THE INFORMED FIRST TIME HOMEBUYER’S GUIDE FOR BUYING A HOUSE IN TORONTO
Friday, June 19, 2020
Ready to buy your first home in Toronto? We have come up with 9 real estate expert tips to make your first time home buying experience a smooth sailing one.
Know your budget
Before you start looking at houses for sale in Toronto and go gaga over designer homes, make sure you can afford it. This way you will stay grounded to reality from the beginning of your home search and find a home that you actually love.
As a first time home buyer in Toronto, you need to know how much down payment you can afford. In Canada, minimum down payment is 5%- 20% depending on price of home. Single-family detached house prices in the city of Toronto, as of last month, were around $1.4 million while Toronto condos were sold approximately at $722,000. The average home in the GTA is forecasted to be $900,000 in current year. It is important you have a savings plan before buying a house in Toronto- the more you have saved up, the less you will need to borrow, thereby reducing your monthly mortgage payment.
Get a Mortgage Pre-approval
This will help you determine how much you can borrow from a financial institution when looking for houses for sale in Toronto. Lenders will check your income, debts, credit history and give you a writing of how much mortgage you qualify for, monthly mortgage payment and interest rate valid for 90 days or so. This is extremely helpful in determining your home purchase budgeting and gives seller the opinion that you are a serious buyer.
Take advantage of First-Time Home Buyer Programs
As a first-time homebuyer, make sure you are informed of various home buyer incentive programs in Toronto. Whether it’s a rebate you may avail or a tax saving way of financing your down payment, there are a number of government programs in place that can aid you in saving huge money when you buy your first home: For instance, The First Time Home Buyers' Tax Credit currently gives you a rebate of $750. In addition, Canadian government's Home Buyers' Plan (HBP) lets first-time home buyers to borrow up to $25,000 from RRSP for a down payment, and this is completely tax exempt. First-time homebuyers in the City of Toronto are also eligible to receive a rebate on the city’s land transfer tax.
Know your home criteria
Finding out what you need and want in your dream home is imperative in your home search such as what are the house features that are your must-haves and your nice-to-haves? What is your family size – present and future? How many bedrooms and washrooms are you looking for? What about other features like exterior, interior design? It is important to know all of these beforehand but make sure you are flexible when looking at homes as a house may not have it all in the price range or location you are looking for.
Undoubtedly, the location is a big factor too. Which Toronto neighbourhood appeals to you and feels like home? You might also consider relocating if house price somewhere else is more affordable but allows the same amenities.
Choose the best real estate team in Toronto
Buying a house in Toronto or anywhere else is a daunting task but if you have the right team it can take smooth the home buying process a lot. Make sure you do your due research before choosing from the best real estate agents in Toronto. Take note of years of experience, google reviews, client testimonials, customer service when selecting your realtor. Apart from choosing the right realtor, you also need expert real estate lawyer and lender in your team for your home buying journey. An expert lender will ensure you get home loan at the lowest interest rate, while an expert real estate lawyer will ensure there is no discrepancy in legal bindings of the house purchase.
Buy when the time is right for you
As we are now in the middle of a pandemic, many people are concerned of the covid situation and the overall Toronto real estate market. Decide for yourself instead of going with the market. The market will always have its ups and downs as will the economy. If you are financially stable, have enough savings, now could be the best time for you to buy a house in Toronto.
Get a home inspection
As you are making a huge financial investment, make sure you have the property inspected thoroughly to make sure your investment is not a faulty one. You don’t want to be a buyer who buys a property at a great deal and finds later major problems with the house which would not only cost you money but also your peace of mind. It will cost anywhere from $250-$500.
Know your closing and after closing costs
Before you embark on your home buying journey, beware there are a lot of additional expenses that comes with buying your first home such as closing costs, property tax, land transfer tax, condo maintenance fee, utility bills and so on. This is why a savings plan is crucial even after you have saved enough money for your down payment. A good rule of thumb is to save up 5% of your home’s purchase price to insure your home closing costs.
Don’t be disheartened to lose out on a bidding war
Even during the covid era, the Toronto real estate market is buzzing with houses getting multiple offers. When you find yourself in the middle of a bidding war, don’t feel disheartened even if you had your heart set on the property. Make an educated guess, consult your real estate agent and give it the best shot. However, do not go over your budget to get the house of your dreams only to find yourself buried in mortgage payments and other household expenses.
Buying your first house is undoubtedly a great adventure and an unforgettable experience you’ll cherish for the rest of your life. While there may be times when the process feels stressful, with the right team and planning it can be exciting and rewarding.
Our team is always there for you if you have any real estate related queries, so feel free to contact us anytime to help you find your dream home in Toronto.