take a bus to school? Can they walk to the park? Can you do most of your shopping without a car?
- Are there nearby bus stops and cycling lanes? How long is the bus ride to work, or school? Can you safely bike?
- House size and features
- Are the homes compact with shared walls to reduce heating costs?
- Are homes reasonably sized with lots requiring less upkeep?
- Are there different dwelling types (such as single-detached, semi-detached, townhouse and apartments) in the neighbourhood?
- Are the lots modestly sized? Roadways narrow? Driveways/parking areas small? Do natural drain ways lead to streams and storm water ponds or park lands? Is there native vegetation and streams with woodland edges?
- “Look and feel”
- Do the buildings have a friendly face to the street? Are the community centres, shops and meeting places welcoming?
- Are there trees lining the street? Do you find the homes interesting to look at? Do the building sizes feel comfortable to you? Are the roads easy to walk along or cross?
- Do the homes have “eyes on the street”? (In other words, are there people around who might watch out for you? Is there somewhere to go in an emergency?)
- Is there adequate street lighting?
- Are there safe places for children to play?
- Are the streets safe for cyclists and pedestrians?
- Is traffic slow moving and light?
Use the CMHC worksheet What’s Important to You to figure out the things that are important in your neighbourhood.
Do You Want a New Home or a Previously-Owned Home?
A new home is one that has just been built – no one else has lived in it yet. You might buy a new home from a contractor who has built it, or you might hire a contractor to build it for you. A previously-owned home (often called a resale) has already been lived in. Here are some characteristics of each type of home.
- A new home has up-to-date design that might reflect the latest trends, materials and features.
- You may be able to choose certain features such as style of siding, flooring, cabinets, plumbing and electrical fixtures.
- You may have to pay extra if you want to add certain features, such as a fireplace, trees and sod, or a paved driveway. Make sure you know exactly what’s included in the price of your home.
- Taxes such as the Goods and Services Tax (GST) (or, in certain provinces, the Harmonized Sales Tax (HST)) apply to a new home. However, you may qualify for a rebate of part of the GST or HST on homes that cost less than $450,000. For more information about the GST New Housing Rebate program, visit the Canada Revenue Agency website at www.cra-arc.gc.ca.
- A new home will have lower maintenance costs because everything is new, and many items are covered by a warranty. You should set aside money every year for future maintenance costs.
- A warranty may be provided by the builder of the home. Be sure to check all the conditions of the warranty. It can be very important if a major system such as plumbing, or heating, breaks down.
- New Home Warranty programs are generally provided by provincial and territorial governments. There are also private new home warranty programs. In some provinces a warranty may be provided by the builder of the home. Check with your realtor or lawyer/notary to find out what the new home warranty program in your province or territory covers.
- Neighbourhood amenities
- schools, shopping malls and other services, may not be completed for years.
Building Your Own Home
Some people prefer the challenge and flexibility of building their own home. On one hand, you make all the decisions about size, design, location, quality of material, level of energy-efficiency and so on. On the other hand, expect to invest lots of time and energy.
- When the home already exists, you can see what you are buying. Since the neighbourhood is established, you can see how easy it is to access services such as schools, shopping malls, libraries, etc.
- Landscaping is usually done and fencing installed. Previously owned homes may have extras like fireplaces or finished basements or swimming pools.
- You don’t have to pay the GST/HST unless the house has been renovated substantially, and then the taxes are applied as if it were a new house.
- You may need to redecorate, renovate or do major repairs such as replacing the roof, windows and doors.
What Type of Home Should You Buy?
What types of homes will you be visiting with the idea of buying? Do you see yourself living in a detached single-family home? Or, perhaps a townhouse? Maybe, a duplex?
A single-family detached home is one dwelling unit. It stands alone, and sits on its own lot. This often gives the family a greater degree of privacy.
A semi-detached home is a single-family home that is joined on one side to another home. It can offer many of the advantages of a single-family detached home. It is often less expensive to buy and maintain.
A duplex is a building containing two single-family homes, located one above the other. Sometimes, the owner lives in one unit and rents the other.
Row House (Townhouse)
Row houses (also called townhouses) are several similar single-family homes, side-by-side, joined by common walls. They can be freehold or condominiums. They offer less privacy than a single-family detached home, although each has a separate outdoor space. These homes can cost less to buy and maintain, even though some are large, luxury units.
Stacked townhouses are usually two-storey homes. Two two-story homes are stacked one on top of the other. The buildings are usually attached in groups of four or more. Each unit has direct access from the outside.
Link or Carriage Home
A link, or carriage home, is joined by a garage or carport. The garage or carport gives access to the front and back yards. Builders sometimes join basement walls so that link houses appear to be single-family homes on small lots. These houses can be less expensive than single-family detached homes.
A manufactured home is a factory-built, single-family home. It is transported to a chosen location, and placed onto a foundation.
A modular home is also a factory-built, single-family home. The home is typically shipped to a location in two, or more, sections (or modules).
Mobile homes, like manufactured or modular homes, are built in factories, and then taken to the place where they will be occupied. While these homes are usually placed in one location and left there permanently, they do retain the ability to be moved.
A self-contained unit in part of a building consisting of a room or set of rooms including kitchen and bathroom facilities.
Forms of Ownership
People who do not rent their home, own it. There are two forms of ownership.
Freehold means that one person (or two, such as joint ownership by spouses) owns the land and house outright. There is no space co-owned or co-managed with owners of other units.
Freehold owners can do what they want with their property — up to a point. They must obey municipal bylaws, subdivision agreements, building codes and federal and provincial laws, such as those protecting the environment.
Detached and semi-detached homes, duplexes and townhouses are usually owned freehold.
Condominium ownership means you own the unit you live in and share ownership rights for the common space of the building. Common space includes areas such as corridors, the grounds around the building, and facilities such as a swimming pool and recreation rooms. Condominium owners together control the common areas through an owners’ association. The association makes decisions about using and maintaining the common space.
Condominium ownership is ownership of a unit, usually in a highrise but can also be a townhouse or in a lowrise.
What Professionals Should You Call On?
Even if this isn’t your first homebuying experience, you’ll want to get help from a team of professionals. Having the help of professionals will give you experienced and knowledgeable people for reliable information and answers to your questions. These are the people who can help you:
- Lenders or mortgage broker
- Lawyer or notary
- Insurance broker
- Home inspector
- Land surveyor
- Builder or contractor
You will be doing a lot of interviewing to establish your team. Use this handy CMHC worksheet to help you keep track of the people you interview and the ones you finally choose.
The next sections describe each professional role.
Your realtor’s job is to:
- Help you find the ideal home
- Write an Offer of Purchase
- Negotiate to help you get the best possible deal
- Give you important information about the community
- Help you arrange a home inspection
Finding a Realtor
When looking for a realtor, don’t be afraid to ask questions — especially about possible service charges. Normally, the seller pays a commission to the agent. But, some realtors charge buyers a fee for their services. Use the CMHC worksheet Checklist for Evaluating Realtors to help you.
If you would like to know more about a realtor’s ethical obligations, go to the Canadian Real Estate Association’s website at www.crea.ca, or call your local real estate association.
The Lender or Mortgage Broker
Many different institutions lend money for mortgages — banks, trust companies, credit unions, caisses populaires (in Quebec), pension funds, insurance companies, and finance companies. Different institutions offer different terms and options — shop around!
Mortgage brokers don’t work for any specific lending institution. Their role is to find the lender with the terms and rates that are best for the buyer.
Finding a Lender or Mortgage Broker
- Ask around. Your realtor, another professional, family members, or friends may give you helpful suggestions.
- Look in the Yellow Pages™ under “Banks,” “Credit Unions” or “Trust Companies” for a lender and under “Mortgage Brokers” for a broker.
- Contact the Canadian Association of Accredited Mortgage Professionals at 1-888-442-4625, or visit the Association’s website at www.caamp.org.
Having a lawyer/notary involved in the process will help ensure that things go as smoothly as possible. You need a lawyer (or a notary in Quebec) to perform these tasks:
- Protect your legal interests by making sure the property you want to buy does not have any building or statutory liens, charges, or work or clean-up orders
- Review all contracts before you sign them, especially the Offer (or Agreement) to Purchase.
Finding a Lawyer
Law associations can refer you to lawyers who specialize in real estate law. In Quebec, contact the Chambre des notaires du Québec for the names of notaries specializing in real estate law.
Remember that a lawyer/notary should:
- Be a licensed full-time lawyer/notary
- Live/work in the area
- Understand real estate laws, regulations and restrictions
- Have realistic and acceptable fees
- Be able and willing to explain things in language you can easily understand
- Be experienced with condominiums, if that’s what you are buying
Lawyer/notary fees depend on the complexity of the transaction and the lawyer’s expertise.
Shop around for rates when choosing your lawyer/notary. Use the CMHC worksheet Checklist for Selecting a Lawyer/Notary to guide you.
The Insurance Broker
An insurance broker can help you with your property insurance and mortgage life insurance.
Lenders insist on property insurance because your property is their security for your loan. Property insurance covers the replacement cost of your home, so the size of your premium depends on the value of the property.
Your lender may also suggest that you buy mortgage life insurance. Mortgage life insurance gives coverage for your family, if you die before your mortgage is paid off. Your lender may offer this type of insurance. In this case, the lender adds the premium to your regular mortgage payments. However, you may want to compare rates offered by an insurance broker and by your lender.
Don’t confuse property insurance, or mortgage life insurance, with mortgage loan insurance.
The Home Inspector
Whether you are buying a resale home, or a new home, consider having it inspected by a knowledgeable and professional home inspector.
The home inspector’s role is to inform you about the property’s condition. The home inspector will tell you if something is not working properly, needs to be changed, or is unsafe. He or she will also tell you if repairs are needed, and maybe even where there were problems in the past.
A home inspection is a visual inspection. It should include a visual assessment of at least the following:
- Doors and windows
- Roof and exterior walls
- Plumbing and electrical systems (where visible)
- Heating and air conditioning systems
- Ceilings, walls and floors
- Insulation (where visible)
- Septic tanks, wells or sewer lines (if inspector is qualified)
- Any other buildings such as a detached garage
- The lot, including drainage away from buildings, slopes and natural vegetation
- Overall opinion of structural integrity of the buildings
- Common areas (in the case of a condominium/strata or co-operative)
Finding a Home Inspector
It’s important to hire a knowledgeable, experienced and competent home inspector. In most areas of Canada, there are no licensing or certification requirements for home inspectors. Anyone can say that they are a home inspector without having taken any courses, passed tests or even inspected houses. So look for a home inspector who belongs to a provincial or industry association holds an accreditation that demonstrates training and experience, provides inspection reports, carries insurance, provides references and has strong experience with the type of home to be inspected.
While CMHC does not recommend any individual home inspector or association, CMHC supports national standards of competency for home inspectors such as the home inspection industry’s voluntary and independent National Certification Program.
Home inspector fees are generally in the $500 range, depending on the size and condition of the home. Use the CMHC worksheet Home Inspection Checklist to review your home inspection report.
Before you make an offer, an independent appraisal can tell you what the property is worth. This will help ensure that you are not paying too much. In order to complete a mortgage loan, your lender may ask for a recognized appraisal.
The appraisal should include:
- Unbiased assessment of the property’s physical and functional characteristics
- Analysis of recent comparable sales
- Assessment of current market conditions affecting the property
Finding an Appraiser
Ask your realtor to help you find an appraiser.
The Land Surveyor
If the seller does not have a Survey or Certificate of Location, you will probably need to get one for your mortgage application. If the Survey in the seller’s possession is older than five years, it needs to be updated.
Remember that you must have permission from the property owner before hiring a surveyor to go onto the property. Ask your realtor to help co-ordinate this with the owner.
Finding a Land Surveyor
Search the web or Yellow Pages™ or ask your realtor to help you find a land surveyor.
If you are buying a newly constructed home, you will have to hire a builder or contractor. If you are buying a resale house that needs renovations, you may also require a builder or contractor.
Here are some things to keep in mind when choosing a builder or contractor:
- Ask for references. Talk to other customers about the builder’s performance.
- Check with the New Home Warranty program in the area (if applicable).
- Visit other housing developments that the company has built.
- Ask builders or contractors if they are members of a local homebuilders’ association. Ask them for their provincial license number.
If you are having a custom home built, remember that:
- You may want to hire an architect to design the house, and supervise construction.
- Builders of custom homes usually work on either a fixed-price or a cost-plus basis. Authorize any changes to your contract by writing your name or initials beside the change.
Make sure your contract with the builder or contractor is very specific about construction details. You can even require that the brand names or model number of finishes be specified. If you agree to a change in the contract, write your initials next to the change.