When you’re looking to buy a house or condo, there are a few steps to take before beginning your search. The most important of these is your financing approval. You need to know how much you will qualify for as discussed with and approved by a lending institution. This will include a combination of financial factors some of which include how much of a down-payment you will have, your current debt ratio and what you can afford in mortgage payments over a negotiated period of time. Once this is secured, we’ll be able to start the process that will help you find the home that best fits your needs and criteria.
If you need help securing your mortgage pre-approval or with financial planning for a home purchase, check out our Recommended Professionals who would be more than happy to help get you started.
Now that you’ve got your mortgage pre-approval, let’s determine what is on your wish list for your home purchase. Having an understanding of what you’re looking for will help us in order to best assist you. We know the local market and have seen numerous homes and condos to have a great understanding of the inventory that’s available, neighbourhoods to search in (and steer clear of) and the different condo communities; therefore we can streamline the search process for you so that it’s most efficient. We won’t be wasting your time showing you properties that aren’t best suited for what you’re looking for.
- Let us know what your wants include, for example:
- Type of home (single family detached freehold (no maintenance fees), semi-detached, townhouse, condo etc.)
- Basic requirements (number of bedroom/bathrooms, finished/unfinished basement, size, updated or a fixer upper, new build or mature neighbourhood, etc)
- Desired location (do you want to be downtown or in the ‘burbs?)
- Must haves (added home features that you’d like to have)
Aside from the purchase price, you’ll want to account for the closing costs that you can expect when purchasing. You will have the following fixed costs when buying:
- Land Transfer Tax – which is calculated based on the amount of your purchase price. All homes have a provincial land transfer tax. If you’re buying in Toronto, you will have the provincial and municipal taxes to pay (it’s pretty much double). This can sometimes be a deciding factor for a Buyer’s decision on location as the land transfer tax can amount to a considerable figure. You can use this Calculator to determine what to expect.
- Lawyer’s Fees – all Buyers must retain a lawyer to handle the closing arrangement for the purchase as well as the transfer of the funds from your lender.
- Mortgage Insurance – If your down-payment is less than 20% it’s what’s called a high-ratio mortgage. It requires an insurance premium from one of the following of CMHC or Genworth Financial) and you will be required to pay the applicable taxes on the insurance premium on closing. While the insurance premium can be added to the mortgage amount, the tax must be paid at closing. A list of the mortgage insurance premiums can be found here.
- Home Inspection – You may or may not decide to have a home inspection on a property before the purchase or as part of the conditional period. A professional inspection of the home by a certified home inspection is for your benefit and will help you not only to understand the basic components of a home and it’s structure, but it can also uncover issues or concerns that might not be detected otherwise. The cost to do so will range between $300-500 however it’s a small price to pay for your piece of mind.
- Miscellaneous Costs – this depends on you and your resources. Here you could account for your moving expenses, cleaning service, and trades such as painters if you decide to do some renovating or sprucing up before you move in. These are not fixed costs to anticipate, however depending on the home you purchase and your personal resources (if you have family or friends that can help out) you might want to budget for this.
We like to advise people to account for about 2% of the purchase price as an average to budget for the closing costs.
The nice thing for you as the Buyer is that you’re not paying the commission that we earn on the purchase – this is typically paid by the Seller to the listing brokerage for the service. Bonus, right? You have nothing to lose and the most exciting purchase of your life to gain – and we love to be a part of it.
The Offer Process
Now that we’ve found the perfect home, the next step is the offer. We’ll provide you with the information that you’ll need in order to make an informed decision on the offer price. We’ll negotiate on your behalf in order to get you the best price possible and include all the terms to protect your interests.
Depending on the type of property and where you’re purchasing, your offer may or may not include conditions.
Conditional – where there is little competition for available properties and houses have been on the market for a while, or when a market is over-saturated you can make an offer that’s conditional on terms that you set. Typical conditions could be “subject to a home inspection” or “subject to you obtaining financing approval”. The home isn’t sold firm until the conditions are met.
Firm – in a heated market where there are more buyers than homes available, it’s not uncommon for a Buyer to be competing with others, generating a Multiple Offer scenario. In order to make the offer more attractive to the Seller the Buyer may choose to forgo having any conditions in the agreement.
You’ll want to ensure that you have the deposit amount ready and accessible as it’s required within 24 hours of an accepted agreement. The deposit amount will vary based on the purchase price, and it’s applied to the balance of your down-payment.