Tips On Buying a House in Toronto Ontario
SHAIKH LAW FIRM
Buying A House in Toronto Ontario
Buying a house is an exciting project. Of course, it is easy to just throw yourself into it – browsing house move sites, booking viewing after viewing and starting Pinterest boards for each room of the house – but if not done correctly, buying a house can turn into your worst nightmare. If we’ve put a dampener on your mood, fear not; we’re not saying it shouldn’t be fun, rather that we want you to enjoy the journey and have many happy years in your dream home thereafter. So how can this be possible? Help is at hand. Use our step-by step guide to buying a house in Toronto the smart way.
7 Tips on Buying a House in Toronto Ontario
- Save for minimum down payment.
- Get pre-approved for a mortgage.
- Find a real estate agent.
- Go house hunting.
- Submit an offer.
- Get a home inspection.
- Close on your house with a Real Estate Lawyer in Toronto.
When to Buy a House
How do you know when it is the right time to buy a house? What is right for one person/family will not be the same for another. Consider the following to help you decide:
Evaluate Your Finances
You need to be in secure and stable employment where you are assured of a regular income. This will make saving for a deposit much easier – if you already have a substantial down payment that’s a great head start. Buying a house in Toronto before you are financially ready can lead to all sorts of trouble.
Consider the housing market.
A house is an investment. Just like any investment the value will go up or down. Do you research into the state of the housing market in your area. If you’re unsure of where to start, talk to a real estate agent and ask for their feedback. Essentially you’re looking for a house with a good return on investment should you sell. Also it is not always a buyers’ market, it is worth waiting a few months here or there to make sure you are likely to get the best deal. Keep in mind the that Toronto Real Estate Market has seasonal highs and lows depending on what time of the year you want to buy. Generally speaking everyone wants to buy property during summer vacation but this could be a time when the property prices sky rocket. As your realtor what time of the year people tend to Buying a House in Toronto?
Think about your life stage.
Buying and selling a house is not only expensive but it is hard work. It doesn’t make sense to buy a house if you are going to want to move in a year’s time. Aim to be in a place in your life where you are looking to settle down for at least five to seven years. Newlyweds should wait at least a year before buying a house in Toronto. If you are not a Canadian Citizen or Permanent resident, such as a student or on work permit then keep in mind that you will not only pay Land Transfer Tax but you will also be expected to pay 13% non-resident speculation tax. If you are buying a house in Toronto or GTA Area. Good News is that this amount can be refunded if you become a Permanent resident soon thereafter. Contact SHAIKH LAW FIRM for further details.
So if you think you’re ready here is how to get things moving to get yourself on the housing ladder!
Tip 1: Save for Down Payment
A strong financial foundation is important if you want to become a successful homeowner. Sometimes this means playing the long game so that when you do finally move in you can enjoy years of stress free home making. First and foremost, pay off any debt. It is also a good idea to build up between three and six months’ worth of savings that can be used to cover emergency expenses. As a house owner you only have yourself to rely on, you can’t call on a landlord to fix the boiler that isn’t working or repair the leaking roof and that’s where the emergency fund comes in!
How much should you save?
Saving takes time but it is time well spent. You will need enough money banked to cover the following:
Minimum Down payment:
- Property value $500,000/- or less You need 5% minimum Down Payment. For Example if the property you are buying in Toronto costs $490,000/-, then your 5% down payment will $24,500/-
- If the property value more than $500,000 but less than $1,000,000/- then you need 10% minimum Down Payment. For Example if the property you are buying in Toronto costs $900,000/-, then your 10% down payment will $90,000/-
- If the property value more than $1,000,000 then you need 20% minimum Down Payment. For Example if the property you are buying in Toronto costs $1,500,000/-, then your 20% down payment will $300,000/-
Important note: Your down Payment will affect if you get a conventional mortgage or a high ratio mortgage with default insurance. For example your down payment is less than 20% then you will be classified as eligible for high ratio mortgage, which means you will be expected to pay the cost of default insurance as well. Your default insurance cost depends upon the amount of down payment. The Premiums for default insurance range between 0.6% to 4.5% of the mortgage. The Good news is that this cost can be added to your mortgage amount but the bad news is that your cost of borrowing increases. Default Insurance or CMCH is an additional cost that does nothing to your actual mortgage balance so best to avoid paying it where possible. Market Trends suggest that many new home buyers in Toronto aim for at least 10% on their new home.
Closing costs and prepaids: On Average total Closing Costs range between 2% to 5%. Closing costs are the Legal fees & Costs incurred to transfer the title from vendor to the buyer’s name. Your Closing Costs include the following
- Real Estate Lawyer Toronto Fees $900 +Tax (For Cash ) or $999 +Tax (Purchase with Mortgage);
- Land Transfer Tax for Ontario on average between 1% to 2.5% on purchase price;
- City of Toronto Municipal Land Transfer Tax on average between 1% to 2.5% on purchase price;
- Registration of Transfer $76 & Mortgage $76;
- Title Insurance $1 to $1000. Example. House Cost $750,000 then Title Insurance $750 Approximately.
Moving and other expenses: Factor in what it will cost you to move. Ring around removal companies and ask for quotes. Also consider what work you might want to do in your new home – new furniture, decorating etc.
Saving isn’t complicated. Sit down, make a budget and set yourself some realistic goals.
Tip 2: Get Pre-approved for a Mortgage
If you are not in the position to buy your house outright with cash you will need a home mortgage loan.
How do you get preapproved?
Getting preapproved shows that you are a serious buyer and can help when putting offers in on properties you like. To get preapproval you will need to discuss with a money lender your financial status and they in turn will submit your loan for preliminary underwriting.
A Word of Warning
If you are pre-approved does not mean that you will get the mortgage on or about the time to closing. If your credit drops drastically, circumstances change or for some reason the lender is not satisfied with your documents between the time you are preapproved and at the time your final application is submitted you may not get the mortgage. It is important to ensure that you will finally get the mortgage.
Tip 3: Find the Right Real Estate Agent
To get the best deal we recommend partnering up with a Real Estate agent. The agent will guide you through the end-to-end process and advocate on your behalf when it comes down to the crunch of putting in an offer. They may also be able to show you houses before they hit the wider market.
An agents fees are covered by the seller so to you their services are free. What’s not to love?
Finding the right real estate agent is key. Work on good recommendations not just because your mum’s friend knows someone who may be able to help. Look for someone who has been doing the job full time for at least two years, who understands the local market, someone with great customer service skills and can evidence the number of homes they have sold.
Your home buying experience will only be as good as the real estate agent you choose to work with. Get it right.
Tip 4: Go House Hunting
Getting to this stage means you’ve concluded your financial position and you’re ready to have some fun and house hunt! There are no quick wins so don’t worry if it takes some time.
Start with a list of your non-negotiable house features, discuss these with your partner if you are buying a house with someone else. Agree on a list and share it with your agent.
Your Realtor will be able to provide you with local listing search online within your targeted areas you can afford.
How can you know you’re making a good investment?
Not many people buy a home to sell it, regardless you need to have this in the back of your mind when looking. Here are some tips to help you make a smart investment choice:
Don’t compromise on location or layout. If you don’t love the location or layout, chances are potential buyers years from now won’t either.
Look past the surface. Don’t let décor fool you into passing on an otherwise great home.
Think long term value. Buy a home in the most sought after neighborhood you can afford.
Neighbourhood Watch. Is it an up and coming area? What have other houses sold for? Is business good? All factors that will contribute to your home’s future value.
Research the school districts. School test results can impact on an areas house prices so take a look – even if you don’t have kids.
Tip 5: Submit An Offer
Once you’ve found the right home, it’s time to submit an offer and sign a contract agreement with the sellers.
Your offer needs to robust and backed up by your mortgage preapproval and some flexibility in your timescales, you should have an advantage. Your real estate agent will support you through this process and be able to advise on issues that may be holding up any prospective sale.
Your purchase agreement will describe the terms of your offer and the sale. Details will include, amongst other items, final price, lender information, closing date and even what furnishings are being left. Agreeing terms can be challenging, so it is important to remember to remain calm and patient.
When submitting an offer make sure you make it conditional upon
- Lawyer’s Approval. (SHAIKH LAW can review your agreement for any hidden Legal issues)
- Home Inspection.
- Home Appraisal.
Tip 6: Get Home Inspection & Appraisal
This stage of the process ensures that you have bought the property you thought you had and provides important protection for your home purchase.
A home inspection is a buyer’s right and it is imperative you have one undertaken. An inspection can highlight if there are any structural issues or costly repairs. If so the findings can be used to negotiate the purchase or to pull out of the contract altogether. There are other evaluations you may commission such as a termite inspection or radon test, depending on the advice of your real estate agent and the age and condition of the home you’re purchasing.
If you’re getting a home loan, your lender will require an appraisal evaluating the value of the property. An appraisal protects you from paying more than the home’s true value. If the appraisal comes in lower than your offer price, then you should consider price negotiation with your realtor because your mortgage will also be affected with the appraisal price.
Final Mortgage Approval
If you’re not able to buy your home with cash, once under contract your lender will look to finalise the terms of your deal and issue you with final approval. You are advised not to initiate any action that might jeopardise the final approval, for example by taking on a new credit card, line of credit or even getting a car on lease or financing.
Tip 7: Get A Real Estate Lawyer
You did it! The final step in the home-buying process is closing the deal. This is marked by quite a mountain of paperwork!
SHAIKH LAW FIRM Real Estate Lawyer in Toronto can help you with the entire process efficiently and effectively. All your legal documentation will be prepare by our Real Estate Lawyer who will ensure that your interest are protected and the title is securely transferred into your name. You can get started by hiring our Real Estate Lawyer Online.
A closing day is agreed between both parties and you should receive a draft copy of your closing documents to review ahead of time for your appointment with you Real Estate Lawyer Toronto so there are no surprises.
Congratulations you are now a homeowner!
Learn more about how to buy a house
If after reading our quick guide you are still feeling anxious and overwhelmed, don’t worry. We can help you by linking you up with one of our expert Real Estate Lawyer in Toronto.
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She kept me up to date at all times and was quick to respond to my inquiries. Ali is a good Solicitor as well. He was thorough and explained everything about my two transactions. Both closings went smoothly and I am very happy with service and the cost. I will definitely go back to this Firm for any future transactions.
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