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A Home Inspection Can Give You Peace of Mind

Jackson Middleton • February 7, 2018

We’ve all heard the unfortunate stories. Someone with not enough insurance coverage is injured or killed in a tragedy leaving behind a mountain of debt for their loved ones. Often, you don’t want to spend the extra money on insurance, but when something happens it’s the best investment of your life.

The same can be said when you buy a home. It’s easy to get caught up in the moment when you’re looking for your forever home. You see all the glitter, but maybe fail to see not everything is gold. And that’s where a home inspection can come into play. For a roughly $500 investment on the biggest purchase of your life, it should be a no-brainer to have a home inspection, whether the home is 100 years old or brand new.

In many cases, people don’t bother to do a home inspection on a brand new build because they believe there will be no issues. But they me be surprised to learn that even brand new builds can have problems. And certainly with older homes, there are a plethora of issues, ranging from asbestos and electrical to the foundation.

Why people decide to pass on an inspection can vary. In hot markets like Vancouver or Toronto, bidding wars don’t offer the prospective buyer the time or flexibility to do an inspection. Some people also believe the results of the inspection have to be passed on to the lender. And while the purchaser may love the property, they don’t want any issues to scuttle their mortgage. But only in the rarest cases do the inspections get requested by the lender.

Getting an inspection will not only give you peace of mind when you sign on the dotted line, but it can also give your realtor an opportunity to negotiate any changes that need to be made to the contract.

But like anything these days, you’ll want to find a reputable home inspector who knows what they’re doing and knows what to look for. There are a number of resources to help you find the best inspector, including the Canadian Association of Home & Property Inspectors (CAHPI).

Even a thorough home inspection may not be able to turn up all the issues with a home. Below is a list of some of the most common latent defects in a home.

1) Bathing Area Issues

  • Problem: Hidden water damage behind shower/ bathtub surround
  • Implications: Extra costs will occur, water leaks

2) Pest Infestation

  • Problem: pest activity in areas of homes
  • Implications: Damage to home can occur, extra costs can arise, fire/safety hazards, air quality issues

3) Plumbing Pipes

  • Problem: Polybutylene plastic fittings prone to leaking, insurability issues
  • Implications: Water damage and or extra costs can occur, high insurance premiums and deductibles

4) Hidden Water Leaks

  • Problem: Hidden water leaks
  • Implications: Water damage and extra costs will occur, structural damage, air quality issues

5) Grade Levels

  • Problem: Landscaping too high on structure of home
  • Implications: Structural problems, extra costs can and will occur

This article was originally included in the Dominion Lending Newsletter which was published on February 6th 2018.

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RRSP As A Downpayment

By DLC Canadian Mortgage Experts • December 28, 2022
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Is There A Difference Between A Deposit And Downpayment

By DLC Canadian Mortgage Experts • December 21, 2022
If you’re new to the home buying process, it’s easy to get confused by some of the terms used. The purpose of this article is to clear up any confusion between the deposit and downpayment. What is a deposit? The deposit is the money included with a purchase contract as a sign of good faith when you offer to purchase a property. It’s the “consideration” that helps make up the contract and binds you to the agreement. Typically, you include a certified cheque or a bank draft that your real estate brokerage holds while negotiations are finalized when you offer to purchase a property. If your offer is accepted, your deposit is held in your Realtor’s trust account. If your offer is accepted and you commit to buying the property, your deposit is transferred to the lawyer’s trust account and included in your downpayment. If you aren’t able to reach an agreement, the deposit is refunded to you. However, if you commit to buying the property and don’t complete the transaction, your deposit could be forfeit to the seller. Your deposit goes ahead of the downpayment but makes up part of the downpayment. The amount you put forward as a deposit when negotiating the terms of a purchase contract is arbitrary, meaning there is no predefined or standard amount. Instead, it’s best to discuss this with your real estate professional as your deposit can be a negotiating factor in and of itself. A larger deposit may give you a better chance of having your offer accepted in a competitive situation. It also puts you on the hook for more if something changes down the line and you cannot complete the purchase. What is a downpayment? Your downpayment refers to the initial payment you make when buying a property through mortgage financing. In Canada, the minimum downpayment amount is 5%, as lenders can only lend up to 95% of the property’s value. Securing mortgage financing with anything less than 20% down is only made possible through mortgage default insurance. You can source your downpayment from your resources, the sale of a property, an RRSP, a gift from a family member, or borrowed funds. Example scenario Let’s say that you are looking to purchase a property worth $400k. You’re planning on making a downpayment of 10% or $40k. When you make the initial offer to buy the property, you put forward $10k as a deposit your real estate brokerage holds in their trust account. If everything checks out with the home inspection and you’re satisfied with financing, you can remove all conditions. Your $10k deposit is transferred to the lawyer’s trust account, where will add the remaining $30k for the downpayment. With your $40k downpayment made, once you sign the mortgage documents and cover the legal and closing costs, the lender will forward the remaining 90% in the form of a mortgage registered to your title, and you have officially purchased the property! If you have any questions about the difference between the deposit and the downpayment or any other mortgage terms, please connect anytime. It would be a pleasure to work with you.
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