First time home buyers
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Ottawa first time home buyers Things To Know

So, you’ve finally decided to fulfill a lifelong dream and become a first time home buyer… how exciting! Let me help you to fulfill your dream of home ownership.

Buying a home is one of the biggest decisions you will make both emotionally and financially. Prepare yourself to make this big decision by learning about the process of home buying and the responsibilities of first time home buyer. There are a lot of differences between renting and buying a home and there’s a long list of pros and cons for both options. You should also investigate if you qualify for the Home Buyers’ Plan (HBP) is a program that allows you to withdraw up to $25,000 in a calendar year from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability. And, remember — there is no one best decision for everyone. Here are some questions for first time buyers to consider.

  • Do you have the necessary financial management skills?
  • How financially stable are you?
  • Are you ready to take on the responsibility of all the costs involved in homeownership, including mortgage payments, repairs, and maintenance?
  • Are you able to devote the time required for home maintenance?
  • Plan to attend a first time home buyer seminars in your area

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Ottawa first time home buyers need to consider that there are pros and cons for both renting and buying. Everyone must make his or her own best decision. Buying a home is not for everyone. Take a moment to think through the advantages and disadvantages of both owning and renting. Are the advantages of owning your home really bigger than the advantages of renting? Are the disadvantages of owning your own home really smaller than the disadvantages of renting? If homeownership is for you, you must be both financially and emotionally ready. Buying a home isn’t only about money and you must take an honest look at your lifestyle.

How Much are You Spending Now?

The following steps will help guide you through some simple calculations to figure out your current financial situation, and the maximum home price that you should consider.

How Much are You Spending
How Much are You Spending

Calculate Your Household Expenses

Start figuring out if you are financially ready to purchase a home by evaluating your present household budget. How much are you spending each month? Knowing exactly how much, will give you a better idea about whether you can afford to become a homeowner.

The CMHC Household Budget Calculator helps you take a realistic look at your current monthly expenses.

Calculate Your Monthly Debt Payments

Do you know the amount of debt you are carrying? You need this information to figure out whether you are financially ready for homeownership. If you decide to buy a home, mortgage lenders will ask for this information.

Consider Your Needs — Now and in the Future

Once you know you can afford to purchase a home you’ll need to think about the type of home you would like to buy.

Try to buy a home that meets most of your needs for the next 5 to 10 years, or find a home that can grow and change with your needs. Here are some things to consider.

• Size

• Special features

• Lifestyles and stages

What Location Should You Choose?

Location is a major factor for Ottawa first time home buyers. A home with everything you need but in the wrong location is probably not the right home for you. Here are some things to consider about location.

What Location Should You Choose?
What Location Should You Choose?

• Do you want to live in a city, a town or in the countryside?

• How easy will it be to get to where you work? How much will the commuting cost?

• Where will your children go to school? How will they get there?

• Do you need a safe walking area or recreational facility, such as a park, nearby?

• How close would you like to be to family and friends?

Do You Want a New Home or a Previously-Owned Home?

A new home is one that has just been built — no one else has lived in it yet. You might buy a new home from a contractor who has built it, or you might hire a contractor to build it for you. A previously-owned home (often called a resale) has already been lived in. Here are some characteristics of each type of home.

New Home

  • A new home has the latest designs that might reflect the latest trends, materials, and features.


  • You may be able to choose certain features such as style of siding, flooring, cabinets, plumbing and electrical fixtures.
  • You may have to pay extra if you want to add certain features, such as a fireplace, trees and sod, or a paved driveway. Make sure you know exactly what’s included in the price of your home.


  • Taxes such as the Goods and Services Tax (GST) (or, in certain provinces, the Harmonized Sales Tax (HST)) apply to a new home. 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
  • A new home will have lower maintenance costs because everything is new, and many items are covered by a warranty. You should set aside money every year for future maintenance costs.


  • A warranty may be provided by the builder of the home. Be sure to check all the conditions of the warranty. It can be very important if a major system such as plumbing, or heating, breaks down.
  • New Home Warranties may be provided by provincial governments. There are also private new home warranty programs. In some provinces, a warranty may be provided by the builder of the home. Check with your Realtor or lawyer/ notary to find out what the new home warranty program in your province covers.
  • Check the Internet for Home Warranty Programs in your province.

Neighborhood amenities

  • schools, shopping malls, and other services, may not be completed for years.

Building Your Own Home

Some people prefer the challenge and flexibility of building their own home. On one hand, you make all the decisions about size, design, location, quality of material, level of energy-efficiency and so on. On the other hand, expect to invest lots of time and energy.


  • When the home is already built, you can see what you are buying. Since the neighborhood is established, you can see how easy it is to access schools, shopping malls, parks, recreation facilities, etc.
  • Landscaping is usually done and fencing installed. Previously owned homes may have extras like fireplaces or finished basements or swimming pools.
  • 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.
  • You may need to decorate, renovate or do major repairs such as replacing the roof, windows and doors.

What Type of Home Should You Buy?

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Forms of Ownership

Below are descriptions of a number of forms of ownership.


Freehold means that one person (or two, such as joint ownership by spouses) owns the land and house outright. There is no space co-owned or co-managed with owners of other units.

Freehold owners can do what they want with their property but they must obey municipal bylaws, subdivision agreements, building codes and federal and provincial laws, such as those protecting the environment.

Detached and semi-detached homes, duplexes, and townhouses are usually owned freehold.


Condominium ownership means you own the unit you live in and share ownership rights for the common space of the building. Common space includes areas such as corridors, the grounds around the building, and facilities such as a swimming pool and recreation rooms. Condominium owners together control the common areas through an owners’ association. The association makes decisions about using and maintaining the common space.

Making an Offer to Purchase

After you have found the home you want to buy you will enter into an Agreement of Purchase and Sale with the seller. It is very helpful to work with an experienced Realtor to prepare your offer. The Offer to Purchase is a legal document and should be carefully prepared.

Getting a Mortgage

Once your offer has been accepted, go to see your lender. Your lender will verify your financial information and put together what is needed to complete the mortgage application. Your lender may ask you to get a property appraisal, a land survey, or both. You may also be asked to get title insurance. Your lender will tell you about the various types of mortgages, terms, interest rates, amortization periods and, payment schedules available.

Depending on your down payment, you may have a conventional mortgage or a high-ratio mortgage.

Types of Mortgages

Conventional Mortgage

A conventional mortgage is a mortgage loan that is equal to, or less than, 80% of the lending value of the property. The lending value is the property’s purchase price or market value — whichever is less. For a conventional mortgage, the down payment is at least 20% of the purchase price or market value.

High-ratio Mortgage

<p”>If your down payment is less than 20% of the home price, you will typically need a high-ratio mortgage. A high-ratio mortgage usually requires mortgage loan insurance. CMHC is a major provider of mortgage loan insurance. Your lender may add the mortgage loan insurance premium to your mortgage or ask you to pay it in full upon closing.

Mortgage Term

Your lender will tell you about the term options for the mortgage. The term is the length of time that the mortgage contract conditions, including interest rate, will be fixed. The term can be from six months up to ten years. A longer term (for example, five years) lets you plan ahead. It also protects you from interest rate increases. Think carefully about the term that you want, and don’t be afraid to ask your lender to figure out the differences between a one, two, five-year (or longer) term mortgage.

Mortgage Interest Rates

Mortgage interest rates are fixed, variable or adjustable.

Fixed Mortgage Interest Rate

A fixed mortgage interest rate is a locked-in rate that will not increase for the term of the mortgage.

Variable Mortgage Interest Rate

A variable rate fluctuates based on market conditions. The mortgage payment remains unchanged.

Adjustable Mortgage Interest Rate

With an adjustable rate, both the interest rate and the mortgage payment vary, based on market conditions.

Open or Closed Mortgage

Closed Mortgage

A closed mortgage cannot be paid off, in whole or in part, before the end of its term. With a closed mortgage you must make only your monthly payments — you cannot pay more than the agreed payment. A closed mortgage is a good choice if you’d like to have a fixed monthly payment. With it you can carefully plan your monthly expenses. But, a closed mortgage is not flexible. There are often penalties, or restrictive conditions, if you want to pay an additional amount. A closed mortgage may be a poor choice if you decide to move before the end of the term, or if you want to benefit from a decrease of interest rates.

Open Mortgage

An open mortgage is flexible. That means that you can usually pay off part of it, or the entire amount at any time without penalty. An open mortgage can be a good choice if you plan to sell your home in the near future. It can also be a good choice if you want to pay off a large sum of your mortgage loan. Most lenders let you convert an open mortgage to a closed mortgage at any time, although you may have to pay a small fee.


Amortization is the length of time the entire mortgage debt will be repaid. Many mortgages are amortized over 25 years, but longer periods are available. The longer the amortization, the lower your scheduled mortgage payments, but the more interest you pay in the long run. If each mortgage term is five years, and the mortgage is amortized over 20 years, you will have to renegotiate the mortgage four times (every five years).

Payment Schedule

A mortgage loan is repaid in regular payments — monthly, biweekly or weekly. More frequent payment schedules (for example weekly) can save some interest costs by reducing the outstanding principal balance more quickly. The more payments you make in a year, the lower the overall interest you have to pay on your mortgage.

Starting Your Search

Below are a few suggestions when you are looking for your new home:

Work with a Realtor

For most buyers, a Realtor that is both knowledgeable and you are comfortable working with and is key to finding the right home.

The Internet

Check out the MLS real estate websites, such as These websites give information and pictures of a wide range of properties in various locations. Most sites let you search by location, price, number of bedrooms, and other features.

“For Sale” signs

Drive, bike or walk around a neighborhood that interests you and look for “For Sale” signs. This is a good way to find homes that you like and then you can have your Realtor make an appointment to view the property.

Visit new development sites

If you are looking for a newly built home, you can see available models and get information from builders. It is a good idea to have a Realtor even when purchasing a newly built home as they can walk you through the process step by step and possible negotiate an agreement that would be more favorable to you the buyer.

Useful Tips for Your Search

Keep records

Whether you have a Realtor or are looking by yourself, visit lots of homes before choosing one. Some things to compare are the home’s energy rating, utility costs, property taxes and major repairs. These will affect your monthly housing expenses.

Think twice

Even if a home seems perfect, go back and take a closer, more critical look at it. Visit it on different days and different times of the day. Chat with the neighbors. Look deeper — don’t be distracted by attractive surface details.