PURCHASING A HOME
There’s a lot to know when it comes to buying a home in Toronto. Whether you’re buying your first condo, moving to a bigger house or downsizing. I've listed a few steps below to provide a general outline of the process.
Get pre-qualified for a mortgage, make important financing decisions and choose a lender
House hunt like a pro, online and in person
Make an offer and not be intimidated by the paperwork, negotiations or bidding wars
Be prepared for the closing process and costs so you don’t get caught off-guard
Step 1 . Get Pre-Approved for a Mortgage
The first step to buying a house or condo in Toronto should be finding out how much your bank is willing to lend you. When you pre-qualify for a mortgage, your lender will look at your income, your debt and the amount you have for a down payment. It’s beneficial to take that pre-qualification to the next level before you start actively searching by getting pre-approved for a mortgage. A mortgage pre-approval is in writing (usually valid for 90 to 120 days) and will require you to prove your income and credit history. Pre-approvals will also include an interest rate guarantee.
2. Consider your requirements before beginning your search
Where you live has an impact on your lifestyle and it’s also one of the most significant factors on the value of your home. Choice of location is sometimes limited by the price you can afford but it is still important to consider factors such as commute to work, schools, family, shopping and entertainment.
Consider how much you have to spend, and just as importantly, consider how much you want to spend. Note that purchasing a home includes numerous additional expenses above and beyond the list price.
Is it important for you to have an en-suite bathroom, an attached garage or a private backyard? Would you like a fireplace, a short commute, or maybe minimal work? Once you decide which features you would like, then it’s time to prioritize the list.
Type of Home
You should consider what type of property you would like to live in. A single-family detached home is desirable to many because it typically provides more living space and land. Alternatively, a condominium may be a more appropriate choice, since condos offer low-maintenance living. It is important to determine what type of home best suits your budget and desired lifestyle.
Time to hunt
A real estate agent can help by using a variety of tools to identify properties that meet your requirements. One such tool is the local Board’s MLS® (Multiple Listing Service®) System. MLS can be searched for listings that best match your requirements such as location and budget.
Once you decide to visit a property, keep your requirements in mind, i.e. does it have all the features you want? does the location work for your lifestyle? Also keep some of the technical considerations in mind, such as: wiring, power outlets, heating, foundation and roof maintenance, windows, plumbing etc. Home inspections can provide an assessment of the technical aspects of a property and it is a good idea to have a professional inspection performed.
3. Making an offer
When you find a property that you would like to buy, your agent can put together an offer. The offer will include, the price you are willing to pay, expiration of the offer, a closing date for the purchase of the home and conditions for the purchase. Some commonly included conditions are:
Financing, which states you will be able to get a mortgage.
Selling your current home.
Survey provided by the seller that shows there are no encroachments on the property;
Title of the property being owned by the seller (your lawyer will confirm via a title search).
Home inspection by a qualified engineer; and
Inclusion and exclusion of any appliances and other items - basically, what stays and what goes.
A deposit is given along with an offer. A deposit of appropriate value will show your good faith to the seller.
Acceptance of an offer
Once an offer is accepted and all conditions are met, then the offer becomes binding on both sides. If either party then does not honour the agreement, they can be sued or the deposit lost; therefore before signing, be sure that you fully comprehend all the terms of the offer.
Before the property can formally be handed over from the seller to the buyer, a few more things must be done. You will have to show proof of insurance to the institution that provided your mortgage. On or before closing day, the lawyers from both sides will arrange to transfer the property title from the seller to the buyer. The mortgage will be transferred to your lawyer's trust account, and then to the seller. Your lawyer will bill you all additional expenses such as land transfer taxes or outstanding legal fees. Also be sure to check with your lawyer that everything is as stated in the offer-to-purchase.
Once this is complete and the keys are in your hands, then the home is yours!
4. Additional costs
Purchasing a home is associated with some extra expenses, such as:
Real estate agent fees
Survey costs (if the seller didn’t have a current survey)
A high-ratio mortgage insurance premium
An interest adjustment for the mortgage.
Reimbursement to seller for the unused portion of any prepaid property taxes or utility bills
Land transfer tax in certain provinces
Mortgage broker's fee