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How to Buy a Home in Ontario, Canada

Insider Tips and Strategies for Successfully Buying Your Dream Home in Canada

Home How to Buy a Home in Ontario, Canada
Overview
Ontario Housing Market
First Steps to Homeownership
Location and Budget Planning
Home Buying Checklist
Home Buying Steps
Step 1: Down Payment
Step 1
Step 2: Credit Score
Step 2
Step 3: Mortgage Pre-Approval
Step 3
Step 4: Find a Real Estate Agent
Step 4
Step 5: Home Search
Step 5
Step 6: Make an Offer
Step 6
Step 7: Home Inspection
Step 7
Step 8: Closing
Step 8
Want to Buy a Home in Canada? Trust BCR
Why Choose Us?
Ontario Housing Market

Are you considering if now is the right time to buy a home in Ontario? With the latest insights into the housing market, it’s a decision worth considering. Have you seen the latest twists and turns of Ontario’s housing market?

Ontario Housing Market Overview 2024

But that’s not all—consider today’s lowest mortgage rate in Ontario: as of April 18, it stands at a tempting 4.79% for a 5-year fixed term. Additionally, the rental market is thriving, with asking rents experiencing a 4.9% annual increase, averaging $2,456. One-bedroom apartments have seen a 5.1% rise to $2,239, while two-bedroom units are up by 5.3% to $2,711.

Of course, before jumping into homeownership, it’s essential to weigh the pros and cons of buying versus renting. If you’re leaning towards purchasing, now might be the ideal time to secure a home for long-term growth and stability. However, if flexibility and lower upfront financial commitment are your priorities, renting could be a more suitable option.

But for now, let’s assume you want to buy a home and see what steps you need to take. We’ve created a clear and detailed home-buying guide to help you understand how to buy a home in Ontario.  Ready? Time to dive. 

Location and Budget Planning

Your First Steps to Homeownership

Before you start looking for a home, there are some important first considerations to think about, like where you want to live and how much money you can spend. These are just the starting points to get you ready for the next big steps of buying a house:

Location

  • Choosing Your Location: Do you prefer the vibrant life of the city or the quiet atmosphere of the suburbs? Making this choice is your first step.
  • Selecting the Type of Home: From condos and townhouses to detached homes, decide on the space that says ‘home’ to you.
  • Considering Living Arrangements: Flying solo or with family? This affects your space needs.

Budget Planning

Before you dive into home listings, it’s essential to assess your financial situation as well:

  • Calculate total monthly income.
  • List all monthly expenses.
  • Evaluate current savings against goals.
  • Sum up total debt.
  • Ensure a sufficient emergency savings fund.
  • Examine current investments for stability and growth.
  • Review the budget for potential adjustments.
  • Align readiness with short and long-term financial goals.

Look at your present finances, including your income, bills, and funds. Being financially ready to buy your home means you’re ready for both the initial and ongoing costs of owning a home.

Unsure of where to begin or which neighbourhood will feel like home?  Hamilton, Vaughan, Mississauga — the choices are plentiful. Take our quiz and find which city matches your preferences and lifestyle.

Take Our Quiz to Find Your Perfect Place to Live!

Home Buying Quiz
Which setting do you prefer for your ideal lifestyle?
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Home Buying Steps

Home Buying Checklist

Buying a home is a big step and can sometimes feel confusing. Whether it’s your first time buying a house or you’ve done it before, it’s important to know what to look out for and how to make good choices. These are home-buying steps we suggest you to follow:  

home buying checklist

Step 1

1. Savings and Down Payment

How much money do I need to buy a home? If you want to answer this question, it’s essential to consider the initial financial commitment, the down payment, which typically falls between 5% and 20% of the property’s selling price, influenced largely by your saved funds. This initial payment impacts the overall mortgage amount, applicable interest rates, and subsequent monthly payments. 

For potential homeowners with limited savings for a down payment, high-ratio mortgages become an attractive option. These mortgages require insurance in case you can’t pay, but they let you make smaller down payments.

Want to know how much of a down payment you need based on your home’s price? Let’s see. 

minimum down payment

Step 2

2. Credit Score

Diving into the world of credit scores? It’s a ride full of ups, downs, and all-around surprises! Just like navigating Ontario’s housing market, understanding what makes your credit score tick is essential. 

From the thrill of paying every bill right on time, to the balancing act of managing how much you owe, each move you make plays a starring role. And let’s not forget the seasoned journey of your credit history, the cautious adventure of opening new credit, and the diverse portfolio of credit types you hold.

factors influencing credit score

Ways to Improve Your Credit Score:

  • Pay bills on time
  • Keep credit card and revolving credit amounts low
  • Open credit accounts only when required
  • Instead of shifting debt, pay it off
  • Check your credit report for errors
Step 3

Mortgage Pre-Approval Process

The journey to homeownership in Ontario begins with obtaining a mortgage pre-approval. This foundational step is crucial as it outlines the loan amount a bank or lender is willing to lend you, based on an assessment of your income, debts, and down payment. A thorough pre-qualification optimization is essential before property hunting, ensuring you have a clear budget framework. 

Although a pre-approval letter, valid for 3 to 4 months, does not guarantee loan issuance, it provides a guaranteed interest rate and sets a realistic price range for your search in Toronto or the Greater Toronto Area (GTA). It’s a strategic move that clarifies your financial capacity, reducing the risks and uncertainties of financing once you find your ideal home.

How to Get Pre-approved?

  • Check Your Credit Score: One of the first steps you should take is checking your credit score to buy a home. Why? Well, lenders review this score to understand your creditworthiness. A higher score can help you secure better mortgage terms, so it’s wise to check your score before applying.
  • Gather Financial Documents: You’ll need to provide detailed financial information, including recent pay stubs, last two years’ tax returns, bank statements, investment account statements, proof of any other sources of income, and a list of debts (such as car loans, student loans, and credit card debt).
  • Research Lenders: Look into various lenders, including banks, credit unions, and online lenders, to compare rates and fees. Whether you opt for a bank, a mortgage broker, or specific bank representatives, ensure your choice aligns with your financial situation and goals. Remember, the right lender can offer competitive terms and rates, significantly impacting your long-term financial health. Reach out to us and we give you our best recommendations.
  • Evaluate Pre-Approval Offers: Each lender will provide you with a pre-approval letter that includes the amount they’re willing to lend you and at what interest rate.  
Step 4

4. Finding a Trusted Real Estate Agent

Finding a good real estate agent is like having a friend to help you buy a home. They know all about the housing market, how much homes are worth, and how to make good deals. When you’re picking an agent, choose someone who knows a lot about buying homes in Ontario, especially if it’s your first time. 

home buying deal

Here’s how to pick a good real estate agent:

  • Seek recommendations from trusted sources such as friends, family, or colleagues who have recently bought or sold a home. Look for an agent with a strong track record of success in your local market, particularly in properties similar to what you’re looking for. 
  • Prioritize agents who are responsive, communicative, and attentive to your specific preferences and concerns. 
  • Trust your instincts and choose an agent who not only has the experience and expertise but also makes you feel confident and comfortable throughout the process.
Step 5

5.  Searching for Homes

Once you’ve pinpointed your ideal location based on our quiz, it’s time to dive into house hunting. 

Begin with a clear vision of what you need and want in your new home. Consider factors like the number of bedrooms, the need for outdoor space, and must-have amenities. Balancing your desires with your budget is crucial. Being flexible and willing to compromise on less critical aspects can broaden your options significantly.

Once you’ve narrowed down your choices, take advantage of online real estate listings to search for available properties that match your preferences. Consider not only the surface features but also delve into the property’s condition, identifying any potential repairs or renovations that may be necessary. Your real estate agent’s insights can be invaluable in this stage. Assess how well each home aligns with your unique needs and lifestyle, ensuring that it provides the foundation for your future happiness and comfort.

Step 6

6. Making an Offer with Professional Guidance

Once you’ve found a home that ticks all your boxes, it’s time to make an offer. 

This step requires careful consideration of the home’s value, your budget, and any competing offers. 

Your real estate agent will be essential here, guiding how much to offer and any conditions to include, such as financing approval or a home inspection.

Step 7

7. Home Inspection and Due Diligence

A thorough home inspection can reveal hidden issues that could affect your decision to buy or the price you’re willing to pay. This due diligence is a critical step in ensuring that your investment is sound. Opt for a certified inspector with experience in Ontario’s housing market to get a detailed report on the property’s condition.

Step 8

8. Closing and Smooth Transition

Here we are, at the final step of buying your home: closing the deal. This is when all your efforts pay off. After months of searching, making offers, and going through inspections, it all comes down to signing the legal documents. It’s both an exciting and critical time, as your agent helps you understand the paperwork and finalize the purchase. 

Closing is when you officially become the homeowner, marking the beginning of your new life in your new home. You’ll need to be prepared for closing costs, which can include land transfer taxes, legal fees, lender fees, and adjustments.

Why Choose Us?

Want to Buy a Home in Canada? Trust BCR

The team at Big City Realty is committed to supporting you through every step of buying your home.

From assessing your financial situation and needs to connecting you with the best properties and negotiating on your behalf, we’re here to make your journey to homeownership as smooth and successful as possible.

Remember, buying a home is a significant milestone, and with the right preparation and support, you can make informed decisions that lead to finding your perfect home in Ontario.

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FAQ

Because Canadian rules require a minimum down payment, it might be difficult to purchase a property without making any down payment. Though this is less usual and has certain qualifying requirements, some programs or deals, such as the “Flex Down” scheme, enable you to borrow the down payment via a loan or line of credit.

No, using a realtor is not required when purchasing a property, but many people find that it helps with paperwork, price negotiations, and market navigation. The skills and experience of a realtor may make the purchasing process easier. You expose yourself to many risks by representing yourself.

For properties under $500,000, you should set aside a minimum of 5% of the purchase price as a down payment. For homes over $500,000, you’ll need 5% for the first $500,000 and 10% for the portion above. It’s also advised to set aside extra money for emergency savings and closing charges, which should account for 1.5% to 4% of the buying price.

Yes, but a ban on non-residents buying existing homes is in place until 2025, which may be extended to 2027. Although there are limitations on buying existing residences, foreigners interested in development or possessing work permits may purchase real estate in Canada. 

The new rule in Canada extends the ban on home purchases by foreigners up to January 1, 2027. Initially set by Prime Minister Justin Trudeau’s government to expire on January 1, 2025, this measure aims to improve housing affordability for Canadians by limiting competition from non-Canadian buyers.

In 2023, to afford a home in Canada’s expensive cities, you needed approximately over $200,000 CAD annually. Specifically, in Vancouver, the required income was about $237,000 CAD.

Do research on the neighbourhood market, determine the seller’s intentions, provide a fair offer based on similar sales, and be prepared to compromise on certain things. When negotiating, working with a competent realtor is helpful as there are many risks to being a self-represented buyer.

Yes, as we mentioned above this ban is extended to January 1, 2027. 

The Land Transfer Tax in Ontario must be paid; the amount varies based on the cost of the house. Certain cities such as Toronto will also have municipal land transfer taxes too.

Expect closing costs (lawyer fees, land transfer tax, adjustments), moving expenses, home insurance, property taxes, maintenance costs, and possible condo or association fees.