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The good news is that the market is more buyers friendly. From condos to detached houses, the available options have increased. While there is less competition which keeps prices at bay.
When you choose the right professionals including your real estate agent, mortgage advisors, and lawyer, you will have peace of mind.
However, it’s always a good idea to be aware of what’s involved. The number 1 step in your journey of buying a home is defining your budget. There are 5 key things to keep in mind.

  1. Downpayment
    ● There are legally defined minimum percentages. For example: To buy up to $500,000 the minimum downpayment is 5%. So buying something for $500,000 requires a downpayment of $25,000.
    ● To buy between $500,000 and $999,000 the downpayment is 5% for the first $500,000 but it’s 10% for the remaining amount. E.g. for a residence with a purchase price of $980,000 the minimum downpayment is $73,000.
    ● For purchases over 1 million the minimum downpayment is 20%. E.g. for a residence priced at 1,3 million the minimum downpayment is $260,000.
  2. Mortgage
    Beyond the downpayment, a lender will provide you with the remaining amount. But don’t assume that a lender will offer a mortgage because you can pay the monthly payment. A lender will evaluate your income, any other loans you may have, and more. It is vital to speak with a mortgage advisor to confirm what you can borrow. Getting formally pre-approved is recommended.
    Keep in mind that pre-approvals are valid usually for up to 120 days. But if it’s the pre-approval is for a variable rate if the rates go up the amount you can borrow may be reduced.
  3. Closing costs
    These are not included in the purchase price. The biggest amount is by far the land transfer tax. Which also varies depending on the location. Toronto has a higher tax. E.g. a residence with a purchase price of 1,3 million in the city of Toronto comes with a land transfer tax bill of $44,950. The same purchase price in Mississauga would mean a land transfer tax of $22,475.
  4. First Time Home Buyer Rebate
    If you qualify as a First Time Home Buyer the rebate is a maximum of $8,475. So for the example of a 1,3 million price point in Toronto, the tax from $44,950 is reduced to $36,475. While in Mississagua the max rebate is $4,000. So the land transfer tax is reduced from $22,475 to $18,475 for a purchase of 1,3 million there.
    Closing costs include other amounts and fees such as your lawyer fee that you also need to budget for.
  5. Source of funds
    The money you use for the downpayment and for the closing costs must not be borrowed. If they come from your own savings there are certain requirements. E.g. the money to be in Canadian bank accounts for 90 days. Money from alternative sources can be used under specific guidelines. A common example is an amount gifted by a close relative or the proceeds from the sale of a property.
    It's a lot, I know. But remember that the right team of professionals will be with you every step of the way.
    Do you have any questions? Is there anything else concerning you in real estate? Contact us so we can address it through one of our upcoming articles. Or to discuss it in confidence.
January 13, 2023

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