Feb 18, 2021
Buying a house is one of the largest financial decisions you will make in your lifetime. There are many things to think about when you're going through the purchase process. Even though it's exciting, buying can be stressful – so stressful that a poll rated a new house purchase more stressful than bankruptcy, divorce or bereavement.
And if the real estate market is hot – it's challenging to complete a thorough due diligence process to make sure that you are purchasing the right one. To help make your next home a success, here are some tips on making your purchase a success and insights into how your costs are determined.
What Kind Of Insurance Do You Need When Buying A New House?
Did you know that by law, you don't have to have coverage when you buy? Although you're not legally required to have it, mortgage lenders want it to protect their investment. Even if you own your home (no loan from a bank on it), it may be your most significant source of future wealth – so you want to protect it.
8 Tips To Consider When Buying A New House
1) Talk To Your Insurer Before You Buy
Your insurer looks at your house purchase from the risk perspective; how likely your house could be damaged and how much damage might be incurred. They may have information that may not be available to you and can help you assess the potential for problems. You can also bundle your auto and home insurance for a better deal.
2) Purchase Insurance For Replacement Costs On The House
Don't make the mistake of assuming that your limits will automatically adjust to rising or falling market prices. The fact is, replacement value, or the cost of labour and materials required to rebuild is what you need to consider.
3) Provide Key Information To Determine The House Value
Your representative will need to know some information including :
- Age : How old is the house? Is it a brand new build or an older home?
- Size or Area : What is the square footage of the house?
- Roofing : What type of roofing does it have and how old is it?
- Heating : How is the house heated and how old is the system?
- Stoves And Fireplaces : How many fireplaces does the house have? Are they wood burning or gas?
- Unique House Features : Does the house have unique features such as a pool, hot tub, custom built appliances or other other features?
- Distance To Fire Hydrant : How far is the closest fire hydrant? What is the distance to the nearest responding municipal or volunteer fire department?
- Additional Structures : Are there any other structures on the property such as garages, sheds or barns?
4) Review Your Insurance
You need to review the full document carefully once your insurer sends over the details. Make sure you know what it will cover and what is excluded. If you have questions, make sure that you speak with your advisor. Don't leave any questions unanswered.
5) Buy Title Insurance
This protects your ownership of a property. Title insurance is bought when you purchase and it will protect you from any flaws or mistakes on your ownership.
6) Calculate The Cost Of Utilites
Don't forget to calculate the costs of your utilities along with your mortgage and coverage plan. Here are some areas to consider :
- What is the size of the space you will be heating and cooling?
- How old is the home, windows, doors, and roof? Are they in good condition or have been updated recently?
- Are the applicants energy efficient?
7) Location, location, location
You'll want to consider the area you are moving to. Are there amenities nearby that suit your lifestyle? What is the commute to work like? Do you have access to schools, parks, or hiking areas? These will all be attributed to property tax - another cost to consider.
8) Pre-Purchase ChecklistBefore you sign, consider these questions :
- List the pros and cons of a new build or a older home. The quality of the home is an important factor for the longevity of the house and it will impact your policy.
- If you do not include a home inspection as a condition of your offer, what risks can you assume?
- Is your budget flexible enough to cover any costs that could increase, such as property taxes, utilities, or mortgage?
- Does the builder have any claims or lawsuits?
- Did you check for any home insurance claims against the property?
As you navigate the steps of buying your dream home, keep these steps in mind and always ask your insurer or real estate agent questions along the way.
How To Make Your New Home Purchase A Success
There are other ways you can make sure your purchase is a good investment. Some of these factors influence your coverage, while others are sound advice to ensure you're making a wise investment. It's your investment, after all, and one crucial way that you can build financial stability.
- Invest In A Home Inspection : An inspection can uncover a lot of potential problems that you cannot see. An inspector will assess for damage, potential repairs and possible problems (leakages). You can uncover some glaring problems you might be faced with that you didn’t recognize before by having the inspection.
- Share Your Inspection Details : Your inspection results will help assess possible risks. An advisor may have information that will give you a clearer picture of the “state of repair” and whether its issues are related to its location.
- Confirm Location With Local Municipality : This is important because it may be located in a flood plain. You can still get water damage insurance but you will need to add it to make sure you are protected.
- Check For Alarm And Security Systems : If these are already installed, you are one step closer to better protection. Smoke detectors and security systems may also make you eligible for discounts.
- Are You Going To Renovate? : If you are planning on doing home renovations, don’t forget to mention the renovations to your insurer to make sure that you are adequately covered during and after the process.
- Assess Special Or Unique Features : Does it come with proper protection for these unique features? For example, if you have a pool, do you have the required fencing? If not, you’ll need to put one up.
Buying A New Home FAQs
This type of protection covers the property owner and projects under construction. Builders will assume this type of policy, but it is highly recommended you have a paper copy available in the event that something happens.
Unlike automobile protection, it is not legally required in Canada if your house is fully paid for. However, you will need to purchase it in order to get a mortgage and to protect yourself if you need to make a claim.
Make Your Next Home Purchase A Success
Buying a house makes a significant investment in your future. You have a lot to take into account with owning a property and home insurance in Ontario. Use this list as a way to ensure that you protect yourself from problems down the road.