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BRAD MEADUS
EXPERT MORTGAGE AGENT

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Buying a Home

Making an Offer to Purchase

At Expert Mortgage, we specialize in helping clients create a strong offer that positions them competitively in the housing market. Our team will assist you in determining a fair purchase price by analyzing comparable properties and current market conditions. However, there’s more to consider than just price. We will also guide you through potential contingencies, such as financing approval and home inspection results, that can make your offer more appealing while protecting your interests. Being pre-approved for a mortgage showcases your financial readiness and commitment as a buyer, making your offer more enticing. Let us assist you in navigating the offer process, crafting a clear and compelling proposal that enhances your chances of making your dream home a reality and beginning the next chapter of your life.

Any offer or agreement will typically include:

  • Legal name, vendor name, and civic address
  • Offered purchase price
  • Included chattels (e.g. window coverings, appliances)
  • Deposit amount
  • Request for current land survey
  • Date when offer becomes invalid
  • Any additional conditions, such as property inspection and mortgage approval.

Steps for the Offer to Purchase

Your real estate agent assists you in preparing an Offer to Purchase, which should contain all the necessary details of the transaction.
Before showing the offer to the vendor, it is advisable to have your lawyer review the document as it is legally binding.

Afterwards, your real estate agent or attorney will present the offer to the seller. The seller may choose to accept (Situation 1), counteroffer (Situation 2), or reject (Situation 3) the offer.
Your real estate agent assists you in preparing an Offer to Purchase, which should contain all the necessary details of the transaction.

Before showing the offer to the vendor, it is advisable to have your lawyer review the document as it is legally binding.

Afterwards, your real estate agent or attorney will present the offer to the seller. The seller may choose to accept (Situation 1), counteroffer (Situation 2), or reject (Situation 3) the offer.
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Situation 1

The vendor has agreed to your offer, and the transaction is now completed.

Situation 2

The seller has the option to propose a counter-offer, which could include requesting a higher price or alternate terms.
You return the offer to the vendor with a price higher than your initial offer, but lower than the vendor’s counter-offer.
The vendor has agreed to accept this counter-offer, thus finalizing the deal.

Situation 3

The seller may present a counteroffer, suggesting a higher price or alternative terms. If a counteroffer is given to you at an increased price, be sure to determine your financial limit before engaging in negotiations. It is important not to become overwhelmed by the excitement of the moment and agree to costs that are beyond your means.

You decline the counter-offer and opt not to propose another counter-offer.
The sale is not completed and your deposit will be refunded.
When submitting an offer to purchase, it is common for your real estate agent or lawyer/notary to include specific conditions, making it a conditional offer. This indicates that the contract will only be binding once these conditions have been satisfied. Typically, the following three conditions are customary in an offer to purchase, particularly for first-time buyers:
  • A satisfactory home inspection report
  • A property appraisal
  • Lender approval of mortgage financing to finance the purchase

Home Inspection

Having a professional home inspector assess the property you are purchasing is highly recommended. The inspector will conduct a thorough visual examination of the house and its systems to evaluate its condition. Once you receive the inspection report, you and your real estate agent should decide whether any necessary repairs could impact the sale price or if it is necessary to withdraw your offer.

New Home Warranty Programs

Most new homes come with warranty programs, typically offered by provincial and territorial governments, although private options exist as well. Residents of Nunavut and the Northwest Territories do not have access to these warranty programs. To learn about what is covered in your province or territory, speak with your real estate agent or lawyer/notary.

For Condominiums or Strata Units

In order to purchase a resale condominium or strata unit, it is necessary to obtain a satisfactory Estoppel Certificate or Certificate Status, except in Quebec. This requirement should be listed as a condition in the Offer to Purchase. If you are considering condominium living, you can access a free copy of CMHC’s Condominium Buyers’ Guide by visiting www.cmhc.ca.

Fixed, Variable or Adjustable Interest Rate

There are three types of mortgage interest rates: fixed, variable, and adjustable. A fixed rate remains the same throughout the term of the mortgage, while a variable rate changes according to market conditions while the mortgage payment remains constant. An adjustable rate, on the other hand, fluctuates both the interest rate and the mortgage payment based on market conditions.

Mortgage Approval

While having a pre-approved mortgage certificate is beneficial, it does not guarantee approval for the loan. You will still need to meet with your lender during the conditional offer period to receive the final mortgage approval. To help the process run smoothly, it is important to bring the following items:
  • A copy of the property listing; and
  • A copy of the signed Offer to Purchase
Your lender will review and confirm your financial details, as well as compile the necessary information to finalize the mortgage application. An appraisal and/or survey might be requested by your lender, and title insurance could also be necessary. Your lender will provide you with information on different mortgage options, including terms, interest rates, amortization periods, and payment schedules. The type of mortgage you qualify for, whether conventional or high-ratio, will depend on your down payment amount.

Conventional Mortgage

A traditional mortgage is a loan that is limited to 80% of the property’s lending value, which is usually calculated as the lower of the purchase price or market value. This means that the down payment required is a minimum of 20% of the purchase price or market value.
If you put down less than 20% of the home’s price, you’ll likely need a high-ratio mortgage which most often requires mortgage loan insurance from providers like CMHC. Your lender may include the insurance premium in your mortgage or ask for full payment at closing.

Closed Mortgage

Choosing a closed mortgage could be beneficial if you prefer having a consistent payment amount that helps you plan your finances around your current lifestyle. However, closed mortgages lack flexibility and typically come with penalties or limitations on extra payments, such as prepayments or lump sum payments. It may not be the most suitable option if you anticipate moving before the term ends or wish to take advantage of potential interest rate decreases.

Open Mortgage

This mortgage option offers flexibility, allowing for pre-payment in lump sums or full payment without penalty at any time. An open mortgage is ideal for those looking to sell their home soon or make significant pre-payments. Most lenders permit switching to a closed mortgage at any time, typically requiring a small fee.

Term

The lender will inform you about the various term options for the mortgage, which determines the length of time that the agreed-upon mortgage contract conditions, including the interest rate, will remain fixed. This duration can range from six months to 10 years. Opting for a longer term, such as five years, allows you to plan ahead and shield yourself from potential interest rate hikes as you settle into homeownership. Assess your choices thoughtfully and feel free to inquire with your lender about the variances between shorter (one or two years) and longer terms (five years or more).

Amortization

This represents the duration in which the total debt will be settled. While most mortgages are amortized over a 25-year span, longer terms are possible. Opting for a lengthier amortization results in reduced monthly mortgage payments but higher long-term interest payments.

Payment Schedule

Paying off a mortgage loan typically involves making regular payments, which can be done on a monthly, biweekly, or weekly basis. Choosing a more frequent payment schedule can help reduce interest costs by lowering the outstanding balance faster than with monthly payments. The number of payments made each year can also affect the total interest paid on the mortgage. It is important to consider any special payment features that a mortgage may offer, as these could potentially save money and help you pay off the loan sooner.

Once the Offer is Accepted

After all offer conditions are met or waived, it is time to start planning and making preparations for the future.
  • If you are renting, inform your landlord of your plans to move.
  • Explore different moving options, such as hiring a professional moving service or taking care of it yourself.
  • Update your address with utilities, services, and the post office.
  • Arrange for property insurance.
When making an offer on a property, it usually includes a clause that allows the buyer to visit the property multiple times before the closing, once all conditions are met.During these visits, the buyer can:
  • Take measurements for window treatments.
  • Measure for special-sized furniture.
  • Bring in a tradesperson for renovation or remodeling estimates.

Arrange for these visits in advance to make sure your real estate agent is available

Navigating today’s saturated mortgage market can be overwhelming, which is why seeking advice from a mortgage professional is crucial. Whether you’re a first-time homebuyer or a seasoned pro, consulting with an expert can prove to be invaluable.
If you’re a first-time homebuyer, you may not be familiar with all the financing options available to you. It’s important to select the right plan for your individual needs and understand the legalities involved. I can help guide you through this process, providing expert advice and ensuring a smooth and error-free application.
Even if you’ve purchased a home before, staying up-to-date on the latest rates and packages is essential. To ensure you choose a mortgage that is tailored to your specific needs, don’t hesitate to contact me.

You can easily get started by filling out a brief online form with your information and submitting it. I will then reach out to you with a customized mortgage solution that meets your unique requirements.

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