Guide To Buying Your First Home In Toronto & The GTA
Wednesday Nov 04th, 2020
Questions For First Time Home Buyers in Toronto & GTA - First-time Home Buyer Questions Explained
Buying a house for the first time can be an overwhelming and seemingly complicated process, especially if you don't ask the right questions. How does a first-time purchase work? Here is a detailed list of common questions for first time home buyers.
How Do I Begin The Process of Buying a Home?
Find the Right Realtor
Finding the right realtor is crucial to your new home buying process. Realtors know the areas you wish to explore, know the details of things to look for when buying a new home, and will help you get throughout your entire home buying process.
Determine Your Budget
It is incredibly important to find a good mortgage broker to help you figure out what you can afford and how to obtain the right mortgage for you. Mortgages brokers will first help you approximate your budget and then secure the right loan for the property you would like to buy.
Our mortgage calculator is a great tool for determining payments and other costs associated with a home purchase.
Start Viewing Properties
Your realtor will take you to homes that fit your criteria and budget. You'll see a lot of houses so try to take notes.
A good realtor will help guide you in the process – they'll point out things you should look out for, help you notice the differences between different styles of property and, most importantly, help you make the right decision for you and your family.
Why Should I Use a Realtor?
Remember – this is one of the biggest transactions in your life; don't navigate the process by yourself. Your Realtors' job is to expose you to all of your options on the market and perform their job concerning the requirements and obligations for representation according to their code of ethics. They will guide you through the legal requirements and ensure they are performing in your best interest.
The offer process can seem overwhelming and stressful at times - this is why it is critical to find the realtor that is not only knowledgeable and has the expertise to navigate the process successfully but someone you trust.
Trust your gut – your realtor should be working in your best interests.
How do I Select The Right Realtor?
- Choose the person with whom you have a connection. While experience is necessary, go with your gut feeling. You can always ask for referrals from other homeowners.
- Be upfront about your budget and needs. The right realtor will communicate openly about properties that fit your criteria.
- Look for motivated and passionate agents who are in the business because they love it.
- See if your agent is honest about the potential risks. Always go with honesty over an agent telling you what you want to hear.
- Pick an agent who is clearly communicating with you. You should be clear on every step of the first time home buying process.
How Much Should my Down Payment be?
Your down payment is the percentage of your home purchase price that doesn't require a mortgage or loan. Generally, the downpayment ranges from 5%-15% if you have CMHC Insurance or 20% and up for a conventional mortgage.
What is a Deposit?
Your deposit is the amount you put down with or upon acceptance of your offer. This shows you are a credible and serious buyer. The deposit, in some cases, is not refundable. Your realtor will guide you through the process.
What Should I Look For When Deciding on A Neighborhood?
Everyone wants to live in a safe neighbourhood, but how do you determine if the potential home is safe? Here are a few things you can look up:
- Crime statistics - every area has some criminal activity so don't be scared if you check your local crime reports and see a few cases. However, if you notice a high level of illegal activity, it's a red flag. You can check criminal activity through news sources or neighbourhood websites.
- Is there a neighbourhood watch? It's not the most important to have a neighbourhood watch, but it's certainly helpful.
- Kids are playing outside - if you see kids playing around the area, chances are you're in a safe neighbourhood.
- Talk to the neighbours - introduce yourself and chat with the neighbours. They'll tell you if they feel safe in the area.
Public Transportation, Malls, Schools, Restaurants, and Parks
If public transportation is important to you, map the areas that would suit your commute the best and discuss with your Realtor what your options are.
It's always good to have daily life necessities close to you. Food, medications, and toiletries are things we all need daily, so it's fantastic if they are accessible to you.
If you have children, see what the schools in the area are like. What are your plans? Do you want your children to attend a public or private school? Answer these questions before you purchase a home. There are many resources available to you to help you pick the right school for your children.
If you have pets, it's nice if there's a dog park in the area. Maybe you prefer spending time outdoors, in that case, it's great to have a park nearby.
What Type of Fees Should I Expect?
- Your down payment is the most significant expense when buying a house.
- If you choose to do a Home Inspection, you will have the option to choose from different packages that can help you make the right decision.
- Your moving costs depend on using a moving company or doing it yourself.
- Property insurance is required for all homes with a mortgage. You will need to have that in place for closing.
- The appraisal fee is necessary if you wish to determine the property lending value for mortgage purposes, ranging from $250 to $350.
- Land transfer tax - according to the Ontario government, the land transfer taxes are the following:
Amounts up to and including $55,000: 0.5%
Amounts exceeding $55,000, up to and including $250,000: 1.0%
Amounts exceeding $250,000, up to and including $400,000: 1.5%
Amounts exceeding $400,000: 2.0%
Amounts exceeding $2,000,000, where the land contains one or two single family residences: 2.5%.
- Property Survey: A document that shows the property boundaries, location of the building, and indicates any intrusions on your property. However, if you need one, the fee ranges from $1000 to $2000.
- Real Estate Lawyer Fees: If you choose to hire a real estate lawyer to deal with all the legal paperwork, your lawyer fees could range from $500 to $1000+, with some companies offering a fixed rate.
What Are The Homeowner's Tax Benefits in Ontario?
Please note the following credits are subject to change. Please refer to canada.ca for updated information.
First-time homebuyers' tax credit
First-Time Home Buyers' Tax Credit of $4,000. Your mortgage broker will be able to determine how it applies.
Home Buyers' plan
Suppose you and your partner or common-law partner are Canadian residents with a Registered Retirement Savings Plan (RRSP) contribution. You might be eligible for tax-free withdrawal up to $35,000. This applies to first-time buyers or those who haven't owned a home in the previous four years. Keep in mind you do have to repay the borrowed amount.
GST/HST new housing rebate
If you paid Goods and Services Tax (GST) or Harmonized Sales Tax (HST) on a newly built or substantially renovated home, you might be able to take advantage of a new housing rebate on the part of the tax.
Homebuyers' tax credit for people with disabilities
You may be able to enjoy the Home Buyers' Tax Credit even if you aren't a first-time home buyer if you or your partner meet the CRA's guidelines for persons with disabilities.
Home accessibility tax credit
The Home Accessibility Tax Credit (HATC) could help you save taxes on an eligible renovation costing up to $10,000. You have to be over 65, qualify for a disability tax credit, the renovations have to be permanent and completed by professionals.
You can claim up to a certain amount to make your home accessible for yourself or qualified dependents who have mobility issues. Your tax credit refund could be as much as 25 percent of eligible medical expenses if you qualify.
If you own real estate, you lease out; you can declare said income and claim certain expenses such as advertising fees, property taxes, and insurance.
If you move more than 40 kilometres away for school, business, or a new job, you could deduct your moving expenses such as hotel bills, legal fees, or moving company bills.
If you're self-employed or working from home, you could claim a portion of your utility bills and homeowners' insurance.
What Happens if a Home Inspector Uncovers a Problem With The House?
This doesn't mean you shouldn't buy the house. It means you now know about current or potential issues you can run into. There are many ways to remediate the issues you come across, from asking the sellers to make any necessary repairs to negotiating the final price.
Keep in mind, the report won't include everything in or around the home, and it doesn't guarantee your new home won't need any repairs in the future. But it is a useful tool in the big picture and the overall condition of your home.
How Do I Make an Offer on a House?
- You and your realtor will determine your offer price and terms.
- Your terms include items such as – closing date, conditions etc.
- Your realtor will draft your offer and explain what you are signing. Upon finalizing your offer, they will submit your offer with an irrevocable date – this is the date the sellers have to respond to your offer.
- The seller will accept, reject, or counter your offer.
- Your realtor will handle the negotiation process in your best interests.
- Once you have an accepted offer, you and your realtor will waive the final conditions and wrap up the deal.
Remember, find the right realtor for you and ask lots of questions. They are there to help you, guide you and support you through this process. It doesn't have to feel overwhelming or stressful. Your realtor will ensure you are knowledgeable and confident when proceeding with this next big step!
AleksProperties.com is managed by Aleks Pavlicevic, an experienced Real Estate Sales Representative serving the GTA. With a passion for all facets of real estate, Aleks helps guide her clients to their next Real Estate endeavor with ease, expertise, and a personalized approach. Aleks' clients range from first time home buyers, families upgrading, retirees downsizing, to investors looking to grow their portfolio.