Mortgage Basics #Home Buying

Buying a house in Quebec


How to buy a house in Quebec

Whether you’re looking to buy a single-family home, duplex, or maisonette in Quebec, one thing is certain, a large chunk of your funds will go into the purchase. Buying a house is not an easy task plus you need to consciously save and prepare for this substantial expense.

This guide drawn from our years of experience answers the questions you may have about buying a house in Quebec. Here you’ll find the most important things you need to know at each phase and what to expect.

Step 1: Determine if you’re ready to buy a house

Firstly, you need some form of financial stability to buy a house in Quebec. Whether you’re a first-time buyer or looking to add another house to your list of properties in Quebec, getting your finances and credits right is the most important step. The Quebec market average home price as of 2021 was $365,000 as reported by QPAREB which means you’ll need at least $18.250 (5%) for a down payment on the house you want to buy. Your down payment is only a fraction of several other factors you need to consider before checking the readiness box.

Income And Employment Status

To afford an expensive home, you’ll need to increase your income to pay for your mortgage and also have enough for taxes while maintaining your lifestyle. In buying a house, the first thing to consider is your income and how this income comes in. Are you employed, self-employed or unemployed? These factors will play a major role in your mortgage application. 

Debt-to-Income Ratio (DTI)

While your employment status is crucial in determining your readiness to buy a house, your gross and net income is equally as important. If you incur too much debt, then your net income will be too low to save anything significant to buy a house. As such, it is recommendable to keep your debt-to-income ratio below 42%. 

Down Payment

If you do not have enough funds to pay for a house in Quebec outrightly, then you can go the mortgage way. But every mortgage requires you to have a down payment. A down payment is an amount you pay for a house upfront. While how much you pay as down payment depends on the lender, generally, the down payment should not be less than 5% of the purchase price. Moreover the higher your down payment the less you’d have to pay in interest. 

Credit Score

Before accepting a down payment your lender will assess your credit score which is also referred to as your risk profile.  Importantly, when you want to buy a house using a mortgage, it is crucial to have a good credit score. Most lenders will require you to have a credit score of 650 which also provides you with mortgage options and lower interest rates. However, this does not mean there isn’t hope for people with a bad credit score. There are other options people with a bad credit score can capitalize on when they want to buy a house. 

Step 2: Calculate how much you can afford to buy in Quebec 

No matter the type of house you’re looking to buy, Quebec mortgage lenders will compare your income with your taxes, mortgage payments, insurance to determine how much mortgage they can offer you. Conversely, you can also find out how much you can afford by using a mortgage affordability calculator to estimate the maximum home price you should be looking at.

Step 3: Save for your Down Payment, Closing Costs & Fees

It goes without saying that buying a house can be quite expensive. Perhaps it might be one of the costliest purchases you make. But not to scare you, if you are serious about buying a house and don’t have a ton of cash sitting at the bank, it all starts with little steps such as saving. 

Depending on the type of mortgage you choose, your down payment starts at a minimum of 5% of the property’s value. You can also expect to pay 1.5%% to 2% of the house purchase price for closing costs which includes legal and land transfer fees among others. You need to save any little amount you come across. Because at the end of the day, you will spend quite a lot when buying a house.

Step 4: Choose your mortgage rate type and term

As soon as your down payment situation is settled, what’s next is to shop around for a mortgage lender with suitable terms and rates. You can either get a mortgage loan from a mortgage lender or a mortgage broker. How a mortgage lender lends money differs from how a mortgage broker. Make sure to carefully go over their terms and rates before choosing to work with them. A great move would be to hire an experienced mortgage lawyer who can review your terms to check for suspicious clauses. 

To find the best mortgage lender for your needs, talk with several lenders about their products. Some great questions to ask yourself when seeking a mortgage lender includes:  

  • How long do you want the mortgage to be?
  • What type of mortgage do you need?
  • Do you want a mortgage with a rise or fall interest rate or one that is fixed?
  • How often do you want to make a repayment on the mortgage?

Step 5: Get pre-approved for a mortgage

After finding the ideal mortgage broker or lender, what’s next is to organize your documentation to submit a mortgage application. Getting a pre-approval for a mortgage gives you peace of mind knowing you can confidently bid on houses you like. Getting pre-approved also means the lender has determined the mortgage amount you would qualify for so that you can have that price range in mind when house hunting. Typically, you will be asked to present several documents like your bank account or investment statement, proof of assets, proof of income, information about your debt, your identification, and so on. A pre-approval for a mortgage tells you the following: 

  • The mortgage interest rate available to you
  • Your maximum monthly mortgage repayment plan
  • The amount you can afford to spend on a house

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Step 6: Begin house hunting

If you’ve arrived at this stage, you must already have an idea or a rough estimate of your house purchase price by getting a pre-approval and calculating your mortgage affordability. Your down payment should also be ready so you can start putting in an offer as soon as you find a house you like to buy.

Popular Cities & Neighborhoods in Quebec 

MONTREAL: Montreal is one of Quebec’s most beautiful, culturally rich, and diverse cities. It offers great amenities with high standards of living and an amazing quality of life

SAINT-LAMBERT: Saint-Lambert is located south of the Saint Lawrence River. As much as it’s a residential city it’s also an economically vibrant community that provides comfort, security, and a rich communal lifestyle. 

MONT-ROYAL: Mont-Royal is an island suburb on the northwestern side of Mount Royal. It boasts an exceptional quality of life, green spaces, magnificent architecture, and amenities that make it a suitable place to live.

BOUCHERVILLE: Boucherville is exceptionally livable with breathtaking environments, lots of green spaces, affordable cost of living, and a self-sustaining economy.

LEVIS: Located on the east of the Quebec province, Levis is a perfect suburban city to live comfortably and without the hassles of life in the big city. With its exceptional livability rating, amenities and recreational facilities, anyone can enjoy a peaceful life.

Helpful home buying resources in Quebec

Home buying resources potentially ease the stress and challenges of buying a house in Quebec. These resources are generally provided by the  government to help citizens reduce costs such as property tax and purchase a house with some financial assistance. Two of such resources are the First Time Home Buyers Incentive and Home Purchase Assistance Program – Montréal.

Step 7: Make an offer on a house

Things move quickly when you find the house you would like to buy, but don’t panic. What you should do first is to submit an offer to purchase the house. As soon as your offer gets accepted, move on to finalize your mortgage plan. 

Step 8: Close on your new Quebec home

Before you pay for the house you want to buy in Quebec, request a home inspection; after the inspection, the house’s purchase price can change depending on the finding in the house inspection. Contact your real estate lawyer as you may make a down payment and transfer the title of ownership. The entire process shouldn’t take more than 30 to 60 days. 

First-Time Home Buying Resources in Manitoba

If it is your first time buying a home, there are certain difficulties you will face. However, the provincial and federal governments have developed an FTHB program to make buying a house easier for first-timers. As a first-timer, you are eligible for the following: 

  • Home buyers’ plan: With the home buyers’ plan, first-timers can withdraw up to $35,000 from their RRSP for a down payment. And the best part is that you can repay annually over 15 years.
  • First-time house buyer incentive: As a first-timer, you get an interest-free mortgage on a second loan. It covers 5% or 10% of the purchase price of your home. You can repay the government after 25 years.
  • Land transfer tax rebate: Lastly, as a first-timer, you are eligible for up to a $4000 rebate for any land-transfer tax paid on the first $368,000.

Final Thoughts

To comfortably buy a house in Quebec you need to be well prepared, especially if you’re looking at some of the high-end neighborhoods in the province. Your income, credit score, employment status, down payment must be secured before you can approach a lender for a mortgage to finance the home purchase. Be specific about the kind of house you want and location so you can patiently build your finances and mortgage requirements to secure it without hassle. If all goes smoothly after going through all the steps outlined here, then congratulations on your new home in Quebec.


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