Find Yourself a Reputable Agent 

You would not go on safari without a guide would you? The same principal applies to the purchase of real estate. Although there are no life-threatening issues at stake, there are extensive financial implications to consider, significant legal matters to examine, and various locations to choose from, all of which require a certain level guidance. 

Real estate agents are ideal guides in the purchase of real estate. They prospect for the buyer, act as negotiator between buyer and seller, and advise in the completion of the transaction. They must hold a license issued by their provincial real estate board, assuring you that they are trained agents, well-informed on the subject of how to buy a house in Canada. 

When you first meet with a Canadian real estate agent, it is required that he present to you a pamphlet that explains the nature of his relationship with you and the extent of his responsibilities to you. The basic obligations of the agent are to protect and promote your negotiating position at all times, abide by your instructions (providing they are lawful), respect all confidences, and account for all funds placed in their possession while acting on your behalf. 

Safeguards 

When you are researching how to buy a house in Canada, the security of your transaction is very important. What kind of systems are in place to ensure you do not loose your investment in a fraudulent transaction? 

Real estate brokers are audited once a year to confirm that they are following regulations enacted by the province. The provincial commission has the right to impose fines, suspend or revoke licenses to those who are not abiding by the rules. 

Many provinces require real estate agents to have an insurance policy that protects purchasers in the event of errors and/or omissions with regard to real estate transactions. In such a case, the insurance company would typically compensate the purchaser for the agent’s mistake. Some provinces have a recovery fund to indemnify clients who are victims of fraud, resulting in a financial loss caused by a real estate representative. 

Real Estate Rules for Non Residents 

British Columbia, Ontario, Quebec, Nova Scotia, Newfoundland and New Brunswick pose no restrictions regarding the extent of real estate a non-resident can buy in Canada; however, some Canadian provinces limit the amount of property to foreign buyers. “On Prince Edward Island, non-resident buyers must apply to the Island Regulatory and Appeals Commission for land over 5 acres in size, or land with a shore frontage greater than 165 feet. In Manitoba, non-residents are prevented from owning farmland unless they actually plan to move there within 2 years. Non-residents may not own land over 10 acres in size in Saskatchewan, whilst in Alberta they may only own up to 2 plots of land not exceeding 20 acres in total.” 

Since the tragedy of 911, a national agency called Fintrak collects data on real estate buyers, requesting their current address, passport identification, and driver’s licence in order to verify their status. The purpose is to ensure that money is not laundered in Canada for terrorist activities or other nefarious endeavors that would threaten the country’s security under the mask of real estate dealings. 

Financial Recommendations 

Learning how to buy a house in Canada includes knowing how to finance such a purchase. In order to determine the amount you will need to borrow, you must be aware of the purchase price, transfer tax, appraisal fees, inspection fees, insurance costs, and closing fees which constitute legal fees. Keep in mind other potential disbursements. 

You should endeavor to put down as much money as you can afford towards a down payment - the larger the down payment, the lower the monthly mortgage payment.. If your down payment is less than 25% of the purchase price, your mortgage loan will have to be insured with a mortgage insurance company. Since this involves another outside service, additional legal fees would be required for the loan application, and an insurance premium (a certain percentage of the loan amount) would have to be budgeted. 

Canadian citizens are allowed to withdraw up to $20,000 from their Registered Retirement Savings Plan (RRSP) to buy a house, without having to pay taxes, and are permitted 15 years to reimburse this amount without having it become part of their gross annual income. It is possible that non-residents wanting to buy a house in Canada may also be able to withdraw money from their country’s equivalent of the Canadian RRSP program. It might be worthwhile to research the availability of this financial option in your country of origin.