The Best Comprehensive Guide to Buying a House in Montreal in 2022 - Everything You Need to Know

We've all heard about the great (overpriced) Canadian real estate market. It's become one of the world's most expensive housing markets.

Forget Toronto and Vancouver. It's nearly impossible to afford a house there now.

Next up, we have Montreal. Montreal's housing market is booming. Prices are skyrocketing, and many people want to buy a house right now.

This can make finding a house that fits your needs and budget difficult. 

After all, buying a home is one of the most important investments you'll make. For many of us, it's the biggest purchase we'll ever make, and it's an investment that will follow us for the rest of our lives.

If you don't get it right, you could be filled with regret for a long time. 

It's a big step, and it can be stressful.

We'll talk about the process of buying a home in Montreal and what you need to be aware of before you make that life-changing decision.

This post aims to serve as a guide about buying a house in Montreal so that you can make the best decision when purchasing your home. 

Reasons to live in Montreal

Montreal real estate is one of the most expensive real estate markets in Canada, with home prices soaring as high as $1,000,000+ and, in some areas, even higher.

It's an expensive city because it has so many advantages.

Let's look at why you would consider living in Montreal.

Lifestyle

It's a city where the lifestyle is fantastic. You can find everything here. For example, there are many bars, cafés, and restaurants in downtown Montreal. There's always something to do.

If you can handle the winters, the spring and summer are awesome.

Public Transportation is affordable

If you have a bus pass, you can get anywhere in Montreal. The public transit network (STM) is very simple, with four major subway lines, many train stations, and bus stops all around the city.

It's very commuter-friendly. Many people don't have cars, thanks to that!

It's also cycling-friendly. 

There are bike paths all over the city to help you ride your bike around.

Culture

Montreal is a unique city. The city is a blend of old and new and, above all, it has a rich cultural heritage. There is so much to enjoy, the food, the nightlife, and the festivals. It's very culturally diverse, with immigrants from all over the world.

Also, most people speak both French and English or "Franglais/Frenglish," a combination of both since they are prevalent in everyday life.

Entertainment

It has year-long festivities throughout all four seasons. You'll have the chance to enjoy Montreal's festivals and culture every day.

Cost of living

Rent is still affordable. Montreal is much less expensive to live in than big Canadian cities like Toronto or Vancouver. This is partly because you need to speak French to find work. Fewer people are moving here because of that.

If you speak French or are up to learning French, you can benefit from a cheaper cost of living that you would not find elsewhere.

Affordable education costs

Tuition fees are significantly cheaper for Quebec residents.

The cost of an undergraduate program in Quebec is about $3,000, which is mind-blowing compared to the much higher tuition fees of other provinces across Canada.

My 3-year nursing undergraduate degree at McGill University costed about $10,000.

With my scholarship, the fees went down to roughly $7,000.

That's cheaper than a year in an Ontario undergraduate program!

It was affordable, and paying off that debt was much easier than it would have been outside of Quebec!

The cheaper cost of living and tuition makes it worth learning French.

What's the catch?

The Language

There is no real catch except that it could be difficult if you do not speak any French.

If this is not a problem for you, living in Montreal would be a great option.

Construction

The ongoing joke about Montreal is that you'll see orange cones everywhere you go.

There is so much construction going on all the time, making it hard to navigate around.

A not-so-fun fact: the Montreal Italian mafia handles 80% of our road contracts. 

Higher Taxes

Taxes are higher for Quebec residents.

Homeownership is still within reach despite higher taxes, unlike Toronto and Vancouver.

If you are still interested in purchasing a property in Montreal, let's go over the seven steps to buying a home in Montreal.

Buying a house in Montreal in 7 steps

Find a Mortgage broker

Finding a mortgage broker is the first step to getting a mortgage.

A mortgage broker will help you with everything at no cost to you at all. 

They are paid by taking a percentage of the final loan amount from the lender. There is no catch at all.

They will get you pre-approved for a mortgage and will also be able to help you choose a property that you like and meets your budget.

The mortgage broker will look at your credit report, income, down payment, mortgage rate, credit score, and more to determine your budget.

The advantage of a mortgage broker is that they can shop around all the lenders to find you the best deal.

Determine your purchasing power

If you can't qualify for the mortgage, you won't be able to purchase the house.

Find out your purchasing power before even visiting homes because there's no point in visiting homes you cannot afford.

A mortgage broker will help you figure out your maximum purchase power.

Get a pre-approval letter

It's the document that tells the bank that you can afford the mortgage.

You can get a pre-approval letter from a bank, mortgage broker, or credit union.

If you get a pre-approval letter from a bank, the bank will give you an interest rate that you can use to calculate your monthly mortgage payment.

It's common for sellers to request a pre-approval letter to submit an offer.

While it's not guaranteed, it's an official document that shows the seller you are a serious buyer and can make an offer to buy their home.

Find a Real Estate Agent

A good real estate agent will be able to help you identify your needs and make sure that you end up with the best property for your budget.

They have access to information that you don't, and they are entirely free as buyers.

You don't have to pay them at all. Both real estate agents will split the commission fee paid by the seller.

Again, there's no catch and nothing to lose. 

Find a property

Think about what kind of property you are searching for.

Are you looking for a single-family home, a condominium, a townhouse, a plex or other?

What neighbourhood, how many bedrooms, big or small yard, garage, parking are other questions you should figure out with your broker.

This step is vital because it relies on your needs and purchasing power.

It's good to discuss this with both a Canadian mortgage broker and a real estate broker.

Once you know how much you can afford, you can start exploring online through Realtor sites with Canadian houses for sale, such as the following:

Centris has all the homes for sale d by sellers using brokers in Quebec.

Realtor has all the homes for sale listed by sellers using brokers in Canada.

Duproprio is also a great site; however, you will have to pay the fees of using a real estate broker because the seller is not using their services to sell their property.

Make an offer

After some or many home visits, you will eventually find a property that meets your needs and budget.

It's time to make an offer. It's convenient to have a broker because they will assist you in preparing the purchase offer.

They will negotiate the conditions on your behalf throughout the entire process.

If your offer is accepted, your broker will inform you of the next steps in the home buying process as you will have about two weeks to complete them: the home inspection and the financing.

Get a house inspection

No matter how hot the market is, make sure to do a home inspection before you commit to buying a house.

It will help you identify problems with the house that you might not see on your own. Which could help prevent future issues or buying the wrong property.

It'll also allow you to get a better idea about what you can expect from the house in terms of maintenance and future renovations and repairs.

There are many horror stories about homes people have bought, only to find out later that the house wasn't in good condition.

You're the one who's going to be living in this house, so you must have as much peace of mind as possible.

Financing

While organizing the house inspection, you will reconnect with your mortgage broker to share the good news.

You will need to send them the information on the house, such as the real estate listing, accepted offer and any updated information available.

They will help you finalize the financing with the lender which is required to complete the transaction.

Home Insurance

Without home insurance, you cannot finalize the purchase. After all, it's there to protect you against any losses or damage to your home. 

You will want this by your move-in date for your peace of mind.

Get on it right away, and shop around for the quotes you can get.

Legal transfer of ownership

Now, a new partner comes into play: the notary or real estate lawyer.

They will help you complete the transfer of ownership to you by completing many important legal tasks involved in the home purchase.

Some of their responsibilities include:

• Educating the buyer on the process
• Examining the title
• Management of the money
• Drafting the deed of sale

They will do all the paperwork required to transfer the property ownership to you officially.

Should you go with a real estate agent?

As a buyer, you should go with a real estate agent unless you want to and can deal with the paperwork and negotiation yourself.

Since you don't have to pay the commission at all, it's worth having someone assist you throughout the process. Both agents will split the commission paid by the seller.

When I bought my first property, I was uneducated and terrified. Having an excellent real estate agent that I trusted made the process much smoother than it would have been. 

The only real estate agent you shouldn't go with is the seller's agent, unless you know them because they don't have your best interest in mind since they want both commissions.

Choosing a real estate agent

Choosing a real estate agent can be difficult and scary because there are many out there, and not everyone has your best interest in mind.

It would be best to speak to a few agents to figure out which one is a good match for you.

If the seller shows the qualities that I value in a person, then I think it's a good fit.

Here are some of the qualities of a great real estate broker:

• Great communication skills
• Great listener
• Buyer-centric
• Knowledgable of the market
• Organized and responsive
• Clear and transparent
• Honest
• Does not pressure you
• Has integrity

I had bad experiences before finding the right broker, and it made a complete difference.

I think these qualities are also essential when choosing a mortgage broker.

Total true costs of buying a home

Now that you have all the details of what to expect, it's time to do the math and calculate the true cost of buying a home.

It's important to look at all the costs as they can quickly add up.

The costs don't just end with purchasing, inspection, and lawyer fees.

By looking at the costs, you can see if it's worth it to buy a home.

Downpayment

You'll need to deposit a down payment of at least 5% of the property's purchase price.

Mortgage and mortgage insurance

Depending on your chosen period (amortization period), you'll be setting up a mortgage with a lender that you'll have to pay off.

If your downpayment is less than 20% of the purchase price, you must pay an additional mortgage insurance premium.

Welcome tax (Property transfer duties)

Everyone must pay the city after buying a property.

It's calculated through multiple rate brackets similar to income tax brackets.

The higher the house, the higher the welcome tax.

It adds up to a significant amount, so plan accordingly.

Property tax and utility adjustment fees

You may be required to reimburse utility fees the seller has already prepaid. The notary will calculate it all for you.

Property taxes include the school tax and the municipal tax, depending on the chosen borough.

Sales tax

You'll have to pay two sales taxes when purchasing a new property in Montreal (not previously owned).

Goods and Services Tax - 5%

Quebec Sales Tax - 9.975% 

Make sure to think about it before buying a brand new property from a developer.

Inspection

Estimated cost: $400 - $1000

Strongly recommended.

A home inspector helps you find out if there are any problems with the property.

A home inspection ensures you know what you are buying and provides an opportunity to negotiate the price down depending on the issues found.

Legal fees

Estimated cost: $1000- $2000

You have no choice. Make sure to save enough for these fees.

You will have to pay the fees for all the paperwork the notary executes.

Moving costs

We tend to forget about the cost of moving.

Hiring a moving company can be expensive, especially if you've got lots of stuff.

It can be cheaper to rent a truck, and have your friends help you.

Estimated cost: $200 - $1000

Other fees

Furniture and appliances

Home insurance

Electricity

Renovation/repair

Condo fees

Home decorations

Landscaping and home maintenance tools

How can a first-time homebuyer save money?

As a first-time home buyer, many helpful programs are available to you.

The Home Buyer's Plan

To buy a qualifying home, you can withdraw up to $35,000 from your registered retirement savings plan (RRSP).

Use the form T1036 to submit your request to your RRSP issuer to withdraw funds from your RRSP.

You will have 15 years to repay that amount, and your first repayment has to be completed by the second after the year of withdrawal.

In other words, if you withdrew in 2021, the year of your first repayment is 2023.

Home Buyer's Tax Credit (Quebec)

You can get a tax credit of up to $750 if your home meets the following conditions:

• It is located in Quebec
• It is one of the following types of properties:
• a detached, semi-detached, or row house,
• a manufactured home,
• a mobile home,
• an apartment in a condominium building, or
• an apartment in a multiple-unit residential complex.

You will need to complete the form TP-752.HA-V

Home Buyer's Amount (Canada)

You can claim up to $5000 on your tax return if you bought a qualifying home and it's your first home.

By entering $5000 on line 31270 of your next tax return, you can do so. No form to fill.

The takeaway on buying a new home in Montreal

Before buying a house, you have to look at your financial situation and personal preferences.

If you're planning to move to Montreal, you should consider all these steps and the costs involved in buying a property.

It can be overwhelming, so take it one step at a time and find the right brokers to help you. 

Montreal is a fantastic place to live in, and it's still affordable!

If you're planning on moving to Montreal, feel free to hit me up!