The housing market isn’t an easy one to break into. Home prices in Ottawa remain stubbornly high while interest rates continue to go up. The combined pressures mean homeownership is not getting any cheaper, but that’s not deterring some first-time buyers from pursuing their dreams of homeownership.
For potential homebuyers trying to get into the market for the first time, this guide can help prepare you for the process that lies ahead.
#1 How Much Do You Need for a Down Payment?
In Canada, the minimum down payment you need is 5% of the purchase price of a house. However, if you have less than 20% as a down payment, you can expect to pay mortgage loan insurance. This insurance can add anywhere from 0.6 to 4.5% of the cost of your mortgage and protects the mortgage lender if you default on your mortgage payments.
When you’re saving, don’t forget that you will also face extra closing costs that will have to come out of your pocket right away. Closing costs generally come to 1.5 to 4% of the purchase price, which can amount to a substantial sum. These costs include:
- Legal fees
- Title insurance
- Land transfer taxes
- Home inspection fees
#2 Get Pre-Approval for a Mortgage
When you feel like you have enough saved to seriously start your search for a home, talk to lenders about getting pre-approved for a mortgage. In the pre-approval process, a lender will examine your finances (including a credit check and evaluating your income). They will tell you how much they are willing to lend you and the interest rate they’ll charge.
Pre-approval will give you a sense of your real budget. Even with a 20% down payment, the interest rate you have to pay will have a big impact on your monthly payment.
#3 Search Listings in Ottawa
Now comes the fun part: time to start looking for houses for sale in Ottawa. The best way to start is to check out listings online. You may get recommendations from a real estate agent, but you’ll want to do your own search and pick out houses that you love. This can also give your agent a better idea of what you’re looking for.
Search according to neighbourhood, price, space, amenities, or aesthetics.
#4 Tips for Viewing Houses
Once you’ve found some listings that you like, it’s time to start booking viewings. There are a few red flags to look for when you’re on-site and viewing a property:
- Signs of deferred maintenance.
- Issues with the foundation like large gaps or sloping floors.
- Mold around drains or water pipes.
- Water damage or even a musty odor that indicates its presence.
- Recent cosmetic enhancements, like a single freshly painted wall that could be concealing bigger issues.
#5 Making an Offer
Lean on your real estate agent for advice when it comes to making an offer on that home you love. They can help you estimate whether you should match the asking price, go over, or attempt to go under. They may not know everything, but they’ll be familiar with the market and what similar houses are going for in the area.
With these tips in hand, you’re well-prepared to start house hunting!