Should you buy a brand new home that you can customize, or shoose one that’s move-in ready? Both have their advantages:
Personalized choices. You may be able to upgrade or choose certain items such as siding, flooring, cabinets, plumbing and electrical fixtures.
Up-to-date with the latest codes/standards. The latest building codes, electrical and energy-efficiency standards will be applied.
Maintenance costs. Lower maintenance costs because everything is new and many items are covered by a warranty.
Builder warranty. A homebuilder’s warranty is usually available in all provinces (except Nunavut and the Northwest Territories). This can be important if a major system such as plumbing or heating breaks down. This warranty does not apply if you build the home yourself. Neighbourhood amenities like schools, shopping malls and other services may not be complete for years.
Taxes. Such as the Goods and Services Tax (GST) will apply. 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,
http://www.cra-arc.gc.ca.
Extra costs. You may have to pay extra if you want to add a fireplace, plant trees and sod, or pave your driveway. Make sure you know exactly what’s included in the price of your home.
Easy access to services. Probably established in a neighbourhood with schools, shopping malls and other services.
Extras included. Landscaping...
Landscaping is usually done and fencing installed. Previously owned homes may have extras like fireplaces, finished basements or swimming pools.
No GST/HST. 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.
Possible redecorating and renovations. You may need to redecorate, renovate or do major repairs such as replacing the roof, windows and doors.
When you find the perfect home, buy it.
After touring homes, you will probably instinctively know which one or two homes you would like to buy. Ask to see them again. You will see them with different eyes and notice elements that were overlooked the first go-around.
At this point, Richard Getty PREC* will call the listing agent to find out more about the sellers’ motivation and to double-check that an offer hasn’t come in, making sure these homes are still available to purchase.
Richard Getty PREC* will help you through the offer process. Be very specific in your offer about any improvements or repairs you want the seller to make before closing or about any appliances or other items you expect to be included.
Counteroffer. The seller may accept your initial offer, no questions asked, but often he or she will make a counteroffer, accepting some terms but making changes or raising the price. This process goes back and forth until you either agree or the deal collapses. Contingencies. Acceptance of the sales contract can be made contingent on (that is, dependent on) certain circumstances. As a first-time homebuyer, you should probably stipulate that the house passes any inspections you want performed and that financing is approved.
Shop for a mortgage. That ½ percentage point may not seem like much but it will save you thousands over the life of a mortgage. Get quotes from a variety of banks or enlist a mortgage broker (the bank, not you, pays his or her fee). You can always go to your own bank to see if they will match the rate. Ask me for a Mortgage Broker recommendation.
Shop for a Lawyer or Notary. Fees may vary greatly and you can often save a lot by using someone who specializes in real estate law, as they compete for this business. Costs are often less due to economies of scale, but ensure you get a full cost quote.
Get a home inspection. Not only for piece of mind but there is nothing worse than discovering cost prohibitive problems after you have moved in. If your home inspector identifies deficiencies, you may be able to renegotiate the purchase price to cover required repairs.
Decline mortgage insurance. You are farther ahead to increase your own term insurance for the amount of the mortgage. The premiums are often less and the payout greater.
Buy a home that produces revenue. If you can rent out your basement or a self contained suite it will help you pay the mortgage or offset your home expenses. Richard Getty PREC*can advise you when it comes to zoning requirements and public transportation access.
Shop and get quotes on all of your major expenses including moving costs, renovations, home insurance etc. Ask lots of questions and get referrals. Richard Getty PREC* is a great resource.
Don’t buy your furniture on time payment plans. Make do until you can afford it. Shop garage sales or used furniture outlets, Craigslist and Facebook marketplace.
Make a budget and stick to it. There are a number of costs that you need to take into account as we have illustrated. Put the money aside.
Remember, all of the above will save you money but the most important consideration is to buy a home you can afford to live in.
