Buying a home is a significant life milestone. For many individuals, buying a home is one of the largest purchases they will ever make. Purchasing involves an intricate series of steps that, when navigated wisely, can lead to a rewarding investment and a place you can call your own. This guide is designed to help you understand and manage the process. It summarizes the process in simple terms.
- The first step in the purchasing process is determining your maximum budget. For many, this means obtaining a mortgage pre-approval.
- You will need to speak to a mortgage professional. This may be the direct representative of a lender, such as a mortgage advisor employed by a bank; or, you may choose to work with a mortgage broker or agent in representation of several lenders.
- Depending on the strength of your application, your mortgage broker or agent will recommend a variety of lenders and mortgage products.
- Understand that different mortgage brokers/agents have access to different mortgage products. You will want to work with a mortgage broker/agent that can get your application in front of the greatest number of eyes, as well as help you assess your monthly cost to carry your existing housing and personal expenses.
- Mortgage brokerages that generate a high volume of business are oftentimes favoured by a larger number of lenders. Don't select a mortgage broker based on personal relationship, work with someone that has access to the greatest pool of lenders and most advantageous terms. This will get your application to get in front of more eyes.
- To see whether you qualify for a mortgage, check out our mortgage calculator and application below:
- Your mortgage professional will collect a variety of information from you, including documents supporting your income and consent to obtain a credit report.
- If you have strong credit and high earnings, your mortgage broker or agent may submit your application to a chartered bank for a mortgage, commonly called a primary or "A" lender, as they have the most stringent requirements but generally offer the lowest rates to borrowers.
- Alternatively, they may recommend a secondary lender with less stringent terms but higher interest rates, in the event that you possess inferior credit and earnings. These lenders are usually institutions and commonly called "B" lenders.
- Private lending may also be an option, where lenders extend mortgages to individuals based exclusively on the percentage of their loan to the total value of the property, oftentimes helping buyers with poor credentials and very large downpayments.
- Once you qualify, your mortgage broker or agent will issue a letter confirming the total mortgage value for which you are pre-approved, allowing you to answer the first question when buying a property - how much do I qualify for?
- Ask your REALTOR® about a Buyer Representation Agreement, required under the Trust in Real Estate Services Act to be signed at the outset of a REALTOR® providing their knowledge, advice, and services to you.
- In addition to services, this agreement extends several protections and duties to you as a tenant, including the duty of conscientious care, obedience, loyalty, good faith and confidentiality and ensures that your interests come first.
- Determine your target community - are you looking to purchase for personal use, where proximity to work, amenities and transportation may be most important? Perhaps you are looking to invest in an area that boasts the highest cash flow or appreciation.
- Make a list of your must haves and wants, such as the number of bedrooms, bathrooms, interior finishes, garage space to name a few.
- Your REALTOR ® will help you establish and assess your goals, as well as provide practical advice on which communities and property types will help you best achieve your goals.
- Once you have selected a community and property type, instruct your REALTOR ® to evaluate average prices in your community of interest. Ensure that the market prices for properties are within your budget.
- Check out the Neighbourhood Value Calculator offered below to discover what properties are selling for in your neighbourhood of interest.
Neighbourhood Value Calculator
- Work with your REALTOR® in your search for properties. They will scour the market using various resources, including the Multiple Listing Service System, online listing platforms, real estate websites, classified ads, and social media groups.
- Your REALTOR® will book appointments and attend viewing appointments with you, sharing their opinions and experiences with you along the way.
- During these viewings, pay close attention to the property's condition, safety features, and available amenities.
- Prepare a list of questions that your REALTOR® will ask the seller or listing representative after the viewing, covering topics such as undisclosed features, outstanding maintenance items, outstanding work, deposit and possession terms, and any specific rules or restrictions around property use.
- Once you have selected a property of interest and decide you wish to purchase it, you will submit an offer. If you are submitting an offer to purchase a residential property, your offer will be drafted on the Ontario Real Estate Association Agreement of Purchase and Sale - Residential.
Four main factors to consider include: offer price, deposit amount, closing date and conditions.
- If you are arranging mortgage financing, you may choose to make your offer conditional on approval, which allows you to back out of the transaction if for some reason your mortgage lender does not provide you with a mortgage commitment or extends unsatisfactory terms.
- You may also choose to make your offer conditional on inspection by a certified home inspector.
A home inspector is important in evaluating the overall integrity of a home and may be able to identify issues that are not readily apparent to the average consumer or that were immediately apparent in the initial showing.
- Your REALTOR ® will help you draft all offer documentation for submission to the listing representative or seller. Oftentimes, your REALTOR ® will negotiate on your behalf, and advise on the best offer strategy.
- Sometimes, sellers deliberately list their properties significantly below the price they would reasonably expect to obtain at market. They do this in an attempt to create competition and initiate a bidding war among prospective purchasers. Your REALTOR ® can help you understand when a seller is attempting to do this and how to best navigate the process.
- Offers to purchase are oftentimes made irrevocable for a fixed period of time, over which the seller can review its elements and decide on how they wish to respond.
- A seller will respond to your offer with one of three decisions: they may accept your offer, reject your offer or submit a counter-offer with modified terms and conditions.
- Carefully review the agreement of purchase and sale before signing. Ensure you understand all the terms and conditions. Once you sign an offer, it is made irrevocable, which means you cannot rescind or otherwise take back your offer for a fixed period of time.
- Seek clarification from your REALTOR® on any clauses or language that you find unclear or concerning. It's essential to have a clear understanding of your obligations and rights as a purchaser.
- Once both parties have affixed their signatures and the accepting party has confirmed acceptance of an offer or counteroffer, then the agreement is binding, and you will be required to submit the negotiated deposit to secure the purchase.
- If the seller is working with a REALTOR®, the deposit is oftentimes deposited in their brokerage's trust account.
- Execution by both parties triggers a conditional period, if applicable. During this period, you will conduct your home inspection and review its findings, as well as submit any further required documents to your mortgage lender to obtain a mortgage commitment.
- A copy of the agreement of purchase and sale, as well as of the listing will be sent to the lender through your mortgage broker or agent. An appraisal of the property will also be arranged during this period.
- This additional information will be reviewed by the lender. If all is approved the lender will finalize the loan and provide you with a mortgage commitment.
- Your home inspector will conduct the inspection during this period and provide you with an inspection report outlining any hazards, safety concerns or deficiencies. You may then make the decision to proceed with the purchase, request repairs or negotiate a discount due to the presence of deficiencies.
- If all is acceptable, your REALTOR® will draft a notice of fulfillment of conditions to be signed by you. This will notify the seller that the agreement is "firm," pending completion.
- In Ontario, each party to a transaction in real estate requires representation by a lawyer. At the time of acceptance/execution you will provide your REALTOR® with the lawyer you wish to use for the purposes of closing.
- Your lawyer will conduct a title search a few weeks before closing to ensure that there are no undisclosed charges against the property. You may elect to purchase title insurance, protecting you against undisclosed charges.
- Your lawyer will prepare any undertakings or documents required by the mortgage lender for signing and will receive any outstanding funds from you or your lender for provision to the seller's lawyer on the date of closing.
- You may choose to conduct a final walkthrough of the property before closing to ensure that any required repairs have been completed and that the state of the property has not been materially changed since initially viewing the property.
- On the date of closing keys will be exchanged, and the lawyers will agree on a statement of adjustments outlining the proportion of the recurring expenses that must be paid by the buyer and seller, such as utilities, taxes or maintenance fees (if applicable).
- Plan your move ahead of time by renting a moving vehicle or arranging a moving company. Start packing well in advance of your move-in.
- Ensure that you register for utility accounts, including hydro, heat, water and internet; or otherwise transfer existing services.
- Conduct regular maintenance to help protect your investment and ensure that value is not lost.
- Ensure that you stay up to date on property taxes and insurance, as failure to pay either may affect your standing with your mortgage lender or otherwise be registered as a charge against your property.
Buying a property in Ontario can be a rewarding experience when approached with knowledge and preparation. By following this guide, you can make informed decisions, safeguard your rights, and experience a successful and fair negotiation. Whether you're a first-time homebuyer or have purchased before, staying informed and proactive will help you navigate the market effectively. Please note this guide is intended for informational and educational purposes only and is not intended to be a comprehensive instruction to buyers and sellers.
Working with a REALTOR® is a decision that can make a significant difference in your home buying experience. Whether you're a first-time buyer or a seasoned investor, the benefits of having a real estate professional by your side are numerous, and they become evident throughout the entire journey of finding and purchasing a home.
First and foremost, a REALTOR® is your trusted guide in navigating the complex and ever-changing real estate market. They possess a wealth of knowledge about local neighborhoods, market trends, and property values. With their expertise, they can help you identify areas that align with your preferences, lifestyle, and budget. This insight is invaluable, especially if you're unfamiliar with the region or city you're considering for your new home.
A REALTOR®'s role goes beyond simply showing you properties. They work as your advocate, ensuring that your interests are protected at every step. One of the most crucial aspects of this is negotiating on your behalf. REALTORS® are skilled negotiators with experience in handling various real estate transactions. They can help you secure the best possible deal, whether it's in terms of price, contingencies, or repairs, ensuring that you get the most value out of your investment.
Moreover, a REALTOR® provides access to a vast network of resources. They can connect you with trusted mortgage brokers, home inspectors, and contractors, streamlining the process and saving you time and effort. These connections can be especially beneficial when it comes to arranging financing, getting a thorough inspection, or addressing any necessary repairs before closing the deal.
Additionally, REALTORS® have access to the Multiple Listing Service (MLS), a comprehensive database of properties listed for sale. This gives them the ability to pinpoint properties that match your criteria quickly and efficiently, saving you from the time-consuming process of sifting through online listings. They may also provide you with exclusive listings and early access to new properties, giving you a competitive edge in a competitive market.
Throughout the buying process, a REALTOR® acts as your trusted advisor, answering your questions, addressing your concerns, and offering guidance based on their experience. They ensure that you have all the information you need to make informed decisions, and they remain by your side from the initial search to the closing table, ensuring a smooth and successful transaction.
