Are you ready to buy a house?

Are you ready to buy a house?

Buying a house or a condo is one of the biggest decisions a person can make. This one decision will impact plans up to twenty five years down the road – far beyond what anyone can predict. The weight of this fact falls heavily on the shoulders of Canadians, who need to decide if they’re ready to buy a home or if they should continue renting.

Down payment

Buying a home isn’t as simple as showing up at the bank and asking for money – you’ll need to have saved up enough money for a down payment. You’ll want to make an initial payment of 20% of the home’s cost as a down payment, as mortgages in Canada traditionally only cover 80% of the home’s total cost. Mortgage insurance may be required if you have less than the 20% down payment, which will increase the cost of the mortgage by as much as 4.75%.

Mortgage Closing Costs

Mortgage closing costs include the legal and administrative fees required to officially transfer the property into your name. Mortgage closing costs include a one-time land transfer tax (the rate varies from province to province), any fees for your notary, and fire insurance. Note that an insurance agent should be brought into the process early, as some homes may be not be insurable.


To complete a mortgage, you’ll need a copy of the signed sales contract, deposit verification, the names and contact information of all lawyers, builders, insurance agents and real estate brokers involved in the transaction, and a copy of the listing sheet and legal description (if available).

Credit Score

Before handing out a mortgage, banks will look at your credit score. They’re not just looking at your number, however, they’re also looking at your repayment history and the type of credit you have. If you only have small credit cards (less than $1000 limit) you may not qualify for a mortgage even if you’ve made all of your payments. If you want a mortgage, you’ll want a clean record for the past 24 months, as well as at least two trade lines – loans (or credit cards) with a $1500 limit or higher.


As mortgage lenders are interested in seeing a return on their investment, you’ll need to prove that you’ve had a stable income over the past two years. Pay stubs, a letter of employment from your employers, and tax information will all need to be handed to the bank in order for them to approve you for a mortgage.


Those who are self-employed will need at least two years of their income history. This history must be verified by an accredited accountant. Note that it can be more difficult for those who are self-employed to maintain mortgages, as they may be seen as a higher risk group by some institutions.

Joint Mortgages

Two people can sign a joint mortgage to help offset the cost of owning a home. In this case, both parties will need to be approved for the mortgage, with their combined income and credit history being the deciding factor. However, problems can occur when one person doesn’t fulfill their end of the deal. If one person is unable to make their payment, the bank is allowed to request the payment from anyone else listed on the mortgage.

Are You Ready?

Buying a home is a difficult decision with lots of details to factor in. Unless you’re able to save up enough money to buy your home outright, you need to carefully weigh the pros and cons of acquiring a mortgage for your house.

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