Does a Finished Basement Add Value to a Home?
Many families choose to create extra living space in their homes by finishing the basement. It’s a popular option for those who need more space in their current home. Those building a new home can choose to have the basement finished as part of the build, or even turn it into a legal suite.
The big question, of course, is whether or not a finished basement adds value to the home. The short answer? Yes, it does. Let’s break it down a little further to better explain that answer.
More Bang for Your Buck
Essentially, when you finish the basement, you get more living space within the same building footprint.
If you decided to add a finished basement to your current home, you get the space you need, for less money than if you were to go out and buy a new home that already has the basement finished. You can tailor your new basement plan to fit your needs, budget, and timeline.
In a new home, getting the space you really want by adding a finished basement at the time of building allows you to utilize that space as soon as you move in (rather than living in a construction zone a couple of years down the road). You’re also able to absorb the cost of the basement into your mortgage, which usually makes it more affordable rather than paying a large amount for a renovation.
In both of these cases, the homeowner gets value from the finished basement because of the additional living space with a relatively low cost.
Older Homes vs. New Homes
The value of a finished basement can vary slightly based on the type of home we’re talking about. And no, we’re not talking about the style of the house. This is where age is an important factor.
In an older home, you have to consider all of your costs. Building codes change over time, and many older homes have basements that won’t meet today’s standards. Finishing the basement to current building codes can cost a lot of money, especially if electrical components need to be fixed. It may even be impossible to finish the basement to a look you love. In cases like this, you won’t be able to recoup the money you spend on the remodel.
In a newer home, it’s often worth the money to finish the basement. By including the finished basement in your original home build, you’re able to save money. This is because the cost of the materials and labour is already accounted for in your new home build. And as mentioned, the cost of the finished basement is built into the overall price of the home.
How Are You Finishing Your Basement?
You also have to take the design into your consideration. Almost all families appreciate having extra living space in a home. If you’re finishing the basement into a general-purpose basement – maybe a rec room, a guest bedroom, and an extra bathroom – then it’s likely going to have widespread appeal.
However, a finished basement with a specific purpose can be more or less appealing to certain buyers if/when you sell the home down the line. For instance, some people love the idea of having a separate income suite in the basement to earn a bit of extra money or a suite designed for a multigenerational home. However, other buyers will be turned off by a home with these features because they don’t want to share their home with others.
And a finished basement with something highly specific, like a home movie theatre or an exercise studio with floor-to-ceiling mirrors could be even less appealing to some buyers. If these are the types of things you really want in your home, the value comes from your own enjoyment of the space.
If you’re planning on living in your home for many years to come, you won’t be as concerned with the resale value as someone who is updating the basement to sell their house. But the basement design can affect the resale value of the home – either negatively or positively – so think about what you want and need before making final design decisions.
What Do Others Do?
Something else to consider – at least in terms of resale value – is what the neighbours are doing with their basements. If you’re the only home on your block with a finished basement, generally you can expect your home to be more popular than others in the neighbourhood. Homebuyers who are looking in that neighbourhood may not be expecting a finished basement and it can be an attractive feature.
On the other hand, if most of the homes in your neighbourhood include finished basements, your home is likely to have a lower value than nearby homes if you don’t have one – and it could be harder to sell your house.
How Does a Finished Basement Add Value?
We said at the beginning that the short answer was “yes”. So let’s get into some specifics…
Additional Bedrooms and/or Bathrooms
When finalizing the plan for your basement (whether a renovation or a new build) most people add at least one bedroom and a bathroom. You’ve turned a 2-bedroom, 1-bathroom house into a 3-bedroom, 2-bathroom house!
While technically the square footage of a basement doesn’t ‘count’ towards the total number for the home, having these extra rooms in your basement increases the usable space for a wider variety of potential buyers when it comes time to sell.
And in real estate, more bedrooms and bathrooms are always a big bonus (AKA strong selling points!).
By turning the basement into a suite (separate or shared) you have the opportunity to make some money and help offset the cost of your mortgage. A side benefit of an income property is that banks look at these types of homes more favourably, as rentals are generally always in high demand, at least in the Edmonton market!
Let’s be honest – have you ever walked into a house and said “there’s too much storage space in here!”
We didn’t think so. With a finished space you can add more room for storage – either with lots of shelving or a cold room for food storage – you have options! And when it comes to resale, your property will stand out in comparison to other homes that won’t be able to measure up in the storage department.
For many buyers, a finished basement is one of the best ways to increase living space while sticking to a budget. And it’s going to add at least some value to your home.
How To Buy A House: What You Need to Know
Trying to figure out how to buy a house can also be one of the most confusing or challenging purchases of your life if you don’t understand the process.
But a home is something everyone needs, somewhere to rest and build memories. To enjoy family and friends, to create something that is uniquely yours.
So, we’re here to help. Over the next few months, we’re going to walk you through the process of how to buy the perfect house for you, step by step.
Part 1: Should You Buy a New House?
To Rent or To Buy?
As you start to think about buying a house, one of the first questions to ask yourself is “Should I rent or buy?”
Make a list of the pros and cons when it comes to renting versus buying, to determine the best option for you. Some things to consider include:
Carefully weigh the things that are important to you to make a clear decision.
Should You Own a House?
Next up on the questions to ask yourself – “Should I own a house?”
Granted, this applies to someone who is a first-timer but it’s important (so if you already own a home, go ahead and skip to the next part; we won’t be hurt!). And at first, that seems like a silly question, but it’s actually quite relevant.
Homeownership is often viewed as a natural goal; one of the stages of life everyone eventually wants to hit, such as getting a job, getting married, or having children. However, it’s not the right move for everyone, and sometimes, it’s just not the right time for you to make a big purchase like this.
It’s important to think about everything associated with homeownership and whether it’s right for you.
Thinking About Your Space
Space – or, more specifically, a lack of space – is often the first reason that people think about buying a home. People simply want more living space to spread out, and it’s hard to find the kind of space you want in an apartment.
People also think about buying a home because they want more outside space, such as a backyard for the kids to play in. And a fair number of people think about buying a home because they want more control over the space that they have. They want to do things like paint the walls or hang photos and art; things that are often forbidden in rental agreements.
If this sounds like you, it’s helpful to start thinking about what you really need in a home. Do you want things like…
- a mudroom by the garage entrance?
- a second-floor laundry?
- a home office?
- a basement suite?
- and more?
When you know these things, you can start looking at homes more seriously and eliminate the homes that definitely don’t meet your criteria. It’s also a good idea to look at various floor plans to quickly assess what’s in a home.
As you look at the homes that have the things that you need and want in your new home, you’ll start to get a sense of what type of costs you’re looking at. This is true whether you’re thinking about buying a resale home or a brand-new home, and knowing those numbers can help you proceed to the next steps.
The Cost of Buying and Owning a New Home
You can see the “sticker price” of a new home, but it’s not always easy to understand what exactly that full cost means, and whether or not it’s something you can afford.
We will dive more into the costs in the next section but a quick overview includes:
- The down payment
- The monthly mortgage payment
- Maintenance and repairs
Each of these needs to be taken into account when you’re planning to buy a house because you want to be sure you can afford it before you begin the process.
As you can see, there’s a lot that should go into your thinking when you decide to buy a home. If it’s the right time for you, though, it’s time to get serious about your purchase.
Part 2: The Finances
Moving onto the second part of what you need to know about how to buy a house – the financial information. People generally have a lot of questions when it comes to this so read on and hopefully, we can answer a lot of those questions for you!
To get the house of your dreams – and to stay in it long-term – you need to think about the finances. How much does the house cost? What’s your monthly budget going to look like? What are the costs associated with moving?
These are all important things to think about, so let’s get started.
How Does Your Current Budget Look?
Not everyone has a solid idea of how much they can afford to spend on a home. Many people look at their current rental expenses and use that as a starting point. That works up to a certain point, but you have to look at all of your expenses.
Often, a rental payment includes things that you will need to pay on your own as a homeowner: utility costs, garbage removal, internet, repairs and maintenance, etc. You have to factor these costs into your future home budget.
We’ve written an excellent article on how you can get started with setting your home buying budget. Essentially, you have to look at what you can afford to pay on a monthly basis, then use a mortgage calculator to figure out how much that means you can borrow.
When you build a new home, you have some flexibility with the budget because each choice you make changes the cost of the home. Rest assured that there are plenty of ways for you to incorporate the things that you want in your home at a price that’s within your budget.
Make Sure You Have a Down Payment
Gathering the down payment is one of the first hurdles you’ll face. How much do you need to have? A good rule of thumb is that you’ll need somewhere between 5 and 20 percent at a minimum, depending on your goals.
If the home you’re looking at is under $500K, you can put down as little as 5 percent of the cost of the home but it does mean you’ll have mortgage insurance added to your payment. To avoid mortgage insurance costs, you’ll need a minimum of 20 percent.
There are plenty of ways to save up for your down payment, but if the amount you need to save seems too daunting, the good news is you have some options. Borrowing from your RRSP is a possibility, and Sterling also can help you with other ways to come up with an affordable down payment. A quick talk with one of our Area Managers or mortgage specialists can help you find a path that will work for you.
What’s Your Affordability?
Naturally, you want a home that’s “affordable”, but what exactly does that mean?
Once you start applying for mortgages, you’ll find that the bank has an idea of what’s affordable for you. This is found using your “debt to income ratio”. Usually, banks want your mortgage payment to be less than 30 percent of your income, and your total debt payments (including mortgage, student loans, car payments, and credit card payments) to be less than around 40 percent of your income.
Using these calculations, the bank will determine what’s affordable for you in their eyes.
You also need to think about what’s affordable on your own, though. The bank’s calculation doesn’t include things like private school tuition for your children, vacations and entertainment costs, utilities, or paying more than the minimum on your credit cards. Often, this means that the bank’s estimate of affordability is higher than the amount that might be actually affordable for you.
One of the best ways to fit a mortgage into your budget is by reducing bad debt such as credit card debt, which also helps your credit score. Speaking of…
Check Your Credit Score
Your credit score plays a big role in how much you pay for your mortgage. The higher the score, the lower your interest rate. Over the term of your mortgage, this can mean a difference of tens of thousands of dollars. You’re likely going to need a credit score of at least 650 to qualify, but the higher the better.
If your credit score is less than ideal, you can work to improve it before you apply for a mortgage. The two biggest factors are on-time payments and having a low debt-to-credit ratio.
There are a variety of things that play into your credit score, including:
- Late payments
- High or at-limit on credit accounts
- Short amount of time in having the account (i.e.: a brand new credit card)
- Too many accounts
- A large amount of hard inquires in a short period of time
- Collections or bankruptcy
- Bureau reporting errors
- On-time payments
- Keeping credit balances low
- Established credit history
- Good variety of account types (but not too many!)
You can dramatically improve your score by paying down debt, and there are many ways to approach this. A key thing to start with would be getting your credit report and checking for any errors. If you find any, report them right away.
Mortgages for New Construction
Pretty much everyone out there needs to get a mortgage to pay for their home, and it’s slightly trickier when you’re building a brand-new home.
The mortgage for your new home starts when you make the purchase, not when you take possession of the home, and this could mean that you’ll be paying two mortgages at the same time. When you use the builder’s preferred lenders, you can reduce your costs by paying only for parts of it along the way. Lenders who specialize in new construction are ready to offer the funding needed at just the right time.
There are two options: a draw or completion mortgage.
Most people end up going with a draw mortgage, which means the builder is able to take money from that mortgage at certain times during the building process. As the buyer, you’re responsible for making payments as soon as the builder does this.
These are quite similar to a traditional mortgage. As the buyer, you take out the full mortgage amount at the time of completion. These types are generally reserved for quick possession homes with not much (if any) build time left.
Keep in mind that your monthly mortgage payment is going to include more than just the payment on the loan. It will also have prorated amounts for the homeowners’ insurance and property tax, along with a mortgage insurance payment if you put less than 20 percent down. With the right lender, you’ll get the best deal.
Home Buying Costs
When buying a new home, people are often so focused on the down payment and purchase price that they don’t think of all the other little things that can add up. Don’t let yourself fall into that trap!
Things you’ll want to think about include:
- Closing fees
- Legal fees
- Property taxes
- Homeowner’s insurance
And once you are ready to take possession of your new home, you might also want to pay someone to move all of your belongings.
Free Resource: Your Complete Moving Checklist
As you can see, the finances of how to buy a house can be extensive, but that doesn’t mean they have to be complicated. Do your research and you’ll be all set.
Part 3: Find the Right House
It’s time to get into Part 3 of how to buy a house – finding the right one. Everyone is looking for their “Goldilocks” home – the home that just fits their family’s needs perfectly.
Surprisingly, some home buyers don’t always think consciously about what exactly that means. And without careful planning, they can make some pretty big mistakes.
When you’re building a home, you have a unique opportunity to choose something that better meets your needs. There is less compromising than if you were buying a resale home. But you need to think carefully and consciously about what types of features you want in your home.
Let us explain how you can do that.
What’s Your Lifestyle?
Ideally, the first thing you’ll think about is the kind of lifestyle you lead. Many dream of owning their own home, but as we mentioned in Part 1, it isn’t always the best choice for everyone. For instance, if you won’t live in the home for more than 5 years, it probably makes more sense – financially – to continue to rent.
Some people do better with the maintenance-free lifestyle of renting, especially when it comes to things like paying for repairs and maintenance or doing the yard work. When people are ready to put down their roots, though, they want to buy a house and start building up some equity. It’s important to look at the pros and cons of renting vs. buying to come up with a decision that makes sense for your lifestyle.
If you’re certain homeownership is right for you, you then need to think about what type of floor plan would best work for your family.
- Are you looking for something with a lot of space for the family to spread out or do you prefer something that’s smaller so there’s less housework?
- Do you need things like a home office or a guest bedroom?
- Do you want your laundry in the basement or on the second floor next to the bedrooms?
These are all important things to consider, as they can’t be easily changed later on.
What Type of Home Is The Best Fit For You?
Everyone has their own vision of a dream home, but are you aware of all of your options? Sterling builds homes in a variety of styles to suit the needs of different people – for instance, first-time homebuyers are usually looking for something that fits a tight budget. They want to start building equity, and they don’t often need or want a lot of excess square footage.
If you aren’t necessarily in the market for a “starter home”, though, you can still get a great deal on a front-attached or laned home. Both of these styles are a great choice for family homes where a bit more space is required.
Downsizers, on the other hand, may be looking for specific features, such as a main floor master suite or a maintenance-free lifestyle.
Finally, we’re also seeing a lot of multi-generational families looking for homes. Some families are choosing homes with basement suites or are opting for things like duplexes and townhomes where they can be close to each but still have their own space.
Not sure about the difference between a duplex and a townhome? You can learn more here.
A Resale or a Newly-Built Home?
You’ll also think about whether a resale home or a new construction home is right for you. Resale homes tend to be less expensive, but they have more maintenance and repairs. You also may have to make some compromises on size or style, especially if you don’t want to spend a lot on renovations. On the plus side, you’ll get to see the exact home you’re purchasing, and you’ll be able to move in quite quickly.
New construction, on the other hand, allows you to build your dream home to your specifications. It sometimes costs a bit more, but you don’t have to worry about repairs or maintenance right after you move in. Most builders are also able to work within your budget.
Those who don’t mind giving up some of the control of the design can move into their home almost as quickly as they’d be able to if buying a resale home by choosing a quick possession home.
The Perfect Location
You’ve heard that in real estate, it’s all about the location. New communities are popping up all over Edmonton, and it’s never been easier to find a community that has things like playgrounds for the kids, easy access to amenities, and short commutes. Think about the types of things that your family wants in a community, and explore some of the options in Edmonton and the surrounding communities.
One thing to double-check before you make your decision is whether or not they will allow you to build the home style you want. You’ll find the answer to this in the community guidelines.
How Big Should My Home Be?
Whether looking to move up into a bigger place for their family or thinking about downsizing in their retirement years, the size of the home is at the forefront of most people’s minds. Square footage can give you a basic idea of how big a home is, but it’s smart to tour some showhomes to get a better sense of what you really want.
Often, we’ve seen that people have a general idea, but once they’re in an actual showhome, they might find that, say, a 2,400+ square foot home feels way too big or that a 1,400 square foot home doesn’t give them everything they need.
This is why you need to carefully think about all of the things you want in a home. Remember that you can sometimes save on the cost of a home by selecting a smaller home and increasing the liveable square footage by finishing the basement. We offer some tips for move-up buyers and downsizers as well.
Selecting Finishes and Features
This is definitely the fun part! With a brand-new home, you’re able to select the finishes and features that work best for your family. This will include things like the layout as well as design features, the material used for the flooring and countertops, and colours used on the walls.
First and foremost, you need to understand that all new construction homes come with standard features – these are included in the “starting from” price. High-end materials or exceptional configurations will be considered upgrades, and not every model can have every upgrade.
If you’re not sure about the difference, we’ve put together a handy guide for you.
Everyone’s different, and we frequently talk about some of the must-have finishes for a new home. There are even special options that appeal to those who love entertaining or for those who have kids.
Deciding whether or not you want to upgrade can be complicated. On one hand, you want to get all of the features in your new home, and that likely includes a few luxuries. On the other hand, you don’t want a home with so many upgrades that it could negatively impact the resale value of the home down the road.
For an easier, more cost effective solution, you could always look into Sterling’s Evolve line of homes. These are designed from the ground up to feature all of the same high-quality finishes as a regular Sterling home, such as vinyl flooring, quartz countertops and tile backsplashes, but offered in pre-planned packages and with colour boards chosen by our experts at DesignQ. If you’re looking for a high-end package of finishes and fixtures that needs to ‘just work’, the Evolve series is a perfect choice.
If In Doubt, Talk To A Professional
When you’re building a home for yourself it’s helpful to have a team of people at your side every step of the way. In addition to the home builder you choose, you may also need a real estate agent (if you’re selling your current home), a lawyer, a mortgage specialist, and an inspector (if you choose).
Clearly, the help these people bring will enhance the home building experience, making sure that you get into the home of your dreams and that the process goes smoothly.
Of all of these professionals, though, the builder you choose is the most important. This is generally the stage of the home buying process where you’ll spend the most time. It’s incredibly important to find a home that has everything your family is looking for. It can be a time-consuming process, but we’re here to tell you that it’s doable. You just have to know what you’re looking for.
Part 4: The Offer
You’ve done your research. You know what kind of home you want and where you want to build it. You just need to get things finalized.
It’s time to make an offer.
Offers on brand-new homes are different from offers on resale homes. Pricing is more standardized, and you won’t be able to put out a lowball offer in the hopes of getting a better deal.
Still, there are some things you can do to make sure you’re getting the house you want at a price you can afford.
The Total Cost of Your Home
The cost of a brand-new home depends largely on all of the little decisions you need to make. You may have gotten an initial quote from a builder, but when you’re about to make an offer on the home, it’s smart to get an updated quote.
Some of your dream features and ideas about what you want in a home may have changed since you got the last quote, and this can significantly impact the overall cost of the home. Your initial quote may also have left out some important expenses, such as the final landscaping. You need to get a final quote that encompasses everything.
At this stage, many people are still looking for the best deal and may not have fully committed to working with a particular builder. If this is true for you, make sure to get full quotes from all of the builders you are considering. This way, you’ll be comparing apples to apples.
Using Builder Promotions
One of the best ways to reduce the cost of a brand-new home – or get more value for your money – is to take advantage of builder promotions. These can vary widely. You might find things like a free deck or patio, $10,000 in kitchen upgrades, or getting your first year’s property taxes paid.
The key to getting the most out of a builder promotion is to look for things you want to include in your build. A free patio might be nice, but it’s even nicer when you were about to spend $15,000 extra on one.
You also have to be careful about the builder’s stated value of the promotion. For instance, $10,000 in free kitchen upgrades sounds good, but would those upgrades only cost $8,000 if you were to buy them separately? Or could another builder’s overall price be lower because they include these upgrades as standard features?
What we’re saying is that promotions can help you save money, but you also need to be smart when shopping around. In this article, we break down how you can compare builder promotions.
The Formal Offer
When you purchase a resale home, there’s often some back-and-forth haggling on the price or included items. Or you may put a condition on your purchase offer, such as getting and passing a home inspection.
This isn’t the case with brand new homes. You already have gotten a price quote from the builder, and that’s what the price will be. Here’s a good explanation of why we don’t negotiate on price.
Once you’ve decided, you simply sign the purchase agreement with the builder.
Where You Can Negotiate
The above section makes it sound like you have no control over the cost of your home, but this isn’t the case! You do have some control; you get to make selections and decisions that affect the cost.
Want to save money on a 2,000+ square foot home? Consider going with a floor plan that’s 1,500 square feet and finishing the basement. Want all the bells and whistles in your home? Expect to pay a bit more, but you could save some money by building in a location outside the city.
The great news? Home builders can work with you to create a home that fits both your budget and lifestyle. Be upfront about how much you want to spend, and the builder will work with you to achieve your goals.
The Best Time to Make an Offer
It’s natural to wonder if making an offer at a particular time could get you a better deal. This is somewhat complicated.
For example – if you make an offer during the spring, the builder can usually get started on your home right away and you can move in faster. However, in the winter, there are generally fewer people shopping for new homes and you can take advantage of that. You could get a great promotion or feel like you’re getting more personalized attention from your Area Manager, but the builder won’t be able to break ground if it’s frozen.
Essentially, the best time to make an offer is when you’re ready to build a home. The sooner you start the process, the sooner you can move in and the sooner you can start to build up your equity and begin enjoying your new home.
Part 5: After Possession
We’ve moved onto part 5 of this how to buy a house article – after you take possession!
If you’re buying a resale home, you typically have to wait about two months for all the legal paperwork to be finished up before you finally get to possession day. If you’re buying a new construction home, this day will come several months after your purchase offer was approved, as the company has to build the home.
In any case, you’re getting close to the moment you’ve been waiting for: possession day. This is the day you finish things up, sign the final paperwork, and get the keys to your new home.
Learn more about possession day and what you should do after possession so you’re comfortable with the process.
Things You Should Know for Possession Day
Possession day – or closing day – will likely take longer than you expect. It seems like it should be quick and easy (all you need to do is sign some papers, right?) but in reality, it can take a few hours as each person needs to carefully review documentation. In other words, don’t book the moving company for noon on possession day. There’s a good chance you won’t be ready!
A week or two before possession day, you’ll get a list of things you’ll need to bring that day. This usually includes items like the down payment, money for closing costs, the most recent copies of your pay stubs, current photo ID, and so on. If you don’t have any of these items, you’ll have to go and retrieve them, which can significantly slow down the process.
You should have information on the exact amount you will need to bring on possession day. Now, there’s a chance that this amount could change, particularly if the date of possession day changes. This is because your closing payments will include prorated amounts for taxes and fees.
What Happens on Possession Day
On possession day, you’ll have all parties involved: you and your lawyer, the seller and their lawyer, and the mortgage representative. These are just a few of the things you should expect to happen during possession day:
- You’ll transfer the down payment or provide a cheque to the mortgage lender.
- The lender will transfer all funds of the sale to the seller.
- Transfer of funds will be confirmed.
- You’ll sign the paperwork.
- You’ll get the keys to your new home.
Most professionals in the home selling industry have this process down to a science. If you have any questions about the expectations or procedures, simply ask ahead of time.
Things to Do Once You Take Possession
Now that you have the keys to your home, you can start moving in. It’s smart to first think about security. If you’re moving into a resale home, you’ll want to change the locks on the doors. Even though the previous owners gave you the keys, you don’t want to risk the possibility there could be additional keys floating out there somewhere.
You can now hire movers to bring your furniture to the new place. Most people schedule the movers before possession day, but sometimes it is safer to wait. This can be a significant expense, so be sure to plan for the costs so you’re not met with an unpleasant surprise.
There’s a good chance you’ll need (or want!) to go shopping for some new things. First-time homeowners often need to make big purchases, like a lawnmower, a snowblower, and new furniture to fill the space. Even if you’re moving from another house, you might need some items that match the new decor better.
Finally, pay attention to your homeowner’s manuals. They’ll tell you details you need to know about your new home, such as how to clean the counters and floors without harming the material, how often you need to do basic home maintenance and how to request service calls if something needs attention.
What to Do If There Are Problems After Possession
If you purchase a resale home, any issues that come up after possession are your responsibility. Since you have done your due diligence when making the purchase, there shouldn’t be any big surprises, but you never know what might happen. It’s smart to ask friends for referrals for companies when you need repairs done.
If you purchased a brand-new home, though, many of the things in your new home will be covered under the Alberta New Home Warranty. Most things are covered for a year, and some of the major components of the home, such as the foundation, are covered for up to 10 years. Of course, you have to understand that warranties will only cover damages caused by product failure or poor workmanship. Any damage that’s caused by you isn’t covered.
Basic Home Maintenance
A brand-new home is going to be in pristine condition, and resale homes should be in good condition at the time of purchase. Naturally, you want to keep it that way. This is done by keeping up with necessary home maintenance throughout the year.
Maintenance usually needs to be done on a yearly, monthly, or sometimes daily basis. For instance, with any type of countertop you’ll want to wipe up spills immediately and give them a good cleaning at the end of the day. Your floors should be vacuumed or washed at least once a week, with a deeper cleaning scheduled once a year. Some people choose to do these tasks themselves, while others prefer to spend a bit of money to have someone else do the work.
No matter how you choose to do it, many new homeowners don’t always understand all of the maintenance tasks they have to do. Unfortunately, this leads to greater wear and tear. Use the following as a guideline.
Spring Maintenance Tasks
Spring is the perfect time to do some home maintenance because it’s finally warm enough to go outside. We recommend:
- Cleaning up yard debris that may have accumulated at the end of fall and over the winter.
- Checking the gutters on a rainy day to make sure that the water is flowing freely. If not, clear up any blockages.
- Slanting dirt in flower beds away from the home. This directs rainwater away from the home. Your original landscaper would have designed the beds like this, but as homeowners add topsoil and/or mulch each year, it’s important to be aware of this.
- Taking on major cleaning tasks such as rug cleaning and window washing.
- Checking the exterior of the home for places where critters might enter.
- Servicing the HVAC system.
- Getting the garden and landscaping ready.
Summer Maintenance Tasks
With longer days, the summer is the perfect time to take on any big projects you’ve been thinking about, such as building a fence or painting rooms in new colours. But don’t forget to take care of these common tasks during the summer:
- Lawn maintenance, including watering, weeding, and mowing. You have to keep up with this or it could cause damage that’s hard to fix.
- Powerwash the exterior of the home, including siding, decks, and patios.
- Touch up or repair any exterior surface. If there’s paint chipping or cracked siding, now is a good time to fix it up.
- Reseal your deck. This keeps the wood lasting longer.
- Watch out for bug infestation. Call an exterminator at the first sign.
Fall Maintenance Tasks
The days start to turn colder during the fall, but you still have time to get a few last-minute maintenance tasks done. Consider the following:
- Leaf management. Whether you rake or mulch the leaves that fall over your yard, it’s best to take care of it before the snow starts falling.
- Clean the gutters. It’s especially important to clean the gutters after the tree branches are bare. Leaves can cause clogging, which is bad news any time of the year, but as you head into winter these blockages are likely to cause ice damming. This can severely damage the roof.
- Check and replace furnace filters if needed.
- Make sure the heater is working well. This is another good time for an HVAC tune-up if you didn’t have one done in the spring.
- Check the windows for air leaks. As the weather gets colder, these will make your home less efficient.
- Buy any snow removal equipment you might need. Shovels and snow blowers tend to sell out soon after the first big snowstorm.
Winter Maintenance Tasks
There aren’t a lot of maintenance tasks that need your attention during the winter, but those that do are important. Make sure you:
- Keep the driveway and walkways clear of snow and ice. It’s often easier to stay on top of this during a snowstorm by doing it halfway through rather than waiting until the end.
- Make sure that vents are not blocked. Check the outside of the home, for places like the dryer vent or attic vents. If these are blocked by snow, it’s not good.
- Open the curtains. Windows typically have some condensation on them. When you open the curtains, this can help the wetness dry up, preventing mould.
Many people think of taking possession as the end of the home buying experience – as you can see, there’s still going to be a lot to do once you get the keys! While this may seem a little daunting at first, by planning ahead, breaking it down into smaller jobs and manageable checklists you’ll soon be on top of everything. You’ll then be ready to settle in and begin enjoying your new life in your dream home.
- Leaf management. Whether you rake or mulch the leaves that fall over your yard, it’s best to take care of it before the snow starts falling.
Moving to Alberta: The Checklist to Buying a Home in Alberta
There’s no doubt about it: Alberta is a great place to live. Whether you’re thinking about moving to one of its vibrant cities like Edmonton or Calgary, or whether you prefer the quiet, rural life in one of its smaller towns, there’s a little something for everyone.
But what do you need to know before making this big move?
We’ve put together this list of some of the most important things to consider if you are planning on moving to Alberta. Follow our advice and your move will go as smoothly as possible.
What Kind of Home Is Right For You?
When you get to Alberta, what kind of home do you think you want to live in? There are certainly lots of options, but some of the things you should be thinking about are:
Should I rent or buy a home?
It’s important to know if renting or buying a home is the right way to go. Many people dream of eventually owning a home, but is it the best move for you right now? Those who are quite familiar with Alberta and who are financially ready to make the purchase may want to jump right in. If you’re new to the area, though, you may want to rent for a year or two as you decide which area will best suit your needs.
What style of home do I want to live in?
There are plenty of options to choose from! Whether you’re looking for a starter home, downsizing or a family-friendly floor plan, you’re sure to find exactly what you need and want in Edmonton!
Are you thinking about the affordability and convenience of a townhome or condo or all the space you can get in a single-family home? Think carefully before you make your final decision.
Do I want to buy a brand-new or a resale home?
When it comes to resale versus brand new, it can be a tough decision for many families. Resale homes can be more affordable, but they can also come with costly problems. If you get a brand-new home, you can design it the way you want and it will be protected by a new home warranty, but you may have to wait several months for it to be finished.
How do I find the right builder?
If you’ve decided that you want to build a home, you need to compare your builder options. Some offer a range of products, while others have a specialty that fits your needs. It’s smart to look at a few different builders and get multiple quotes before you make your decision.
Find The Right Community
Once you’ve thought about what type of home you’ll want to live in, you’ll also want to think about where you want that home to be. What type of community is right for you?
First, think about whether you want the hustle and bustle of an urban area or the peace and quiet of a more rural area. Alberta’s biggest cities are Calgary and Edmonton, and on the outskirts of these cities, you’ll find plenty of nice, suburban communities. Rural areas are typically found in Central or Northern Alberta.
Can’t decide which is better? A lot of people find their happy medium with “bedroom communities” like Spruce Grove or Fort Saskatchewan. These cities are close enough to a major city like Edmonton that you could easily commute for work or travel for a fun night out, but they’re far enough away where they have a quieter atmosphere. You can also enjoy the benefits of bigger yards and more affordable homes.
You’ll also want to scope out the neighbourhood and see what types of amenities are available. For instance, some communities have desirable features like parks and playgrounds, walking trails in natural areas, and tobogganing hills. Others may seem plain in comparison, but maybe that suites your needs perfectly. Additionally, look at the nearby grocery stores, shops, restaurants, and professional service providers. You’ll be most happy with your location choice if the area has everything you need for daily living.
Save Up For A Down Payment
Think you’re ready to buy your home? It all starts with coming up with enough money for your down payment. In most cases, the minimum payment you’ll need in Alberta is 5% of the value of the home. There are a few exceptions to this rule, though.
If the value of the home is over $500,000, you’ll need to have 10 percent of the amount over the initial $500,000. In other words, if the home costs $650,000, you’ll need to have at least $40,000 for your down payment: 5 percent of $500,000 ($25,000), plus 10 percent of $150,000, which is the amount in excess of that $500,000 ($15,000).
Additionally, if you don’t plan to live in the home (for example, if you purchase a rental property), you’ll need at least 20 percent for the down payment.
Remember, though, this is only the minimum amount you need to purchase your home. With a 5% down payment, you’ll only have 5% equity in the home. Your mortgage payment will be higher because you have to pay mortgage insurance. If you can afford to put 20% (or more!) down on your home, you’ll be able to save a lot on your monthly payment.
Saving up this much money can be a big hurdle for many first-time homebuyers who don’t have the advantage of having equity in a home already. Fortunately, there are programs to help you with your down payment, such as the Home Buyers’ Plan or the First-Time Home Buyer Incentive. These programs allow you to borrow money for your down payment. Of course you have to pay it back, but you’ll finally be building up some equity.
Qualify For A Mortgage
Not everyone realizes that the monthly mortgage payment is a combination of many different things. You’re paying back part of the principal balance and the interest on your loan.
Initially, you’re be paying a higher proportion towards the interest. It’s also likely you will pay a prorated amount for your annual property taxes and homeowners’ insurance policy. And like we mentioned before, if you put down less than 20% for a down payment, you need to take mortgage insurance into consideration, which means higher monthly mortgage payments.
With a higher down payment, you may be able to pay less each month or you may be able to pay your mortgage off more quickly.
Before you purchase your home, you’ll have to be pre-approved for the mortgage. This will tell you whether or not the bank is willing to loan you money and how much they think you can afford. To apply for pre-approval – or to apply for a regular mortgage – you’ll need the following items:
Your social insurance number
A summary of assets you own, such as balances in saving and checking accounts, RRSPs, investments, vehicles and other properties you own.
A similar list of liabilities, such as debts.
Proof of employment, such as pay stubs, T1, T4 etc.
3 months of bank statements
A gift letter if your down payment is borrowed
Source of funds if your down payment comes from somewhere else, such as a line of credit.
It may feel complicated, but as long as you complete all of the steps and submit the required information, you should be fine.
Additional Costs To Prepare For
Other costs will come up as you go about purchasing your home. If you’re not prepared, you could be in for a nasty surprise! In general, plan on having an additional 2% of the cost of your home for the following fees:
Adjustment costs: If buying a resale home, you might need to reimburse the previous owners for utility payments or property taxes they paid after the closing date of the sale.
New utility hookups (can vary depending on the provider.)
Home inspection fee
You may not need to pay everything on this list, and you may have other costs that crop up. As long as you’ve set aside extra money, you should be safe.
Alberta is one of the best upcoming markets in Canada, and now is a great time to get in early while the province is still growing. You have a good chance of seeing great returns on your property. By getting to know the best areas in and around Edmonton and Calgary you can find the best spot for you, whether you’re a first-time buyer, a retiree, or someone looking to find the perfect investment property.
Insured and Uninsured Mortgage Stress Test Changes Confirmed for June 1
Starting June 1, both insured and uninsured mortgage borrowers will be subject to a stricter stress test when qualifying for their mortgage.
The Office of the Superintendent of Financial Institutions (OSFI) confirmed on Thursday that it will move ahead with its stress test changes first announced last month, which will apply to uninsured mortgages (typically those with more than a 20% down payment).
Soon after, the Department of Finance confirmed it will follow OSFI’s lead, and apply the same higher qualifying rate to insured mortgages, or those with less than 20% down.
In both cases, borrowers will need to prove they can afford payments based on the higher of the contract rate plus 2%, or a new floor rate of 5.25%, up from the current 4.79%.
“The recent and rapid rise in housing prices is squeezing middle class Canadians across the entire country and raises concerns about the stability of the overall market,” Finance Minister Chrystia Freeland said in a statement. “The federal government will align with OSFI by establishing a new minimum qualifying rate for insured mortgages…It is vitally important that homeownership remain within reach for Canadians.”
Both OSFI and the DoF said they will review the floor rate annually, likely each December at a minimum.
The Impact on Borrowers
Applying the higher stress test to insured borrowers will impact roughly 1 in 5 mortgage borrowers, according to data from the Bank of Canada. It will also take direct aim at first-time borrowers who are more likely to be putting less than 20% down on a mortgage.
The higher minimum stress test is expected to cut maximum buying power by between 4% and 4.5%. For a median-income household, that would reduce the maximum purchase price from $442,000 to $422,000, according to previous estimates from National Bank.
It’s estimated that this change will reduce purchasing power for uninsured borrowers by between 4% and 4.5%. By comparison, the B-20 stress test implemented in January 2019 requiring homebuyers to qualify at the higher of either the 5-year posted rate or the contractual rate plus 200 basis points reduced purchasing power by 22%.
“Today’s news is both bad news and good news for (first-time buyers),” wrote Rob McLister, mortgage editor at RATESDOTCA. “Obviously, it cuts buying power, but that also means fewer people will be able to bid as much for homes, reducing some price pressure.”
Mortgage Professionals Canada issued a statement to members on Thursday, noting it was disappointed that the minister decided to move so quickly in applying the stricter stress test to insured mortgages.
“Given the traditional audience for insured mortgages, namely young aspiring middle-class families, single individuals, and the recently separated, all owner occupiers of the properties they purchase, MPC would have preferred the insured qualification rate had not been increased in the interest of this community,” the association said. “Given the rapid rise in prices, making qualification more stringent now will disqualify many of the Canadians the government has promised to support.”
Bank of Canada Concerned About Home Prices, Household Debt
The new stress test changes fell on the same day that the Bank of Canada voiced concern about unsustainable house prices and growing household debt.
“It is important to understand that the recent rapid increases in home prices are not normal,” Bank of Canada Governor Tiff Macklem said following the release of the Bank’s annual Financial System Review, which found the share of highly indebted households taking out mortgages is now up to 22%.
“Some people may be thinking that the kind of price increases we have seen recently will continue. That would be a mistake,” Macklem added. “Interest rates are very low. That means there is more potential for them to go up…Borrowers and lenders both have roles in ensuring that households can still afford to service their debt at higher rates.”
The Bank also unveiled a “House Price Exuberance Indicator” meant to measure nine major markets across Canada for expectations that local home prices will continue to rise. The indicator currently finds that the Toronto region, Montreal and Hamilton are in exuberant territory, with Ottawa not far off.