Did you know that if you’re a first-time homebuyer, the Canadian government allows you to use money from your RRSP toward your new home? The program is called the Home Buyers’ Plan (HBP) and it allows you to withdraw up to $25,000 from your RRSP. If you own more than one RRSP, you can withdraw from multiple plans, provide you are the annuitant (plan owner) of each one; however, you cannot withdraw funds from a locked-in or group RRSP.

There are a few conditions you have to meet before you can qualify for the HBP program. First, you have to intend to occupy the home as your principal place of residence no later than one year after buying it. As well, you must be a first-time homebuyer. If your spouse or common-law partner has previously owned a home, but you haven’t – or vice versa – you may still be considered a first-time buyer. If you don’t meet the conditions, but use money from your RRSP anyway, your withdrawal will not be eligible and you’ll have to include that withdrawal as income on your income tax return.

The Canada Revenue Agency also states that your RRSP contributions must remain in the RRSP for at least 90 days before you can withdraw them under the plan. As well, you have to repay all the withdrawals to your RRSP within a period of no more than 15 years and you will have to repay an amount each year until your HBP balance is zero. If you fail to repay the amount due for a year, that amount will be calculated as part of your income for the year.

For more information on using RRSPs for your first home, visit the Canada Revenue Agency website at www.cra-arc.gc.ca.

One of the criticisms that is often raised about the television show Extreme Makeover: Home Edition is that the new homes the show builds will cost a fortune for the families to run. Sure, these needy families have had a new house built for them, but will they be able to keep it once the bills come in for hydro, land taxes and other basic costs of running a home?

This is an important issue to keep in mind as you shop for your own home. While you might not be eyeing a mansion like the ones built in Extreme Makeover, you could still be looking at costs that will go beyond what you originally had in mind.

As such, you’ll need to do some research to ensure you can afford to keep your new home after you’ve bought it. What are the land taxes? Does the home use electric or gas heating and how much does that cost? Is there a pool that will require heating? Do you need to buy a parking permit? And is there any maintenance that needs to be done on the house right away or in the near future? Keeping these factors in mind will help you decide if you really can afford the home you’ve chosen or if it will break your budget down the line.

Of course, you can’t be prepared for emergency repairs, tax hikes or other issues that will require you to dip into your savings, but you can minimize the impact by investigating how much the home will cost to run on a day-to-day basis.

Don’t be afraid to ask questions about the costs of owning the home. It’s your money and you need to know where it’s going before you buy.

Sadly, grow-ops – marijuana farming houses – seem to be an ongoing problem in Canada. According to the Canadian Real Estate Association, police estimate there are more than 50,000 active grow-ops in Canada. The problems that come with a grow-op are numerous. In addition to mould from high humidity, fungicides, solvents and other chemicals that are used in drug-making operations can be absorbed by drywall, carpeting, wood and concrete basement floors, reports the Canada Mortgage and Housing Corporation. And those chemicals can seriously affect your health, leaving you with breathing difficulties, headaches and other illness.

Grow-ops can also cause significant damage to the house – both from the mould and chemicals and from the procedures marijuana producers go through to create a grow-op. Power meters may be tampered with to hide how much hydro is being used and the foundation may be compromised due to poor rewiring attempts behind the walls. These amateur attempts at re-routing power can also cause serious electrical hazards. Wiring and lighting systems may be overloaded and loose wires may be left dangling, causing a risk for electrocution or fire.

Thankfully, as a homebuyer, you have rights when it comes to knowing whether a home was used as a grow-op in a previous life. According to the Canadian Real Estate Association’s ethics guide, sellers and agents are obligated to disclose that a property was a grow-op if: (1) the buyer asks or expresses concern; (2) the purchase agreement specifies that the property was not used as a grow-op; or (3) there is a defect in the property that the agent knows about. However, that being said, there is currently no legal requirement in Ontario for realtors to disclose that a house was a grow-op.

A respectable realtor will follow the code of ethics and notify you if a property was a grow-op. However, it’s a good idea to initiate questioning if you have any suspicions. Bring in an inspector to check for mould and faulty wiring and discuss any concerns with your realtor. This is your future home and you have a right to ensure it is safe to live in.

There are various types of ownership you can have on a property and the differences can be quite complex if you’re not familiar with real estate. Here’s a quick summary of the different types of ownership you might be considering.

Freehold

Freehold ownership means that you have full use and control of the land and any buildings on it. As the owner, you can do what you wish with property, provided you adhere to any local planning rules, bylaws or other restrictions.

Leasehold

With leasehold, you purchase the right to use a residential property for a long, but limited, period of time. This type of ownership is commonly used for townhouses or apartments on municipally owned land. It may also be used for houses on farmland, on First Nations reserves and for apartments where the freehold owner of the apartment block sells leasehold interests in individual apartment units to others.

Strata

Strata ownership provides exclusive use and ownership of a specific housing unit (called the strata lot), which is contained in a larger property (called the strata project). The strata project can include common areas such as halls, grounds, garages and elevators, which are to be shared in both use and ownership. Because the common areas are shared, all owners are financially responsible for maintaining these areas. This type of ownership is commonly used for homes, duplexes, apartment blocks, townhouse complexes and warehouses.

Cooperative

With cooperative ownership, each person owns a share in a cooperative venture, which, in turn, owns a property containing a number of housing units. Each shareholder is assigned one particular unit in which to reside.

Unfortunately, the price of the house isn’t the final price you pay when buying a new home. There are a lot of other costs that go into the purchase and you’ll have to be aware of them ahead of time so that you can budget accordingly.

 Some common costs to consider include:

Legal fees – You’ll likely need a lawyer to review the offer, handle the mortgage, do a title search and register a new title.

 Inspection fees – As the buyer, it’s your responsibility to pay for an inspector to examine the safety of the foundation, electrical wiring, roof, plumbing and other structural features. Inspection fees can vary but quite a bit, but are generally around $300 to $500.

 Appraisal fee – If you’re taking out a loan to buy your home, the lender will want to ensure you’re not borrowing more than you need. As such, they may require a property appraisal, which generally costs between $150 and $200.

Land transfer tax – Land transfer taxes vary across Canada (currently, Alberta, Saskatchewan and rural Nova Scotia don’t have land transfer or property purchase taxes). In Ontario, the rate you pay depends on the price of the house. For the first $55,000 of the price, 0.5% is charged; after that, 1% is charged for $55,000 to $250,000; lastly, 1.5% is charged for $250,000 to $400,000.

 Interest adjustment – This is the interest that has accumulated from the closing date to the date the first mortgage payment is due.

 You also have to remember that you’ll be charged HST on a new house (but not on resale homes). HST in Ontario is currently 13%, buyers who are primary residents are eligible for a rebate of up to $24,000, regardless of the price of the home.

Buying a home is certainly not cheap – and these are just a few of the costs that could be involved – but if you budget and prepare accordingly, those additional fees won’t be such an unpleasant surprise.

Where do you want to live? Now, where do you work? And lastly, how far do you want to commute? 

Ontario and the GTA in particular, is a very commuter-heavy area. Many people work in Toronto but live in the suburbs and, as a result, recent studies have ranked the GTA has having some of the worst commuting times in North America. If you don’t like being stuck in a car or on a bus for long periods of time, you’ll want to make sure you buy a home that’s close enough to where you work.

But what if you find your dream home several hours away from the office?  Should you buy it?

Well, there are some reasons you may be willing to take on a longer commute. Perhaps you’re retiring soon. If so, it may be worth it to have a long commute for a few months or years if it means owning the house you’ve dreamed of at retirement. Or maybe your employer permits telecommuting. With all the technology at our fingertips, it’s really not necessary for many employers to have all employees in the office every day. If telecommuting is an option for you, you likely don’t need to worry about how far the office is. Lastly, maybe you’re planning to switch jobs and work near your new home. Be warned, however, that if this is the case, you might have to carry on a commute for several weeks or months until you land a new job.

 Where you work shouldn’t be the deciding factor in choosing your new home – but it should be one of the factors you consider when you’re shopping around.

So, you’ve decided to buy a home, but you don’t know where you want to live. Are you a country person who’s happiest in the great outdoors, or are you a city dweller, who likes the hustle and bustle of a buzzing metropolis?

The advantages of both communities are numerous. With urban living, you have quick and easy access to modern amenities. There’s usually public transit and heaps of entertainment options, such as restaurants, shops and theatres. If you work in a city, living downtown can mean less of a daily commute since you can probably walk or take public transit to work. Rural living, on the other hand, brings with it fresh air, clear skies and a quiet lifestyle. If you live in a small village or town, you may find that the neighbours all know one another and that there’s a real sense of community.

On the negative side, cities can be crowded and noisy and may have a higher crime rate than the surrounding countryside. There may also be environmental concerns such as smog pollution due to excessive traffic. Rural living, meanwhile, might seem boring, especially if there’s no quick access to shopping malls or other entertainment. As well, some people don’t like the extreme quiet that can come in the country and would much prefer the action of a city. Lastly, rural living could mean a lengthy commute if you work in the city and have to drive downtown. 

Another consideration is how utilities are offered in the country versus the city. Many rural homes are on wells instead of town water and some areas may not have access to high-speed Internet or underground wiring. These are very important concerns for when you’re buying a new home.

Either way, the key is to decide what type of community you want to live in before committing to a home. And once you’ve decided, check out the neighbourhood to see if it meets your expectations. Because even if you’ve found your dream home, you won’t be happy with it if it’s in the wrong environment.

Before you buy your new home, you’ll need to have it inspected to ensure it meets all legal safety standards. As the buyer, it’s your responsibility to find a home inspector (read our previous post ‘Home inspectors – How to Pick ‘Em’ on choosing a home inspector) and as such, it’s a good idea to know what types of safety issues a professional inspector will look for.

Electrical

The inspector will ensure that all wiring meets regulated safety standards, that all wiring is up-to-date and that there hasn’t been any unprofessional adjustments made to the wiring, which could pose a fire hazard.

Roof, stairs and foundation

What state is the structure of the house in? Is in the roof in need of repair, or is the foundation unsteady, sinking, rotting away, etc.? Are the stairs sturdy enough to support regular usage? The inspector will check that the overall structure of the house is safe.

Water and sewage

The inspector will check to ensure that the house’s sump pump or septic system is working properly. If the home is on well water, the water should be tested to verify that it’s potable.

Mould, gas and chemicals

The presence of mould, gases or chemical fumes can pose severe health risks. Mould can result from excessive dampness in the house, often due to leakage or flooding. Gases such as methane and carbon monoxide are common concerns; methane could be present in the water or ground and carbon monoxide could come from a faulty furnace. The scent of strong chemicals could be the result of something as well intentioned as a carpet cleaning or as ominous as a history as a grow-op. Ensure your inspector checks for the presence of gases or odours.

If you find a good, qualified home inspector, he or she will know to check for these things. But if you’re worried or concerned, don’t be afraid to speak up and ask the inspector about those concerns.

Once you’ve decided to sell your home, your real estate agent may ask you to stage it. But what does this mean and why is it to your advantage?

Staging a home means tidying it up and decorating in a way that will appeal to the widest range of potential buyers. You want people to imagine themselves living in your home – not seeing how you live there now.

 To successfully stage your home, you need to keep a few decorating tips in mind.

 First, de-clutter. Organize closets, put knick-knacks into storage and generally keep the rooms as minimalist as possible. You don’t want to completely remove all the furniture and décor, but paring down your rooms will make them look bigger and cleaner and will help the buyer better imagine his or her own furniture in that space.

 Next, depersonalize. Take down any family pictures, children’s artwork or religious artefacts. Again, this will help potential buyers to better imagine themselves living there and won’t make them feel like they’re intruding on your personal space.

 Along with depersonalizing, pick a décor that will appeal to a broad range of tastes. Take a cue from nice hotel rooms, which tend to use neutral colours and clean, classic lines. Your staged home should have a similar feel that can appeal to everyone.

 Lastly, clean, clean, clean. When you’re selling your home, you need to have it ready – both inside and out – for showing at any time. Vacuum and dust regularly. Trim grass and bushes and pull any weeds. If it’s winter, make sure your driveway and walkways are shovelled. By keeping your house clean and tidy, you’ll be able to welcome in potential buyers without having to do a rush cleaning beforehand.

Are you trying to decide whether to buy or to rent? There’s no right or wrong answer when making the decision – it’s just a matter of picking the option that’s right for you.

 First off, decide whether your budget supports renting or buying. Compare the prices for rent and for homes in your area and add in how much you would spend on utilities, land taxes, condo fees, etc. At a first glance, buying probably works out to be much more expensive, but consider that cost over the long term. Putting your money into rent may be cheaper at first, but with a mortgage, you’re putting the money into an asset that you can sell down the line.

However, while that could be a good reason to buy, you should also consider whether you can afford to pay those initially higher monthly payments. How stable is your income? If you’re buying, not only will you need money for the mortgage, you’ll also need money set aside for emergencies and maintenance costs. It might be a good idea to sit down with a financial planner who can help you determine what you can afford.

 You should also consider how much work you want to put into your residence. With renting, you’re only minimally responsible for maintenance and repairs, whereas if you own the home, all that responsibility falls solely onto you. When you own your home, you can no longer just call down to a landlord to fix the problems – you have to fix them yourself. If you’re a handy person who enjoys fixing things, or if it doesn’t bother you to hire – and pay for – an expert to come in, then owning a home may be the right choice. Otherwise, you might want to rent.

Remember that the decision to buy or rent is yours. Don’t let anyone talk you into a decision that you’re uncomfortable with or can’t afford.