Buying a home in Ontario is thrilling, exhilarating, and let’s be honest, a little intimidating. You’re making a big financial decision. Even more than that, you’re committing to a place to put down roots for the foreseeable future. There’s a lot at stake with a purchase of this magnitude so it’s critical to cover all the bases. Fortunately, there is a process! Armed with our guide, and the support of knowledgable real estate experts you can ensure a smooth home buying process.
If you remain objective and follow the steps, you will make a wise and strategic choice. In this post, we’ll answer some of your most pressing questions, starting with, how do I buy a house?
Searching for your perfect home in Toronto’s West End? You may just find it while browsing our latest listings.
The Home Buying Process: A Checklist
The process of buying a house in Ontario begins with a plan. You might think you’ll be logical from start to finish. If you are, you’ll be the first buyer who didn’t get caught up in the emotions and the excitement of it all. Keep in mind that there is a place for both your head and your heart along the way.
During these beginning stages, it’s best to stay grounded and stick with the facts as you are organizing your finances and deciding what features your house needs to have. Note: The emphasis is on “needs” for now. Your wants will come later.
Location is typically the number one consideration when buying a home. The posts below might help you choose your new neighbourhood:
Find a Local Expert
Connecting with an experienced real estate team is one of the most important steps to buying a house in Ontario. It means not lying awake at night wondering if you should place an offer, if you should keep looking, or what you’re getting yourself into in the first place. You’ll have guidance at every turn, as well as someone to answer all of your questions along the way.
A good real estate agent will be someone with a long track record in your chosen area, and who cares as much about your outcome as you do. They will also be there to advocate for you, and negotiate to get you the right home at the best price.
What to Know Before Buying a House
For now, we are still talking to that logical part that is building a solid foundation for getting into the market. Don’t worry, the fun part will happen soon!
The down payment is how much you plan to pay for your home using your own money, while the bank lends you the rest. Paying as much as possible up front will save you over the long term. If you borrow less, you’ll pay more toward the principal and less toward interest. If you can make a 20% down payment, you also won’t need mortgage insurance.
These are all things to consider when buying a house. It’s also advisable to focus on what you absolutely need over everything that would be nice to have. A house is expensive enough. Being strategic about your choice will help you make the most of your budget.
In terms of the minimum down payment requirements, it could be 5 to 20% depending on your purchase price.
- A $500,000 condo requires 5% (up to $25,000).
- For homes valued between $500,000 and $1.5 million, you need 5% on the first $500,000 and 10% on the rest.
- If a home is $1.5 million or more, your purchase no longer qualifies (or requires) CMHC mortgage insurance. At this price point, you need at least 20% for your down payment.
Is this your first home purchase (or first in a long time)? The posts below can be an excellent refresher:
- Buying Your First Home: A Guide to Toronto’s West End
- How Much Is Land Transfer Tax in Toronto?
- Interview with a First Time Home Buyer
Be Ready to Make a Deposit
After a seller accepts your offer, you will need cash on hand readily available to make a fast deposit. This amount is negotiable, but 5% tends to be the industry standard. The deposit will typically accompany the offer or be paid within 24 hours after a seller accepts. The remainder of your down payment is due upon your closing date.
Note that both your down payment and deposit need to be from guaranteed funds, such as a bank draft or wire transfer. You cannot use unsecured credit; however, you may be able to use funds from an RRSP (if you are a first-time buyer) or gifted from a relative. Just be sure that this is a true gift and not a loan that needs to be paid back. These guidelines aren’t just required for a lender to approve your mortgage, but they will also make your home buying experience more affordable and comfortable over the long run.
Obtain a Mortgage Pre-Approval
Here’s one last step for your rational mind. A mortgage pre-approval can set you up for successful negotiations later. It’s not essential, and not everyone does it. But it’s very valuable, especially if you’re ever in competition during offers. If no one else has done it, you’re in an excellent position.
You’ll visit your lender or a mortgage broker and fill out a mortgage application. They’ll run a credit check and determine how much you qualify for based on your income, assets, and liabilities.
It’s critical to remember that this is an accurate estimate, but it is not a guarantee of financing. If your financial situation changes drastically, so could your approval status. This is why you don’t want to make any unnecessary purchases on credit during the home buying process.
Nevertheless, a pre-approval does allow you to negotiate from a position of strength because you can demonstrate your creditworthiness to a seller. It also allows you to act quickly to place an offer because you know you already qualify for adequate financing.
Factors to Consider When Buying a House
Now we can start to get creative about this whole home buying process! You’ve established your budget, which means you’re less likely to bid too much on the first house you fall in love with. It’s time to start thinking from your heart, picturing all of the things you want in your home. Keeping your core needs at the back of your mind remains beneficial. It helps you stay comfortably within the lower to mid-range of your budget whenever possible.
However, you can now determine whether there’s room for other attributes you would like to see, such as granite countertops, heated floors, or an attached garage. During this stage, you may also decide that there are features that you want, but are willing to wait for. Not everything has to happen right away, but look for the hidden signs of potential. If there’s an extra bathroom roughed-in, you can add it later without disruptive renovations.
Start the Search and Negotiations
Finally, you’ve reached the fun part of this process. You’ve done your homework, and now you can begin looking at the prime contenders. Your real estate agent will bring you to showings where the properties meet those items you said you need to have. Sometimes, however, we might find a house that looks nothing like your initial vision, but is still absolutely perfect. You never know what can happen when you stay flexible!
We’ll also guide you to creating an offer that appeals to the seller while still ensuring the best value possible. Negotiations might leave you on the edge of your seat, but rest assured, you’re well on your way to owning your new home.
What else can you expect before your transaction closes? The posts below will give you a clearer picture:
What to Do When Buying a House: The Closing Process
Once your offer is accepted, the countdown to closing begins. It’s time to start getting excited because you’ll soon get the keys, and you can start packing up to move! However, there are still some costs associated with buying a house beyond the purchase price.
- Municipal and provincial land transfer taxes are the big ones. Like the down payment, they are based on a tiered percentage of the purchase price of your house.
- Legal fees will cover a title search to uncover any liens and encumbrances. Be sure your lawyer advises you on title insurance, as well.
- You and the seller will each have a share of property taxes and other municipal charges before your transaction closes.
A lawyer will facilitate most of your closing process, and most of the time, it’s seamless and straightforward from here. A good real estate agent will continue to support you in the interim, right through to when you get the keys and greet the new neighbours.
We hope you found these home buying tips helpful! For concierge-level support throughout your transaction, get in touch with our West Toronto Realtors® today. Reach out to 416-788-1823 or email kim@kimkehoe.com to learn more.
