This winter, my boyfriend and I embarked on quite an adventure: we decided to buy a house in Montreal. During the fall, we had taken the time to meet with a bank in order to have an idea of the approval process and be prepared for our purchase. After all, this is not something you plan on doing multiple times. Here is my advice to make sure the process goes smoothly!
1. Be prepared and know how much you are willing to pay
To finance our home purchase, we had to seek the help of a financial institution. We ended up having appointments with two banks and both times, the bank didn’t set a limit for how much we could borrow, we did.
The reality of how much you can pay per month on your mortgage isn’t an exact science, you need to know how much you’ll be willing to pay and how your new expenses will affect your lifestyle. Also, be sure to ask the bank to help you calculate all the expenses associated with buying a property (taxes, electricity, insurance, etc.). There are quite a few and it’s important to know them all.
2. Be sure to shop your mortgage rate
Get a few appointments before you go any further and learn about the rates on the market. Institutions are all competing for your money, so take the time to get a good rate and you’ll be at ease once you find the property you want.
3. Decide what you are willing to compromise on and what you aren’t
In our case, we absolutely wanted something that was over 1000 square feet and that had two bedrooms. We were looking for an open apartment with a big kitchen, a bathtub and potentially a parking spot. We didn’t get the open space and the parking spot, but this wasn’t a deal breaker for us. We would have liked a yard, but knew that in Montreal, it was a dream hard to reach for our first property.
4. Figure out the neighborhoods that interest you
Here are things you need to know before you start home shopping: Are you looking for a neighborhood that has schools in it? A subway station close by? Do you absolutely have to have a grocery store nearby?
If you drive to work, it’s particularly important to time how long it would take to get there. Are you willing to spend an hour in the car everyday? If the answer is no, do not pick a place that’s far away even if it’s the prettiest place you’ve ever seen. If you are buying this home as a couple, take time to answer these questions on your own and then come together with your answers.
5. Timing is everything
At the end of October, when we first considered finding a place, my father kept telling us to book an appointment with a bank immediately. We told him to leave us alone, we didn’t think it was urgent since we wouldn’t move until the summer. He kept insisting that now was the time to start looking and talked about how few people were home shopping around the holidays. We shouldn’t wait for the high season.
People usually start looking in the middle of winter and by the time April comes along and finding a new home becomes more urgent, they are willing to overbid because they’re desperate. We ended up visiting the first week of January, a house we had wanted to visit since the end of December. We were the first there in a while and when we made our offer, we were alone on it. It took about two weeks and a half for the whole process to close, but we were so happy to be the only ones. It even gave us leeway to negotiate.
6. Get a real estate agent
We didn’t take this piece of advice, but to our defence, my father worked as a real estate agent for over fifteen years and helped us a lot. After going through the whole process, we really think agents are a must for first-time home buyers. An agent helps you see potential problems with the property. In a market like Montreal, certain neighborhoods have a bad reputation: foundation issues, problems with the land, etc. An agent will know these things. It’s an important investment for something this important.
7. Negotiate and don’t get emotional
Making an offer can be very stressful. It’s important to know the worth of the property you want to purchase and to be reasonable. Overpaying is something you’ll have to live with on your mortgage payments for years to come. Ask yourself if this is really the right investment for you. Except for some areas and types of properties, prices should be negotiated. If there aren’t any other buyers interested, you don’t have anything to lose by making a low offer.
8. Get the place inspected
Inspections are always a good idea! You wouldn’t buy a used car you haven’t inspected, so why wouldn’t you inspect a future home? Find a good inspector that specializes in your area and follow him/her through the entire process. You’ll learn a lot and you’ll be better prepared if anything significant comes up.
In our case, the inspector found a foundation issue. We got a contractor to evaluate it and were able to make the price of the house drop a bit to cover the expenses we would have because of this problem. Being prepared is CRUCIAL, do not neglect this step.
9. Budget Budget Budget
In the weeks after you get your property you’ll have a lot of expenses, it’s important to be ready for them. As soon as you can, budget them and start planning. Fixtures, lighting, new furniture, taxes … the expenses won’t stop you’ll have to be prepared.
This might be a once in a lifetime opportunity, take your time, you deserve to be satisfied and be confident that the property you are buying meets your needs.
Have you gone through this process recently? Let us know in the comments, we’d love to hear about your experience! Pictured in the article is my new property, stay tuned for some before/after shots!