Are ready to buy a house? That’s great! For many newcomers, buying a home in Canada is a major goal and is celebrated as a milestone. Rightly so, because buying a home is one of the most expensive purchases that we can make.
Those of us who chose to live in the prairies are fortunate. Compared to most major Canadian cities, Manitoba enjoys one of the most affordable housing costs. Based on the latest figures from the Canadian Real Estate Association, the average price of a house in Manitoba is $277,670 in 2020. Compare this to $728,044 in BC or $627,855 in Ontario – you can thank your stars that you are planting your roots in Manitoba.
As a newcomer, and first time home buyer, allow us to break down for you five essential considerations before buying a house:
- Downpayment and period of stay
Did you know that as a newcomer, your payment options are affected by the amount of time that you have stayed in Canada? Those who have lived in Canada for up to three months, may be required to put up as high as 35% for down payment. To have lower down payment options, you must have stayed in Canada from 6 months to more than a year.
- Know all the costs
Aside from the down payment and the mortgage, you will have to pay for closing costs. These are one time payments covering lawyer’s fees and the land transfer tax. In Manitoba, the land transfer tax is computed up to 2% of the house’s purchase price.
Have you thought about monthly housing costs? Now that you are a home owner, you will have to take charge of the utilities, property tax, home insurance, and of course mortgage expenses. Experts advise that housing costs should not be more than 30% of your total household income per month. If you factor in other monthly expenses, such as your credit card bills, car loans, and other personal loans, you may have to work with a lower budget. Another important consideration is the cost of maintenance. These include costs like minor repairs around the house, fixing the roof, or repairing/ replacing a malfunctioning appliance (like a furnace, for example). It is suggested that homeowners budget 1-2% of their income each year (as an emergency savings fund) for house maintenance.
- Have you considered your lifestyle?
Do you like cutting grass, or gardening? Are you handy around the house? Being a homeowner means you have to take charge of maintenance and repairs your landlord used to do for you when you were renting. For some, owning a house may also require some lifestyle sacrifices. With more of your funds going to mortgage costs and monthly utilities, you may have to cut down on expenses for eating out, vacationing, or shopping.
- Get pre-approved before you start looking
If you are serious about buying a home, you can apply for pre-qualification and then for a pre-approved mortgage. Being pre-qualified for a mortgage gives you a good idea of how much you can get to finance a house. This is done by a lender, such as a bank or credit union. On the other hand, when you are pre-approved for a mortgage, you have the lender’s actual commitment for a loan. Being pre-approved is an advantage when you are looking to buy a house because you will be taken more seriously by sellers and real estate agents. It can even allow you to negotiate better, as this means that your finances are in order.
- Invest in a house inspection
Those granite countertops in the kitchen and new bathroom fixtures may be impressive, but do you know if the electricals are up to code? Are you sure that the house that you have set your sights on has a solid foundation? To ensure that the house you are buying is structurally sound, you can ask for a house inspection. You can hire a professional inspector (or ask the help of New Journey Housing for volunteer home inspections). This may save you from paying for costly renovations and repairs after buying the house. It also gives you the peace of mind that you are getting the right value for what you paid for.
The First-Time Homebuyer’s Incentive
Learn about this new program launched by the government. Its goal is to make it easier for individuals and families to purchase a home by reducing monthly mortgage payment without increasing their down payment.
To view the rest of the videos in the series and to learn more about this program, go to: First-time Home Buyer Incentive.
Article updated Feb. 2020
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1. According to the article, the average price of a house in Manitoba in 2016 is
2. It is estimated that you will need an annual income of _______ to buy a house in Winnipeg.
3. What is the correct definition for “down payment”?
4. A malfunctioning appliance is one that:
5. What does the phrase “up to code” mean?
6. What is the advantage of being pre-approved for a loan?
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