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Are you finally ready to take the leap?  This is it!  You’ve saved your down payment, you’ve chosen your neighbourhood, the style of home you’re looking for and you’re ready to hit the ground running, deposit cheque in hand.

Before you jump into your home search, make sure you understand the process, financial responsibility and do some detailed research.  Buying a home in Toronto is often categorized as daunting and stressful – and there is some truth to this. However, being well prepared will significantly lessen this burden and get you in tip top shape to confidently shop for a house or a condo.

Nested has years of experience working with first time home buyers. Over the years we’ve learned from our clients what challenges, struggles and questions they had along the way and how to solve them effectively. When you’re armed with knowledge you will make better choices and buy smarter.

★ Read more about how to be successful and efficient in Toronto’s competitive housing market in this recent blog post.

Let’s explore your home buying checklist:

1) Get your financing pre-approved

Mortgage pre-approval takes time.  There are many steps involved in this process, and many stages of approval before you get the final stamp, so to speak.  We recommend starting this process at least 2-3 months ahead of your planned home search so you have time to wrap your head around your budget.  Knowing what you can afford, for real, will really help narrow down your search and save you lots of time, and possibly heartache.  It is important to know the differences in mortgage payments relative to various price points so you can keep your options open.  The difference between $1,400,000 house and $1,600,000 house can be quite significant, however the actual monthly mortgage payments might still be affordable and within your price range.

You will also need to have a minimum 5% deposit of the purchase price of a home, readily available within hours which is required to submit with an offer. Having an available deposit signals to the seller that you are a qualified buyer, committed to closing.  This money is only deposited if your offer is successful.

2) Understand the costs involved

Mortgage approval is one thing, but understanding other costs involved in purchasing and owning a home is another important piece that is often missed by first time buyers. Mortgage and Lawyer fees are relatively low in comparison to Toronto’s home prices. These should cost you approximately $2000-$3000 (plus any adjustments on closing).

Land transfer tax is a big one and needs to be paid on closing.  Unfortunately, this is not a cost that can be added to your mortgage.  As an example, land transfer tax on $1,5000,000 house is just shy of $45,000, including the first home buyer rebate.

Check out our handy Land Transfer Tax Calculator

In addition to these costs, there are also some unforeseen costs to be prepared for, such as yearly home maintenance.  Will this home need a new roof sooner than later? Do you want to update the landscaping to make it your own?  These are all factors to consider when determining what price point is best for you.


Read these additional buyer resources that will help guide you through the process:

3) Identify your wants and be open to new ideas

How do you know where to start looking if you don’t know what you want? It’s important to identify what items are at the top of the list.  Type of home, condo or house? Location, neighbourhood, parking, amenities, etc.

Consider how handy you are and if a potential renovation is something you can handle. Depending on your budget, chances are doing some cosmetic updates is in your future. Today’s buyer is willing to pay top dollar for a completely turn-key home and if you aren’t afraid of a little renovation dust, this might get you a larger home in a better neighbourhood.

So you’ve made your list of wants, lets go over it and see where you’re willing to make a compromise. Are you open to a different neighbourhood? A bungalow vs. a 2 storey?  If you can’t afford the house of your dreams right now, waiting to save more money will potentially price you out completely! Homes in desirable neighbourhoods appreciate a minimum of 10% per year and sometimes significantly more.  We saw prices jump upwards of 18% in 2020! As a first time buyer, your goal should always be to get into the market and work your way up every 7-10 years. Real estate is a business.

Learn how to avoid these common mistakes as a first-time home buyer by reading: Climbing The Property Ladder: 101

4) Hire an experienced realtor

We can’t stress this enough. Don’t even try to navigate the home buying process by yourself. An experienced realtor will know right away if the house is priced correctly, how to read between the lines of the home inspection, and can even see the renovation potential from the first walk-through,  this isn’t the time to hire your friend’s sister’s brother’s cousin’s daughter.  Everyone has to start somewhere, but buying your first home is the single biggest financial transaction you will make up to that point.  It’s best to go with someone with experience, expertise and insider intel.

Did you know that home realtor fees are paid for by the seller?  This is one of the biggest mistakes we see first time buyers make. The seller’s agent’s primary goal is to get the most amount of money for their client’s home.  This alone is reason enough to hire your own, experienced realtor.

Your realtor should be very knowledgeable in the top neighbourhoods on your list. They will confidently help you figure out what types of homes will be feasible in your budget. Working with a realtor is a two way street.  A good realtor will educate you along the process and will teach you how to evaluate homes and potential opportunities you may not consider otherwise.

If you are willing to do some renovations, hire a realtor who is knowledgeable in renovations and can help you identify a good opportunity versus a complete money pit. Chances are a realtor like that will also have valuable connections in the construction and trades industry.

5) Wrap your head around “The Seller’s Market”

What does that even mean? Toronto has been consistently in a seller’s market for years. This means the supply of homes for sale is lower than demand of buyers who want to buy them. We have seen minor market fluctuations over the years, often with an accelerated return back to a fierce seller’s market in less than a few months.

In a seller’s market you are almost always competing with several other buyers for one house, this is called a multiple offer scenario. This also means that you are often paying well above the list price – anywhere from $50,000 for condos to $200-$300 thousand or more for homes in desirable locations. In a multiple offer situation, you need to be ok with the fact that you will pay more than the other buyers bidding on the same house. There has to be a winner. A big mistake buyers often make is focusing on how they are paying today versus how much equity they will make by getting into the market or how much more they will need to pay a few months down the road as prices increase.  They say the best time to plant a tree was 20 years ago, the second best time is now.  Waiting to get into the market will ultimately cost you more money for less house.  The time to get into the market is now.

Understand that the listing price is a strategy that has been adapted by sellers to entice multiple offers and get the absolute most money for their house. This is here to stay and wrapping your head around this incredibly important if you want to be successful at buying a home in Toronto. There are no deals in desirable locations in the city.  Always remember, that the only way to make money in real estate is to actually own real estate.

As a future seller yourself , when it’s time for an upsize,  you will be doing the same and your ultimate goal will be to bank as much money from the home sale as possible. Like we said earlier, real estate is a business, and everyone is in it to make money at some point.


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