So, you’ve decided to buy real estate in Toronto, Ontario — that’s a good first step. With the Toronto housing market continuing to be strong and the condo market rebounding, buying real estate in Toronto is a sound decision says Michelle Kam, an experienced real estate broker in the city.
However, there are some things you should know before setting your heart on a property. Here are some tips to prepare you and help you make a more informed decision during the process — especially if you’re a first-time buyer.
Ensure You Have the Down Payment
One of the barriers that prevents renters from jumping into the Toronto housing market is lack of down payment, says Michelle Kam. The amount of money you’ll need to set aside for the initial down payment depends on the selling price of the property.
For example, if you are searching for a home under $500,000, the minimum down payment is 5%. If you’re looking for a home that’s over $500,000 (but under $1 million), you’ll need 5% for the first $500,000 and 10% for the additional amount.
Keep in mind that putting down less than 20% means you will also have to buy mortgage insurance, which is cheaper with a larger down payment.
If you don’t have cash flow but have money stored away in an RRSP, you can withdraw up to $35,000 toward the down payment through the Home Buyers’ Plan without a tax penalty and have 15 years to pay it back.
Get Pre-Qualified
It’s a downer to find the home of your dreams only to be rejected for a mortgage by your bank. That’s why it’s wise to get pre-qualified for a mortgage.
Your lender will look at your financials, including whether you have steady income, and usually gives you an interest guarantee for a few months (which is handy if mortgage rates are low, which they currently are). Now you know exactly what your ceiling is when shopping for a home.
Real estate professionals like Michelle Kam can help negotiate a deal after presenting you with properties that best meet your needs.
Consider Your Goals
You should ask yourself why you’re interested in getting into the Toronto housing market, says Michelle Kam. For example, if you’re looking at it primarily from an investment standpoint, it might be a good time to scoop up a downtown condo as prices have stalled for the time being — although rental demand from students and young professionals heading back to the office can change that picture quickly.
On the other hand, if you’re looking for a place to live long term, you might want to consider a unit that’s close to certain amenities such as schools, medical centres, and grocery stores, and is on a transit line. You’ll also want to ensure the property is of sufficient size if you plan to start a family in the near future.
Research The Local Market
While the Toronto housing market as a whole is moving upwards in property values (and expected to grow more in 2021), that doesn’t mean every neighborhood is. Aside from looking for key features of the property itself, do some research on the area trends in the past several years to see which way prices are headed.
Gather any market information available from a real estate broker like Michelle Kam or search online for some of the current home prices in the area compared to similar ones in other markets.