It’s important to keep in mind that buying your first home in Ontario isn’t a small accomplishment. However, the financial site NerdWallet offers some positive news.
Even in 2021, when the average price was bumped up more than 30%, 20% of the people who bought homes in Ontario were first time buyers. These numbers prove these buyers are motivated despite the challenges.
Still, it’s a good idea for people to set realistic expectations. They need to put together and work through some new ideas like closing costs, maintenance and utilities, and down payment requirements. A smooth buying experience also requires the help of an expert real estate agent who can walk you through affordable and appealing neighbourhoods.
Read on to find out everything that you need to know if you’re looking at becoming a first time home buyer in Ontario.
What are the steps involved in buying a home in Ontario for first-time buyers?
An overview of the steps involved will help you to plan accordingly. Here are ten steps you can use as a handy checklist.
- Reviewing your finances comes first. Buying a home is a big financial commitment. The first step is to ask yourself if you’re financially stable. You’ll need to make sure you’re making enough money to cover new costs like property tax and maintenance, plus others. Here are a few tips to get you started.
- Choosing a compatible real estate agent is critical. You’ll need to find one that’s responsive, professional and knowledgeable. Don’t be afraid to ask questions.
- A mortgage pre-approval is important. This will tell you how much a lender is able and willing to lend you. Keep in mind you’ll want to find one that guarantees a current interest rate for up to 120 days.
- When you begin looking for a house with your agent, consider the amenities like shopping, schools and transportation.
- Remember that a good agent can show you a house virtually and in person. This is a handy way to schedule showings if you’re a buyer from overseas
- It’s always a good idea to have a rough number when it comes to closing costs. These will include lawyers’ fees, home Inspection fees and a possible land transfer tax.
- It’s also a good idea to have a home inspection. That’s the best way to find any underlying issues in a property so you can adjust what you’ll want to pay.
- Making an offer is a big step forward. Working with a realtor can help you decide on a number. A seller’s market might mean you need to come in over the asking price with little conditions. The opposite is true for a buyer’s market where the buyer can offer a lower number.
- Closing the deal usually takes around 90 days. That number can vary depending on what’s in The Agreement of Purchase and Sale.
- While the deal closes, it’s a good idea to take care of your change of address needs. Here’s a link to get that done with the Canada Revenue Agency. Don’t forget to contact the Ministry of Health and Transportation too.
The down payment is one of the first hurdles you’ll need to get over.
How much do I need for a down payment as a first-time home buyer?
There are rules for a down payment the first time home buyer needs to follow. The Government of Canada website reports several minimum down payment numbers. For example, if the house you’re looking at is $500,000 or less, you’ll need to come up with 5% of the purchase price.
Follow this link to the minimums for more expensive places. Keep in mind that if the down payment you put up is less than 20% of the purchase price of the property, you’ll more than likely need to buy mortgage insurance.
Are there any specific government programs or incentives?
You can get help with your first purchase. The Toronto Regional Real Estate Board (TRREB) supplies a list of programs that are targeted to both first time buyers and others. Among them is the First-Time Home Buyers Tax Credit.
The First Time Home Buyer Incentive is another program. It helps first time buyers with a down payment. Remember, you should have clear criteria when shopping for a house.
What should first-time home buyers consider when choosing a location in Ontario?
Moving from renting to home ownership requires some careful planning. Here are a few more things that you’ll need to consider to make sure you get the right place:
- Location is important. If you’re a parent or plan on being one location to schools, it is necessary to commute to school.
- Safety is another big factor. You can contact local police stations to find out about crime in the area you’re considering.
- Consider the commute that you’ll have to work. Include driving time and or time spent on public transportation.
- The features of the home that you’re considering can help you make the right choice. The number of bedrooms and bathrooms makes a difference if you’re planning on expanding a family or working from home. To address your storage needs, you may want a basement or many closets.
It’s also a good idea to steer clear from the following when you’re a first time home buyer in Ontario.
What are some common mistakes to avoid as a first-time home buyer?
First time home buyers are prone to having certain missteps. Try to avoid the following.
- It’s not a good idea to start shopping for a house before you get pre-approved. You might find that you fall in love with a certain style of house and location but can’t get the money for the asking price.
- Not anticipating the money that you’ll need to close the deal and run a house is another common mistake. Generally, you’ll need to pay somewhere between 3% to 5% of the purchase price for closing costs. Here’s a handy calculator to give you a ballpark figure.
Stats Canada reports the average homeowner spends about $12,000 a year on maintenance. Don’t forget to budget for that.
Are You A First Time Home Buyer Looking for a Private Mortgage?
Mortgage Broker Store is a private mortgage lender that can help you with bad credit mortgages in Ontario. If your credit has been tarnished, we can help you get a mortgage when the traditional lending institutions have turned you away. We serve several locations in the GTA. Call 416-499-2122 or email ron@mortgagebrokerstore.com for some free advice. Our team has 34 years of experience.
