Meet Jane. She’s a young professional who works in southeast Calgary and has a good job.
Frequently Asked Questions
Buying a home is one of the biggest financial decisions you make in your life! Sometimes it can come across as an intimidating process, but if you educate yourself and ask questions it can relieve the stress of buying a home and make it a much more enjoyable process. Have a question about budgeting for a home, the buying process, mortgages, home services, home maintenance and more? Check out below for some FAQs and Answers!
Landscaping deposits are required for two reasons. They are necessary to ensure that the landscaping gets completed. Some people may be content leaving their yards a mess which ruins the look of the neighbourhood and upsets many of the residents in the area. They paid to live in there, and expect it to be looking good. If you don’t complete your landscaping, you don’t get your deposit back. Since new home buyers expect a good looking neighbourhood, the developer has put architectural controls in place to guarantee that a consistent, attractive look flows throughout the community. Landscaping deposits help ensure that landscaping deposits are completed to the minimum level. If you don’t meet requirements, you will not receive your deposit back.
Receiving your landscaping deposit should be a straightforward, painless process; however, without fully understanding your obligations and your builder’s obligations, it can become a frustrating and lengthy experience. The developer who created the community put together a list of architectural controls to ensure that the decided look of the sub-division remains consistent throughout. The developer made a deal with the home builder, in the form of a deposit, to ensure that the house and yard would conform to said controls. The deposit also works as insurance to guarantee that the builder pays for any damages they may cause to the curbs, sidewalk, etc.
When the home is completed, the developer inspects the lot and street, and if it meets the criteria, the builder will get their deposit back. When you sign your agreement to the builder, you provide them with a landscaping deposit just like the one the builder gives the developer. You have a contract and are responsible to the builder. Not the developer. When you finish your landscaping you can request an inspection from your builder, and then apply to have your deposit refunded. Sometimes, the builder will recommend you get your deposit returned from the developer so they can simplify the process for themselves. Stop right there. You are responsible to the builder, not the developer. Make sure your obligations are clear when signing your purchase agreement, complete your landscaping according to your conditions, and work directly with your builder to receive your deposit back. If problems occur, try and avoid getting involved in the builder and developer’s affair.
You will need to pay for legal fees when signing your mortgage. These legal fees vary by province and are subject to GST or HST where applicable. It is important that you ensure your lawyers quote includes not only legal fees but also any related expenses and disbursements. Legal fees can range anywhere from $1300 – $2500.
Some properties are GST/HST exempt and some are not. Typically, it will be included in the sale of a new home but not on resale properties. Don’t forget about property taxes, those are assessed by your municipality and range depending on your neighbourhood. Upgrades to the home can increase your overall purchase price and a percentage may be required in cash or can be added to the mortgage (depending on the builder).
Always ask before signing your offer. These are some of the more popular expenses that are sometimes overlooked. It is encouraged that as a buyer you do all your due diligence to ensure you are not forgetting a fee or expense.
Condo fees are the homeowner’s contribution towards the operating expenses of the Condominium Corporation. These expenses may include exterior maintenance such as: grounds’ lawn, landscaping, snow removal, roadways and street lights. They may also include upkeep of the exterior of the buildings and shared interior common areas like the lobby, parking garage or the residential social room. Living maintenance free definitely has its benefits; whether it snows or rains you will never have to worry about shoveling or mowing and your community will remain preserved as will your investment for years to come.
A portion of the condo contribution will include a reserve fund. The reserve fund sets aside a specific amount of the homeowner’s contribution to cover repair or replacement of depreciating common property. This fund is a mandatory requirement governed by the Condominium Property Act and followed by your Condominium Board for your protection.
Condo fees are determined by the Condominium Board of Directors and may be subject to change. This board consists of Condominium Owners elected by the Condominium Owners to carry out the duties of the Condominium Corporation. Your portion of the total condo fees is based on the number of unit factors allocated for you home. This number is determined by various factors, which may include the square footage and location of the unit.
It is recommended you budget 25 – 30% of your monthly income towards covering the cost of housing and utilities. You will also need homeowners insurance to protect your home and contents within it. To help pay for civic services such as police and fire services, road maintenance, snow clearing, public transit, etc. you are required to pay property taxes. How much property tax you pay depends on the municipality you live in and your property value.
Try creating a trial budget to include your new expenses such as utilities (they sometimes require deposits), home insurance, home maintenance/repairs, landscaping/fencing (if you’ve bought a new home where this isn’t included) and condo fees (if applicable).
Show home hours are set by the developers and all builders are obligated to follow this schedule. Hours are typically 3pm – 8pm on weekdays and 12pm – 5pm on weekends and holidays. Show homes being closed Fridays is an industry norm, and allows our sales people time to spend with their families too!
Canadian Mortgage and Housing Corporation (CMHC) loan insurance is usually required by lenders when home buyers buy a home with a down payment less than 20% of the purchase price. The reason for CHMC loan insurance is two-fold; it protects lenders from the possibility of having the borrower default on their mortgage and it helps home buyers purchase homes with a lower minimum down payment of only 5%. The CHMC loan insurance guarantees borrowers with smaller down payments interest rates comparable to those with a 20% down payment.
For new home sales, paying for an inspector to come look at the home is not necessary. Home builders must construct each new home to a certain level as decided by the City of Edmonton. Building codes must be met, and they must pass inspection by the city in order for a builder to be able to turn over a home.
The City of Edmonton created the First Place Program , a market housing initiative, to give first time home buyers a financial advantage through deferred land payments on the purchase of their first home. The First Place Program transforms undeveloped building sites into housing options. Not wanting to compromise what has been in place for decades, each First Place Project will undergo a design consultation with the community members to allow them to voice their opinion, feedback and input on the design. While the goal is to transform and revitalize, the character and feel of each participating neighbourhood will remain consistent.
Realtors are a wealth of knowledge and a great resource when selling your current home or purchasing a resale home; however, for a new home sale they aren’t necessary. If you know you are going to build a new home, an area manager or sales professional will be there to assist you every step of the way on route to purchasing a new home.
If you do choose to use a Realtor they must abide by the Builder/Realtor Cooperative Program created by the REALTORS Association of Edmonton. If you are working with a Realtor they must accompany and register you on your first visit to any of our showhomes. For more information visit CHBA Edmonton Builder/Realtor Cooperative Program.
The debate between renting and owning is complicated, changing, and never ending. Best thing to do is to weigh the pros and cons of each option. Having a look at renting, the biggest positive is that it costs considerably less than owning a home, when you take into account all the true costs of owning a home. Furthermore, when something breaks, it’s the responsibility of the landlord, not you, to fix it. Lastly, renting gives you more freedom to move, change career paths, start new relationships etc.
Unfortunately, when renting you need to consider the negatives such as living among other renters, who may or may not take as much pride in the building as you, and may present undesirable living conditions. Also, renting means you cannot make large changes, since it’s not yours to change and the cost of renting and renewals may fluctuate as they are ultimately subject to the landlord’s discretion.
When you purchase a home, you build ownership and equity with every payment. Furthermore, when it’s your house, it’s your rules. You can make changes, decorate, renovate and do whatever you want, because it’s all yours. With monthly payments comparable to rent with low interest rates, owning a home is affordable. However, owning a home can come with some negatives. Buying a home requires a large up front lump sum as a down payment, closing costs or other fees associated with buying a home. The price of the home may limit what areas you could live in, and realistically, you may not be able to purchase what you want leaving you to settle with what you can afford.
So ultimately, there is no clear cut winner between renting and owning. It depends on an individual’s financial situation. If you can afford a down payment, you can find affordable mortgage options that give you the freedom to live how you want.
Under Canada’s new mortgage rules, the down payment on a rental property holding one to four units must be at least 20%. This rule does not apply to borrowers whose principal residence also includes rental units. Be sure when you have a rental property to deduct related expenses from your income, thus reducing the taxes you owe. Applicable expenses include property tax, property management, maintenance, utility bills, mortgage interest and insurance.
Market conditions are volatile and the real estate game isn’t always the best deal. The best time to buy is when you need a new home to suit your growing or changing needs and the best time to sell is when what you currently have is no longer serving those needs. There are some benefits to buying pre sale as newer neighbourhoods with pre sale homes tend to be lower in cost since the community is just getting established. Before selling you home, it may be beneficial to determine if renting out your property is a good option rather than selling in a market that has changed unfavourably.
The duration of you build depends on a variety of factors. Lot preparations, size of your home and the complexity of the design, availability of labour, weather, and a variety of other factors influence construction. In bigger developments, a certain percentage of new homes require to be pre-sold prior to construction beginning. It can be typical for a townhome/duplex to be anywhere from 6-9 months and a single family home 12 months when building from start to finish. Work closely with your builder for a detailed schedule so you can know what to expect.
Some builders also offer quick possessions for someone who is looking to move into a new home immediately.
Once you’ve found a house to call home, you need to put you your offer on a writing document called a “offer to purchase.” The home buying process could be repeated a number of times based on revisions made after counter offers or if any changes are made before condition removal.
Remember to bring identification for all the people that want to be listed on the home
The offer to purchase takes about an hour and a half to two hours of time to properly go through all the paperwork, a cheque is generally required to make a hold until financing is applied, then the home goes from conditional to unconditional which means you are now in a binding contract
Your down payment is generally enough for the builder to start your construction (if you’ve bought a home from the ground up) otherwise until they finish your home you don’t have to make mortgage payments until the house is officially yours
Walk through appointments (depending on where your home is in construction) are scheduled throughout the process so you can see your home as it continues through the construction stages we recommend you not to visit your home unaccompanied as construction zones are extremely dangerous
Usually a month before you move into your home, ensure your mortgage rates are locked in and you can begin meeting with your lawyer to sign off on your possession when you receive your letter of possession
There is no absolute “standard” garage size when buying a new home and it may differ depending on a single, attached or detached garage. It is helpful to be aware that some double car garages may not be true to their “double” label, as they may refer to two small compact vehicles.
Also note you will have a landing built from your interior garage door and your home as per building codes, which may take up some length. Consult your sales person for actual dimensions of your garage and be sure to ask if you have a large truck or SUV that may defy what standard may encompass.
We strongly recommend that you do not have your movers scheduled to come on the date of your possession. Sometimes although the Possession appointment is confirmed for a specific date, when your appointment comes we may not receive the approval for key release. Don’t worry! We will still go through your Possession walk-through with you and give you all documents pertaining to your home. However, until we have approval we cannot release your keys to you. Should this happen, we would not want you to have your movers on site and waiting to move your possessions into your home.
A condominium is simply a system of land ownership whereby an individual can obtain “ownership of an area within a shared parcel of land” or the “ownership of a space stacked above ground.” When a person buys a “unit” in a Condominium, he receives ownership (title) to a defined space within a “parcel.”
A condominium board is responsible for the enforcement of its bylaws and the control, management, and administration of its real and personal property and the common property.
A Home Owners Association (HOA) is an association for a neighborhood or group of homeowners residing in a certain area and its existence is mainly to maintain community facilities and common areas, and to enforce various covenants and restrictions. HOA’s may maintain such things as the landscaping, grass, trees, snow removal and maintenance of common areas while the lot and the exterior of the home is left up to the home owner. The main difference between the two fees comes down to ownership. With condo fees, a resident owns their own unit, plus takes partial ownership for any common areas.
Alternatively, with HOA fees the resident only owns his own property, and any common areas are owned by the HOA. HOA fees are usually less than condo fees are because there is no reserve fund and the operating costs are less.
Once you move in, the City will mail you a copy of your waste disposal schedule for your area. You can also call #311 in the city, or you can find it online at edmonton.ca.
After you take possession and move in, contact Canada post and they will mail your keys to the nearest post office. Your purchase agreement or some proof of home ownership will be required to pick up your keys as will valid ID.
Canada post has made a very user friendly option on their website to help people find a specific postal code. Just go to their website, enter the address, and it will provide you with the corresponding postal code.
When you purchase your home and are given your move in date, you should be arranging with your utility companies a week or two before your possession. Let them know when you’re moving in, your address, postal code etc. You will arrange for hook-up of power, natural gas, and water (once you’re taking over from the builder, ask your builder who they are currently using as energy providers). Signing up for utilities you will need to show identification and possibly pay an initial deposit to ensure your bills get paid on time. It will be refunded to you after a year of prompt payments.
Seasonal work is simply work that can only be done during some times of the year. For example, if you’re Santa, you’re only really working in December, there’s not many presents to give out during spring break. Therefore, when you live in a cold climate like Alberta, things like landscaping can only be performed after the snow has melted and the ground has thawed. Even then, landscaping crews battle uncontrollable circumstances like rain.
The reason seasonal work can sometimes take a long time to complete is because, since there is only a small window of time to perform the work, these services get booked up fast. A helpful tip is to line up seasonal work like landscaping for the spring during the cold winter months, so you could be first in line and enjoy a new yard all summer.
Maintenance is important in preventing and reducing the number of repairs or damage that could happen to your home. When you purchase your new home and take possession, your builder should provide you with warranty information as well as maintenance tips to prolong the life of your home. Customer resources such as warranty videos are a helpful way builders can welcome new families into their home. For a maintenance guide and a schedule for recommended times approved by the Alberta New Home Warranty Program click here.
Guidelines for the style, color, and size of your fence for your new home will be included in the developer’s architectural controls in order to keep the neighbourhood looking uniform and visually attractive. In most cases, the home owner will be responsible for installing any fencing on the property, but sometimes the builder will construct the fence in part of a landscaping package. Two factors that need to be considered when building a fence are size and location, which are both regulated by the City of Edmonton zoning bylaw. Fences may be built along and up to your property line, but must be within the property limits. A permit is required for any fences higher than 1.2 meters or 4 feet in the front, and 1.85 meters or 6.1 feet in the rear of the property. A good cost cutting tip is to split construction costs with a neighbour. When you work with a neighbour to build the fence, you may both decide the location of the fence. If undergoing a do it yourself fencing project is too overwhelming, be sure to seek professional help so your fence is built solid and safe.
According to City of Edmonton zoning bylaws, within 18 months of any new home purchase landscaping needs to be completed on any front or side yards visible from a public street. In some situations the builder will assume responsibility for the landscaping or it will be your full responsibility after the builder completes rough grade as approved by the city of Edmonton.
It is therefore important to know what you can and cannot do in respect to your landscaping. New homes typically need to follow architectural guidelines, as decided by the developer. These guidelines may include controls such as the minimum number of trees and/or shrubs required on your front lawn. It is highly recommended that you ask your builder for a copy of the landscaping requirements, or look for them on your developer’s website, before you begin landscaping.
To get grading approval, all buildings and concrete drives and sidewalks must be completed. Lot grading approval comes in two stages: rough grading approval (typically done by the home builder) and final grade approval (usually done by the homeowner). Rough grading includes backfilling the foundation walls and shaping the lot to the confirmed lot grading plans. Rough grading should be approved within 18 months of the issuance of a building permit for the lot. Within one year of your rough grade approval you will need to have your final grade approval. When the rough grading is done, it is left 7 to 20 cm below final grade elevation. This room is left for topsoil placement, which should be smoothly spread out, compacted, and prepared for sod, liners, rock, etc.
Do you REALLY need to? The answer is no. BUT…
Getting pre-approved allows you to know what you can afford when it comes to shopping for the home of your dreams. This helps qualify the homes that fall within your range. On top of that getting pre-approved allows you the ability to calculate your monthly payments, giving you the opportunity to budget for the future. Many sales professionals will inquire whether or not you’ve gone through a pre-approval process, as this can help them understand your needs and what product may suit you best. Pre-approvals do have limited time frames ranging from 90-120 days and they give you a preview of what kind of financial information may be required to obtain a mortgage.
A variable interest allows you to make consistent payments onto your mortgage month; however, the amount of that payment that contributes to the principal of your loan varies with the interest rate, which is subject to the current market. If the interest rate decreases, the amount applied to the principal increases, and vice versa. In general, variable interest rates tend to be lower than fixed interest as you assume more risk than the bank that is making the loan to you and for some borrowers this rate is considered less stable or predictable.
A fixed interest mortgage guarantees a fixed interest rate for the entire term of the loan. The advantage of a fixed mortgage is that the borrower will not have to worry about a varying loan payment every month that changes along with interest rates. Stability eases anxiety. As time goes on, more of the mortgage payment goes towards the principal and less of the payment goes to the interest. Those who are more adverse to risk tend to choose a fixed mortgage.
In most cases, to obtain a mortgage you need to be employed full time and have proof of stable income, some savings and a good credit rating. You also need to provide a verifiable down payment of at least 5% of the property purchase price (unless you are purchasing for a rental property which it increases to 20%). A pre-approved mortgage is a home loan that has been tentatively agreed upon by a lender, outlining how much money you will receive for specific terms and a certain interest rate.
To obtain a mortgage, you must be willing to pay legal costs (typically between $600-$1000), insurance on the property and mortgage applicant, and in some cases, an appraisal can be requested.
Need some help with understanding mortgage lenders, rates and which financial institution offers what? A mortgage broker works to find you the best possible rates with an established lender. They have the resources, and will do the necessary research and diligence to get you the best rate. As the home buyer, there are no hidden fees or costs, you do not pay the mortgage broker. They are compensated by the lender you end up choosing, making commission on every mortgage they sell. This can be an area you need to be cautious of. Lenders sometimes offer brokers trailer fees, bonuses, and other perks to motivate you to sell mortgages from their establishment. It is up to you, the borrower, to discuss with your mortgage broker what would be the best fit for you and what lender provides the optimal plan for your lifestyle needs.
Once all information has been provided to the lender (income verification, down payment, property details, etc.) the process could take anywhere from 2 – 4 weeks. Generally when buying a new home, your builder allows you 10-14 days to secure financing conditions which should allow you enough time to obtain your mortgage. Your actual mortgage payments begin only when you move into your new home.
Mortgage Term is that period of time until your mortgage becomes due and payable. Most mortgages have a term that ranges from six months to five years. The rationale for having shorter terms is for the benefit of both the borrower and the lender. Many people lock in for five years when there is a favourable low fixed rate and may opt for a shorter mortgage term is the interest rate is better variable.
If you are a borrower and you have always made your mortgage payments, then most institutional lenders would like to renew your mortgage. More often than not the same terms and conditions apply, other than the interest rate. It is updated to the then current rate.
Amortization relates to the rate at which the mortgage is completely paid off. Most first time buyers start with a twenty-five year amortization period (this is also the new maximum length of time). This suggests your mortgage will be paid off in full after twenty-five years based on the monthly payments and level of interest rates in your initial mortgage. The shorter the amortization rate, the more money is being paid straight to your principal and less to interest.
In Alberta, the GST New Housing Rebate is available in full only to purchasers of new homes priced up to $350,000. It is phased out progressively for new homes priced between $350,000 and $450,000. New homes priced at $450,000 or more are ineligible for any portion of the rebate.
The first time Home Buyers Tax Credit (HBTC) is a non-refundable tax credit that you can claim if you bought a qualifying home. A qualifying home is a new or pre-owned property, a condo, apartment, townhome, attached, or semi attached home, a mobile home and is registered in your name. The total amount claimed cannot be more than $5000 and could result in up to $750 saved. People who are disabled, or are buying the home for a disabled relative also are eligible for the HBTC.
RRSP Home Buyers’ Plan (HBP) Gives you the opportunity to withdraw up to $25,000 during a calendar year from your RRSP’s to buy or build a qualifying home for yourself or for a related person with a disability.