As a first-time home buyer in Toronto, there’s a whole lot to learn. This is likely the biggest investment you’ve ever made – and the more you know, the better your decisions will be. So grab a glass of wine, sit back, and prepare to learn how to buy a house or condo. Make sure to scroll to the bottom for required reading for Toronto home buyers.
Step 1 – Get Pre-Qualified for a Mortgage
The first step to buying a house or condo in Toronto is finding out how much your bank is willing to lend you. When you pre-qualify for a mortgage, your lender will look at your income, your debts, your downpayment and your credit history. The pre-approval should be in writing and will include a guaranteed interest rate (usually valid for 90 days). Pre-qualifying will ensure that you know how much mortgage you can get, which in turn will help you know what price range of homes you should be targeting in your search. It allows you to focus your house hunting efforts and eliminates the risk and uncertainty of financing once you find your perfect home. Click here to find out more about Mortgages under the Financing tab.
Step 2 – Develop your Wish List
Knowing what you need and want in your home is critical. What are your must-haves, your nice-to-haves, and your no-way-absolutely-nots? How many bedrooms do you need? What kind of outdoor space do you want? What about counter-tops, appliances, and floors? You can’t get what you want if you don’t know what you want. Of course, the location will be a big decision – what Toronto neighbourhood makes you feel at home? Check out our Toronto Neighbourhood Guides for the insider scoop on Toronto’s hottest neighbourhoods.
Step 3 – Pick your team
Buying a house or condo will likely be the biggest purchase you’ll ever make – but don’t worry, you don’t need to do it alone. You’ll want to start by picking a Great Toronto Real Estate Agent who works exclusively for YOU. You’ll also need a lender to take you through your financing options, and a lawyer to help with the legal aspects of the purchase. There are thousands of professionals out there (of varying quality), so ask your friends and family for recommendations, do your research and don’t be afraid to interview multiple people.
Step 4 – House Hunting
Now that you’ve pre-qualified for a mortgage, narrowed down your search and picked a great Toronto Realtor to work with, it’s time to start looking at listings and houses. While realtor.ca is a good place to start, your real estate agent will send you custom listings that match your criteria. House hunting will involve screening listings electronically, previewing properties online, and then finally going out to look at homes. This is your opportunity to get a feel for the different Toronto neighbourhoods, refine your wish list, and ask questions. While a wish list seems kind of scientific and is a useful tool in deciding which properties to visit, the truth of the matter is that most people walk into their perfect home and just feel it. Of course, it helps when it satisfies your needs and wants too, but don’t underestimate the power of ‘just knowing’. Click here for a tool to help you decide which property to buy.
Step 5 – Make an Offer
Congrats! Your house hunting efforts have paid off, and you’ve found the right home for you: it satisfies your wants/needs, it’s in your price range, and it feels right. The offer process is both exciting and nerve-wracking. We begin by drafting the Agreement of Purchase and Sale (APS). The APS is a legally binding document which contains everything from the price you are prepared to pay, to the inclusions you want (washer/dryer, big screen TV), to your ideal closing date (the date you take possession), to conditions that need to be met for the deal to go through. Once you’ve submitted your offer, the seller can accept it, reject it or sign back a counter offer. During these back-and-forth negotiations, you may need to compromise on small things, but a good realtor will work hard to get you what you want. And if you’re in a bidding war, make sure you know the facts about Bidding Wars and How to Win in Multiple Offers.
Step 6 – Meet Conditions and Provide Deposit
Conditions are requirements within the Agreement of Purchase and Sale that must be met for the sale to go through. In your offer, you may have included a financing condition or a condition that allows your lawyer to review the legal details of the property, or a home inspection. And of course, you’ll need to submit a deposit–an amount up to 5% of the purchase price, which is held in trust until close. Once the conditions have been met, the agreement is firm, and now it’s just a matter of waiting for your closing date. And of course, packing!
Step 7 – Close the Deal
You’re almost a Toronto homeowner! Closing is the point at which the ownership and possession of the property are transferred from the seller to you. It takes place once all the legal and financial obligations have been met. Closing the purchase will be a team effort: in addition to yourself, your lawyer and your lender will all be involved in helping close the deal. Click here to find out how much your Closing Costs will be.
Required Reading for First-Time Buyers:
There’s a lot to know when buying a house or condo in Toronto – we consider the following links required reading for first-time buyers!
- Downpayment Strategies for the First Time Buyer
- Understanding Mortgage Options
- Online Mortgage Calculators
- Land Transfer Tax
- Government Programs for First Time Buyers
Putting Your Team Together
Determining Your Needs and Options
Condo and House Basics
- 10 Things Every First Time Buyer Needs to Know about Old Toronto Houses
- What to Look for When Buying a Condo in Toronto
- The Truth about Realtor.ca
- How to Read a Toronto MLS Listing
- Top 10 House Hunting Tips for the First-Time Buyer
- What to Look for in a Flip
- How to Determine Which Property to Buy
Making an Offer
- Making an Offer: What to Expect
- The Financing Condition
- The Home Inspection Condition
- Bidding War Basics for First Time Buyers
- How to Win a Bidding War
- Bully Offers
Closing on Your New Home
- Next Steps Once Your Offer is Accepted
- Closing Costs
- Home Insurance Scoop for First Time Buyers
- How to Move without Getting a Divorce