August 30th 2021
How to Buy a House in Ontario
By Corey Sherwood
Buying a home is a big deal. It’s one of the most significant (and most expensive) life choices a person can make. Such a momentous decision shouldn’t be taken lightly, which explains why most Canadians are hesitant to enter the real estate market. But buying a home doesn’t have to be a scary experience — especially since there are some incredible resources out there to help you find “the one”.
Few people are taught how to buy a house and what to look for, but most real estate experts agree on some critical factors when buying a home. In this article, we’ll walk you through those key factors and explain how to buy a house in Ontario.
Save the money
The first phase in buying a home is to save as much money as possible for your down payment. For many people, this can be the hardest step, but it doesn't have to be if you buy a home in Ontario. Saving for a down payment can take time, but luckily Ontario down payments aren’t outrageous. You can pay as little as 5% of a property's total value for your down payment, reducing the amount of time it takes to save up.
However, if you buy a home with a 5% down payment, your mortgage insurance will be a lot higher, plus you’ll end up having to pay more each month for your mortgage. You’ll also have less home equity if you opt for a smaller down payment, which would mean spending more on interest.
Spending on a down payment isn’t the only thing you need to save for though. Other fees — called closing costs — can add up, especially on top of your down payment. These include title insurance, lawyer fees, and land transfer tax.
Another expense to consider when saving to buy a home is the cost of hiring a home inspector. One of the most important parts of buying a house is finding the right home inspector. They examine the condition of a home and make sure it passes all zoning and building requirements. A good home inspector will make sure you know anything that’s wrong with the house, allowing you to bargain effectively with the seller and possibly avoid major problems down the road.
It can take a while to save the money you need for the best mortgage rates, but once you do, it’s time to move on to the next phase.
The second phase sounds obvious, we know. But on top of understanding everything about the home you’re interested in buying, you should also be very aware of your finances and any programs and rates available to you — especially if you’re applying for a mortgage in Ontario. Documents like T4s, recent investments, business income, pay stubs, savings statements, void cheques, and a list of all debts and assets (like student loans) must be compiled and submitted when you apply for a mortgage.
Once your paperwork is ready, you can start looking for rebates and grants to help lower your overall costs. Applying for rebates is a great way to save some money when buying a house. Programs like the Ontario Home Buyers Plan allow you to use up to $35,000 from your Registered Retirement Saving Plan (RRSP), which can help with a down payment. There are many resources online to help you find and apply for these rebates, like the Home Buyers amount, which can give you a $5,000 income tax credit, or the GST/HST New Housing Rebate.
The last step is to find the best mortgage rates and housing prices on the market. Much like buying a car, you can shop around for the best rates. Finding the best rate can save you tens of thousands of dollars on your mortgage, so be sure to do your research.
It also helps to secure a mortgage broker who can compare rates for you and create a diverse portfolio of home buying options. A mortgage broker allows you to get your mortgage pre-approved, which can come with various benefits. When you sign up for a pre-approved mortgage with a mortgage broker, you can get a better sense of how much you can afford to spend on a house and the maximum monthly mortgage payment you can reasonably pay.
Buy your dream home
The final phase of buying the right home is to look for the house! Once you’ve saved the money, organized all your documents, and found the best rebates and rates, you finally get to the fun part of home buying.
The process can be tricky, and sometimes you don’t get the home you want right away. That’s why it’s imperative to work with a local real estate agent. To make it easier, Properly has a team of highly trained real estate experts based in Ontario — because on the homebuying journey, it’s always best to have a top-tier team behind you every step of the way.
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