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

The Canadian real estate market has become notoriously expensive. Toronto and Vancouver are nearly unaffordable. Montreal represents the next hot market, with prices skyrocketing, and many people wanting to buy a house right now.

This major purchase requires careful consideration. This guide addresses the entire process to help you make informed decisions.

Reasons to Live in Montreal

Lifestyle

Montreal offers abundant entertainment with bars, cafes, and restaurants downtown. The city provides year-round activity, though winters require tolerance.

Public Transportation

The STM network includes four subway lines, numerous train stations, and bus stops throughout the city. Many residents forego car ownership. The city is also cycling-friendly with extensive bike paths.

Culture

The city blends old and new architecture with rich cultural heritage. It’s diverse and multilingual, with French and English both prevalent in daily life.

Entertainment

Year-long festivals across all seasons provide constant cultural activities and entertainment options.

Cost of Living

Rent is still affordable. Montreal is much less expensive to live in than big Canadian cities like Toronto or Vancouver. Lower living costs benefit French speakers or those willing to learn the language.

Education Affordability

Quebec residents pay significantly lower tuition. The cost of an undergraduate program in Quebec is about $3,000, substantially cheaper than other provinces.

The Catch

Language

French proficiency helps considerably, though not absolutely required for some residents.

Construction

The ongoing joke about Montreal is that you’ll see orange cones everywhere you go. Constant construction complicates navigation.

Higher Taxes

Quebec residents face elevated tax rates, though homeownership remains more achievable than in Toronto or Vancouver.

Buying a House in Montreal in 7 Steps

Step 1: Find a Mortgage Broker

A mortgage broker will help you with everything at no cost to you at all. They receive compensation from lenders, not borrowers. Brokers provide pre-approval and help identify suitable properties within budget constraints.

Step 2: Determine Purchasing Power

Understanding maximum purchasing power prevents wasted time viewing unaffordable properties. A mortgage broker will help you figure out your maximum purchase power.

Step 3: Get a Pre-Approval Letter

This document demonstrates financial capability to lenders and sellers. It’s common for sellers to request a pre-approval letter to submit an offer.

Step 4: Find a Real Estate Agent

Quality agents identify client needs and match properties accordingly. They have access to information that you don’t, and they are entirely free as buyers. Agents split commission fees paid by sellers.

Step 5: Find a Property

Consider property type preferences: single-family homes, condominiums, townhouses, or plexes. Location, bedroom count, yard size, garage, and parking require discussion with brokers.

Recommended search platforms:

• Centris: Homes listed by Quebec brokers
• Realtor: Canadian properties listed by brokers
• Duproprio: For-sale-by-owner properties (buyer pays broker fees)

Step 6: Make an Offer

After identifying a suitable property, submit an offer with broker assistance. Brokers negotiate terms on behalf of buyers. Accepted offers trigger a two-week timeline for inspections and financing completion.

Step 7: 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. Inspections identify problems, prevent future issues, and clarify maintenance expectations.

Additional Steps

Financing

Share property details with the mortgage broker, including listings and accepted offers. Brokers finalize lender financing requirements.

Home Insurance

Mandatory for purchase completion. Without home insurance, you cannot finalize the purchase. Shop multiple quotes immediately.

Legal Transfer of Ownership

Notaries or real estate lawyers complete ownership transfer, handling buyer education on procedures, title examination, fund management, and deed of sale drafting.

Should You Use a Real Estate Agent?

Using an agent is recommended unless you can independently manage paperwork and negotiations. Since you don’t have to pay the commission at all, it’s worth having someone assist you throughout the process.

Avoid the seller’s agent unless personally known, as their interests diverge from buyer interests due to commission incentives.

Total True Costs of Buying a Home

Down Payment

Minimum 5% of purchase price required.

Mortgage and Mortgage Insurance

If your down payment 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. Uses multiple rate brackets similar to income tax brackets.

Property Tax and Utility Adjustment Fees

Reimbursement of seller’s prepaid utilities calculated by notary. Property taxes include school and municipal components.

Sales Tax (New Properties Only)

New Montreal properties incur two sales taxes: Goods and Services Tax (5%) and Quebec Sales Tax (9.975%).

Home Inspection

Estimated cost: $400-$1,000. Strongly recommended.

Legal Fees

Estimated cost: $1,000-$2,000. Mandatory expenses covering all notary paperwork.

Moving Costs

Estimated cost: $200-$1,000.

Other Fees

Furniture and appliances, home insurance, electricity, renovations/repairs, condo fees, home decorations, landscaping and maintenance tools.

How First-Time Homebuyers Can Save Money

Home Buyer’s Plan

First-time buyers can withdraw up to $35,000 from registered retirement savings plans (RRSPs). You will have 15 years to repay that amount.

Home Buyer’s Tax Credit (Quebec)

Tax credits up to $750 apply for qualifying homes located in Quebec.

Home Buyer’s Amount (Canada)

First-time buyers can claim up to $5,000 on tax returns. By entering $5000 on line 31270 of your next tax return, you can do so. No form to fill.

The Takeaway

If you’re planning to move to Montreal, consider all these steps and the costs involved in buying a property. The process can overwhelm, requiring step-by-step progression and broker assistance. Montreal is a fantastic place to live in, and it’s still affordable!