Buying a home : Four shortcuts to avoid
Published on April 22, 2022
Homebuyers often feel both excited and worried. It's important to take some prudent steps to help prevent certain financial consequences and successfully wrap up the home-buying process.
Even if you're nervous, you'll benefit from including the following 3 steps into your approach: inspection, legal warranty and location certificate. Don't forget to check your ability to pay before you get started!
1. Home inspection
It's important to make sure that the property you want is in good condition. Pre-purchase inspections are sometimes neglected to speed up the buying process. This could have unfortunate financial and personal repercussions. You should therefore include the inspection as a condition of purchase in the offer you make to the seller.
A building inspector or other recognized professional will provide you with a detailed report about the property that will help guide you through important decisions. This report could become a key lever for negotiating, making the purchase or even cancelling your offer. The report also outlines potential work to be done if you go ahead with the purchase.
Pre-purchase inspections are strongly recommended, and having one also helps you avoid the consequences of taking certain shortcuts. Imagine buying a home without having first turned on the lights in each room. That's similar to skipping the inspection.
2. Legal warranty
Another crucial step is to ask about the legal warranty. It includes both the warranty of ownership and the warranty of quality.
The warranty of ownership concerns any defects affecting ownership titles. It protects the buyer from title defects that could deprive them of their right of ownership or affect their rights as an owner. It is strongly recommended that you do not waive this warranty.
In exceptional circumstances, a seller may decide not to provide a warranty of quality for their property. If this is the case, it must be clearly stated in the promise to purchase. This is called a sale without a legal warranty of quality, meaning that it's at the buyer's risk. The buyer thus agrees to purchase the property in its current state, with very limited recourse against the seller in the event of hidden defects.
It's better to be safe than sorry, since it's a risk to jump at what seems like an attractive offer with no legal warranty.
New home warranty
For a new home, make sure you have proof that the builder guarantees the quality of the construction.
It's also important to make sure that the builder is licensed by the RBQ in Quebec or by the HCRA in Ontario. Find out whether they offer new home warranties, and ask to visit a few homes they have built.
3. Location certificate
This document, prepared by a land surveyor, shows the current state of the property to be financed (land, building, parking, dependencies, etc.). It also provides information on titles, the cadastre and legislation that may apply to the property. For example, you can normally see any changes to the building, land, parking or to neighbouring properties on a recent location certificate. If it's not up to date, the certificate may not include changes that could compromise the purchased property's compliance.
The land surveyor will include an updated description of the land, such as the total area. They will also note whether adding a shed would encroach on a servitude or public right of way. Constraints associate with an agricultural or flood zone, for example, will also be listed. Encroachments, such as a neighbour's building that is on your land, and compliance with various municipal and provincial government regulations are also included.
4. Mortgage calculator: Get off on the right foot!
As you embark on this new adventure, take advantage of this tool to calculate how much you can afford to spend on your next home. Within a few minutes, you'll get an estimate of your borrowing capacity. This is crucial for getting an idea of how much leeway you can have while maintaining your quality of life. Don't skip it!
My First Home
Desjardins members can use the My First Home tool on AccèsD. It has a simulator that you can use to realistically calculate your maximum borrowing capacity when it comes to buying a home. You can also obtain a mortgage pre-approval. For personalized support based on your situation, contact your Desjardins advisor.
This partner content is presented by Desjardins.