Canadian Home Buyer Guide

Canadian Home Buyer Guide

Buying a home is the single largest purchase you’ll ever make so it is a financial decision that should be well researched. We have distilled the home buying down to 3 stages to help walk you through the end-to-end process:

There are a lot of activities that need to take place at each stage, but for simplicity’s sake you should only be focusing on the stage you are in right now. We will provide checklists and detailed information about what you should do at each stage.

At the end of this Overview you will understand:

  • How Investing in a home is unique

  • Key activities in each stage

  • Mortgage Sandbox’s home buying philosophy

Rendering: Conceptial design for Oakridge Centre

How Investing in a Home is Unique

Home buying is very different from other investments because of:

  1. High costs if you change your mind

  2. Ongoing ownership costs

  3. The subjectivity of home values

  4. The large amount of debt involved

High costs if you change your mind

Moving cash from one savings account to another costs next to nothing, but selling a home and buying another costs thousands of dollars in fees, commissions, and taxes. If you regret your purchase or simply want to trade up in a couple of years, the costs can set you back significantly.

Ongoing ownership costs

Property taxes, condo fees, utility charges, and general maintenance costs are predictable, but the cost of a new roof, furnace, upgrading electrical and plumbing can be punishing. You need to be saving money in a “rainy day fund” for unexpected repairs.

The subjectivity of home values

Like many investments, the value of a home can be affected by demand, the economy, and interest rates. But home values are also affected by the character of the neighbourhood, local schools, transit, building condition, and whether you have good neighbours. Not all of these factors are obvious when you come to an open house and sometimes buyers can get burned. Homes are not commodities because not all 900 square foot, 2 bedroom apartments are alike. What may look like a compromise to you, could be someone else’s dream home.

It’s a large debt commitment

Most people make the minimum down payment to buy a home and borrow the rest by taking out a large mortgage that will take 25 years to repay. A 1% difference in the mortgage rate can be a big deal.

As an example, a family with a $400 thousand mortgage at a 3.5% 5-year fixed mortgage rate will pay $2000 per month. If they renew the mortgage in 5 years at 4.5%, their mortgage payments will have risen to $2200. Over the 5-year timeframe, that 1% change will cost the family $12,000 more toward monthly payments.

A Mortgage is a Home Loan

At its core, a mortgage is a home loan where you offer the bank your home a collateral for the loan. It’s like a car loan where you offer the car as collateral for the loan but different from an unsecured loan in which you don’t offer the lender anything you own as collateral.

If you miss too many payments or significantly alter the value of the property offered as collateral (home or car) then you will have broken the loan agreement and the lender will ask for the full loan amount back or ask a judge to force you to sell the property to pay them back.

When a lender gives you money for a home loan they register their name on the “title” to your home. The title is like a certificate of ownership that is held on record by the province where you live. Anyone can search provincial land titles and see who lent you your mortgage.

There is a lot of trust involved in a home loan because the lender will give you a loan that typically takes 25 to 30 years to pay off. Ideally, you want a lender who is larger and has a reputation to protect. They will generally make a bigger effort to work with you if you lose your job or get hit by a big unexpected expense. Not all of the big Canadian mortgage lenders are banks.

The Key Activities In Each Stage

Home buying is complex and different depending whether you buy urban, rural, apartment, or detached homes. As you can see below, we’ve looked at other advisors and they often list anywhere from 6 to 16 stages in the process.

Process Complexity.png

We believe that at its heart there are 3 primary stages to buying a home but at each stage we need to look at the Property, Financing, and Risk Protection. In this section, we explore the key activities for each stage of the buying process.

1. Set A Budget

You always want to set your preliminary budget before meeting with a mortgage broker or real estate agent.

Financing Property Risk Protection
  • Decide how much of your savings you will put toward the purchase.
  • Use our "What can I buy?" calculator to find out your estimated home budget.

  • Figure out your requirements for a home.
  • Make a list of amenities you need in your neighbourhood.
  • Set your financing priorities.
  • Find a suitable mortgage broker and real estate agent.

For more details and access to checklists, visit the detailed steps for “Set a budget”.

2. House Hunting

Once you’ve finalized a realistic budget and have been pre-approved for a mortgage, you can start searching for a home. Don’t be surprised if you need to adjust your budget or your expectations, it’s natural for you to have to update your budget and requirements as you learn more about the market.

Financing Property Risk Protection
  • Get pre-approved for a mortgage.
  • Provide the Mortgage Broker with documentation.
  • Come up with a buying strategy.

  • Visit open houses.
  • Plan your offer subject conditions.
  • Select a Home Inspector.

For more details and access to checklists, visit the detailed steps for “House hunting”.

3. Closing The Deal

Once you have an accepted offer to buy a home, you can get formally approved for a mortgage. Just keep in mind, that mortgage approvals are still dependent on you satisfying lender conditions. If any condition isn’t met, then you’ll have to get re-approved. Always try to satisfy lender conditions as quickly as possible.

Financing Property Risk Protection
  • Obtain mortgage approval.
  • Satisfy lender conditions.
  • Confirm property condition.
  • Schedule the move.
  • Get home insurance.
  • Accept Home Inspector’s report.
  • Schedule locksmith.

For more details and access to checklists, visit the detailed steps for “Closing The Deal”.

Mortgage Sandbox Philosophy

At the core of our philosophy is a belief that Canadians want to work with, and give business to, people who share and understand their interests and values. Home buying can take up to 5 months from beginning to end and it is the largest and most complex financial transaction a Canadian will undertake. You should embark on this journey with professionals that you get along with and trust.

With this in mind we developed Mortgage Sandbox, a digital financial advisor website, specialized in real estate, that allows home buyers to get sound financial advice online. The tools offered assess people’s personal goals, their financial situation, and their personal values, and provide consistent advice on real estate purchases, financing, and local real estate agents and mortgage brokers to help execute their home ownership plan.

The software provides financial advice based on mathematical rules and algorithms that rely on data provided by leading economists. These algorithms are executed by intuitive, easy to use software and are supported by context sensitive help. Our goal is to see more home buyers leave the process feeling they have made best purchase and built enduring relationships with their real estate professionals. To learn more about Mortgage Sandbox, click the logo below.


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