wolstie

Depends on the bank / mortgage broker I guess.

All of the ones I spoke to in the last weeks said that if I had PR, I could use a LOC for deposit and closing costs. They won't entertain this whilst on a TWP however.

This is basically how they get around the rules to do 100% mortgages (or 'cashback') these days.

Howefamily

ok, I dont want to argue the legalities of this anymore, I wanted to just say be cautious. It felt extremely different to us. We had an offer accepted on a house and afterwards found we didnt want the house anymore, it was in the wrong location and was in fact not for us. Our realtor said you cant just pull out, you are in a legal contract and you cant make the conditions not be met.
Up until that point I thought we had just signed paperwork showing the details of our offer, I was not aware that our offer was not the same as a UK one, that we could not just walk away should we change our minds.
It was very stressful and we had to get a lawyer involved.


In the UK if we decided after an offer that actually we didnt want the house, we could just walk away.

I am not saying one arrangement is better or worse than the other, just different

JonboyE

In the UK you make a verbal offer. If this accepted the buyer starts the process of due diligence. When due diligence is completed (typically around two months) the buyer's and seller's lawyers prepare a contract of sale/purchase. The buyers and sellers both sign their copy of the contract and these are exchanged. At this point there is a binding contract. Up to this point either party can walk away without penalty.

In Canada you generally do not make verbal offers, or even discuss price with the seller. You make a written offer. In the written offer you include "subjects" which are the due diligence steps you want to take before the offer becomes unconditional. Usually these are subject to building inspection and subject to mortgage finance.

The seller considers both the price you are offering and the subjects you have put in the offer. To make your offer more attractive you try and keep the number of subjects to a minimum, quantify them, and specify the date you will remove them.

If the seller likes your offer they countersign your offer and they have entered a legally binding contract. You still have a bit of leeway. If the building inspection uncovers problems with the home you can withdraw or renegotiate the price. If you can't get a mortgage then you can withdraw. However, at the end of seven days (or whatever period you specified in your offer) you either have to withdraw your subjects or the deal collapses. Once you have withdrawn your subjects you are also in a legally binding contract.

I think what AC is explaining is that the law is the same in Canada and the UK. You have a binding contract when it has been signed by both parties and exchanged. However, custom and practice is very different. In Canada it is very common to go from initial offer to binding contract in less than a week. I bought one property with no subjects and it took less than half an hour between me signing the initial offer sheet and the the contracts being exchanged.

The Canadian way brings more certainty and stops the seller playing games. However, it leaves little time for buyer remorse.

Aviator

Not so, my daughter just bought this week and we had to sign a 'gift letter' saying the down payment was a gift an not repayable. This was through a mortgage broker who told us this was now normal practice. Lenders are being very cautious now with checks they do and guarantees they want.

ExKiwilass

JBE is right. Making an offer - which is always written - is something you only do if you're absolutely serious about buying a house.