Buying your first home will mark a momentous milestone in your life.

You’ll be on your way to owning a piece of the rock, but as Heather Chilvers, highly experienced sales and rental agent at Coldwell Banker, points out, you will also be making a large investment, possibly the largest in your lifetime. It’s a good idea, then, to know what’s involved in the process so that you can plan accordingly and not be disappointed.

Here are eight things she advises you to know beforehand:

  1. Unless you’re extraordinarily fortunate, you will need a loan and/or a mortgage to buy your house. It’s vitally important to understand the financial implications. Your first step before you even meet with your agent is to procure from your bank a letter confirming your preapproval. Since COVID, Chilver explains, sellers have instructed their agents not to show their properties to persons without that letter. Besides, the letter shows the agent and the seller you are serious about buying. If you don’t have one, your offer may not even be considered.
  2. What amount will the bank qualify you for? “This varies from individual to individual,” says Chilvers. “But as a rule of thumb the bank will not go over an approximate debt-to-service ratio of 45 percent to 55 percent of the income you have available. You will need access to a minimum cash down payment of between 20 percent to 35 percent of the total purchase. So, if you are buying a home worth $795,000, you will need at least $200,000 to put down with the bank, plus extra for closing costs.”
  3. Closing costs cover conveyancing and stamp duties. “However, remember, there are all sorts of other charges,” Chilvers points out. “They include stamp duty and finder’s fee on the mortgage with the bank, personal legal fees, cost of structural survey, cost of registration with land title registry. It’s prudent,” she says, “to allow between four percent and five percent on your purchase for additional closing costs.”
  4. You will need to choose an expert conveyancing lawyer. Chilvers is firm about this because a lawyer “can make or break a sales transaction.” Agents can provide names of reputable conveyancing lawyers.
  5. Almost always it’s wise to buy through a real estate agent who will have detailed knowledge of what properties are available and, as Chilvers says, will be able to show you any property listed with any agent or agency. So after gaining your preapproval letter, the next step is to choose an agent you trust and with whom you feel comfortable about explaining your price range and requirements.
  6. Once you’ve chosen your agent, you can start looking for a house suitable for your needs. Do you, for example, require space for children? Do you need to be close to your place of work? Do you want a house with an extra apartment to rent out? Since COVID, buyers have taken suitable space for working from home into consideration. But, of course, you should also look for a house in your price range. Chilvers observes, “Your first home is unlikely to be your forever home, so remember to keep it affordable. Don’t rule out a condo. You can build equity in something affordable, and you could be moving on to your next home sooner than you think.” Your agent will be enormously helpful here. “The agent who knows your budget and taste can save you a lot of time by recommending certain properties that you may not have otherwise considered, or by knowing enough about a property to inform you it doesn’t have the space, privacy, location, income etc. that you are looking for,” Chilvers explains. She also warns against being in too much of a hurry and buying the first property you see before being sure it will suit you.
  7. A common temptation is to choose a “fixer upper” which can often require far more work and expense than is at first apparent. For a first-time buyer this is not always a good idea since the repairs and renovations may not be affordable. It’s vital to have a survey carried out and estimates on renovation costs, which your bank will want to see.
  8. How long does it take to go from offer to closing? About two months. However, title, encroachment, boundary, and probate issues, lost deeds, bank approvals and/or tenant problems can cause delays. The key, Chilvers says, is to have patience.