Buying A house In Canada
Buying a house in Canada is the purpose of many Canadians.
According to Statistics Canada, in 2006 68.6% of Canadians owned the house they lived in. In Ontario, this number reached 71%.
Buying a house in Canada is the most reliable and profitable type of investment.
Real estate prices grow at a faster rate than inflation. This is especially true for detached houses - their price grows the most.
The opposite process, when real estate prices drop, happens in Canada very rarely and is usually a consequence of economic crisis.
Once the crisis is over, the prices start to grow again.
Pros of buying a house in Canada:
- Buying a house or a condo provides guarantee for the future. Shelter is one of the basic human needs, and owning a house gives people a sense of security.
- Buying a house in Canada is also a means of accumulating money. Every time you make a payment on your mortgage, you are buying another share of your house from the bank. When you rent, you literally "waste" the money as it goes directly into the pocket of the building owner.
- When your sell your house, you do not have to pay profit tax on the difference between the sale price and the purchase price. You can easily buy a house in disrepair, fix it and sell it at a higher price, and you will not pay taxes.
- You can rent out your house or condo in order to generate income.
- If you run your business from your house, you can deduct part of your house expenses, including mortgage payments and maintenance.
- Owning real estate in Canada offers a whole new comfort level.
- Owning a house or a condo in Canada increases your social status in the eyes of financial institutions, and in the eyes of others.
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Cons of buying a house in Canada include the following:
- Your responsibility. Since you are the owner of the property you purchased, you have to solve all the questions related to its possession, including legal and financial. You will have to maintain your property in good condition and settle all questions related to its repair and maintenance. This is not the case if you own a condo, as all these questions are settled by the administration of the condominium.
- You must have savings for buying a house in Canada. Ideally, the downpayment should be around 25% -35% of the total cost of the property. For those who buy their first house in Ontario, for example, young people or new immigrants, the downpayment may be as low as 10 %, starting in 2010. Before, it used to be 5 %.
- As a rule, monthly mortgage payments than monthly rent. Remember, however, that the house you buy is usually of a quality superior to that of a rented apartment. If you were renting an apartment of the same quality, your monthly rent could be just as high as your mortgage payments.
The amount of your mortgage payment also depends on what downpayment you put in inititally. The higher the downpayment was, the lower your monthly payments will be.
Also remember that your monthly payments will be higher during the first years after buying a house in Canada. As you pay off your mortgage, the amount you pay will decrease every year. When the whole mortgage is paid off, you will only need to pay your utility bills and property taxes.
- Lastly, you will have maintenance expenses, as you will need to maintain your property in good condition.
Buying a house in Canada - conclusion:
Real estate in Canada is a highly profitable investment, especially if you buy a detached house.
For more information about types of houses and the investment value of each house type read our guide to houses in Canada: detached, semi-detached, duplex and triplex, townhouses and condo apartments.
Although they are about Toronto, all these types of houses are common everywhere in Canada.
Here are the most important pros of buying a house in Canada:
- Thanks to government programs, certain categories of buyers do not need to put in large downpayment. For first time buyers, 10% of the house price is enough.
- Annual mortgage rates in Canada are very low. If you buy real estate taking into account your financial possibilities, your mortgage payments will not be too high.
If you are a new immigrant in Canada and you arrived with a substantial amount of money, and if you are sure that you will find employment quickly, I recommend buying a house right away instead of wasting your money on renting an apartment. If you don't have enough money, or are unsure where you want to live or how soon you will find a job, you should start saving as soon as you get employment.
Most importantly, you should use the help of a highly competent real estate agent. A good agent will be able to evaluate your financial situation, your desires and possibilities and will help you draw up a detailed financial plan.
If you are buying a house in Canada, Toronto, I recommend you to turn to Helen Riabinin, Sales Representative, Century 21 St.Andrew's Realty Inc., whose original articles I used on this webpage.
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