Home Buying in Ontario

#1 – FIND A MORTGAGE PROFESSIONAL AND GET PRE-QUALIFIED

This provides you with an estimate of how much you can afford.  Remember, it is not an approval or pre-approval, but the process sets a realistic price range for you.  

#2 – GO THROUGH THE PRE-APPROVAL PROCESS

This will determines the price of home you can actually afford and helps set your maximum budget. Your Realtor can now set up your search perimeters, and it also lets potential Sellers know that securing financing will not be a problem. 

You’ll be able to secure an interest rate which is typically held for 120 days.  And, you’ll be able to calculate what your monthly mortgage payments will be which will alleviate some uncertainty around monthly costs.

#3 – COME UP WITH A FINANCING PLAN

Now is when you’ll want to secure your down payment & decide how much money you’d like to put down.  In Canada, the minimum down payment is 5%.  Anything less than a 20% down payment is possible, but subject to a mortgage loan insurance, typically through Canada Mortgage and Housing Corporation (CMHC).  Take time and go through bank statements and savings accounts to figure out exactly where you’ll get the money from and how you can start saving. 

#4 – RESEARCH INCENTIVES THAT MIGHT BE APPLICABLE TO YOU

Are you a first time home buyer?  If so, you may qualify for a number of great government incentive programs such as:

RRSP Home Buyers’ Plan– You may be eligible withdraw up to $25,000 tax free from your registered retirement savings plan (RRSPs) to buy or build a qualifying home.

First-Time Home Buyers’ Tax Credit– a 15% credit on $5,000 worth of home purchasing costs to a maximum tax relief of $750.  For example this would be on things like Legal fees, land transfer taxes etc.

HST New Housing Rebate – A rebate for part of the HST on a newly constructed home.

Land Transfer Tax Rebates- Applies to Provincial taxes and may apply to Municipal taxes (Toronto) as well.  The maximum Provincial rebate is $4,000 and the maximum Municipal (Toronto) rebate is $4,475.  

#5 – START YOUR SEARCH.  THE FUN PART!

Connect with a Realtor you know, like and trust and start searching for your home.  Most people don’t know that Realtors have a fiduciary duty to protect the rights of their Buyer clients and to work in their best interest.

#6 – PUTTING IN AN OFFER.  THINGS ARE GETTING REAL!

You’ve found a house and want to make it your home!  Don’t get caught up in emotions, you’ll need to remain level headed for the negotiations.  It isn’t unusual to be faced with Multiple Offers, so don’t get attached until the house is officially yours.  Go back for a second, thorough inspection & expect this visit to take at least an hour.  You want to know exactly what you are purchasing.  You may even wish to bring friends or family members back for a third visit to get another perspective.  After all, this is the biggest asset you’ll likely ever own.  You want to make sure it’s right!

#7 – DECIDE ON AN OFFER PRICE

Your realtor will evaluate comparable properties that have sold and help establish an offer price you are comfortable with.  This will be your starting point for negotiations and will usually be a range of your highest and lowest bid. I advise clients to know their top price in advance to avoid getting emotional in a potential multiple offer situation.  Avoid over paying as this can affect your final financing approval.  

#8 – YOUR CONDITIONS.

Your first offer will likely be contingent on conditions such as financing approval, home inspection, sale of your existing property (if applicable) and/or your lawyer’s review of the Status Certificate (if it’s a condo) to name a few.  Before the contract becomes binding, you’ll negotiate with the Seller and ultimately waive or fulfill all of your agreed upon conditions.