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First Time Buyers

first time buyers There may be nothing as exciting as the purchase of your first home... the great feeling you get when the keys are handed to you and you're standing in your new living room. PLUS, being a first time buyers gives you some advantages that other buyers do not have, including:
  • the ability to buy a home with as little as 5% down payment
  • the opportunity to borrow from your RRSPs interest free
  • exemptions from Toronto's land tranfer tax

Buying your first property may seem daunting and stressful, but if you follow some simple rules, the whole experience will be a positive one for you. Below we present some tips to make sure that you realize your dreams.

Set Your Goals

Your first task to set your goals. What kind of home do you want? What area? What features (schools, parks, recreational facilities, proximity to work, etc?). What price range can you afford? Answering these questions with the help of your agent will allow you to develop an effective plan for searching out that perfect home.

Your agent can set you up on a Property Match process so that you receive new listings in your area and price range directly from the Toronto Real Estate Board database. That way you will never miss out on a hot new listing.

Know Your Limits

How much can you afford to pay? The rule of thumb is that your Total Debt Service (TDS) ratio should not exceed 40% of your monthly income. You can work this out by dividing your principal (original purchase price minus the downpayment), interest, property tax, heating, half of condo fees and any other monthly financial obligations such as credit card payments, car payments, etc against your gross monthly income and multiplying by 100.

You will also have to factor in closing costs if your offer is successful. These will include some or all of the following: lawyers fees (should be between 650 and 900 dollars, ask your agent for a good but fair lawyer); land transfer tax (currently 1% for Canada, you may pay some transfer tax for the city of Toronto - ask your agent (currently first time buyers are exempt.), Also the buyer may opt to pay some of this if you are prepared to buy their property for close to thewir price. (everything is negotiable); survey; home inspection; CMHC fees if you have a high-ratio mortgage (less that 20%); these other items are dispursements and should not cost more than $700 altogether: registration fees; compliance letters; title insurance; utility connection charges, etc. Your agent can help you with all of these details.

Get Pre-Approved

Nothing is more frustrating than losing an offer on a home because your financing fell through, or that your offer was conditional on getting financing approved. Get pre-approved first through your mortgage manager or mortgage broker so that you can submit an offer confidently. Your agent can help arrange meetings with your choice of different mortgage experts.

Start Looking

Your Realtor should take you to see a lot of homes. Both below and above your ideal price.

This is the fun part. Go to open houses, or get your agent to arrange private showings of the homes you are interested in. Take notes to keep track of the homes you have visited. If you find a home you think is the one, have your agent register an offer. At this point, the listing agent will require a deposit, which varies by area and type of property, but is usually around 5%. The deposit will be held in the listing agent's trust account until the transaction closes, or is mutually aborted. If interest has accrued on the deposit it will be paid after closing.