If you are buying a home for the first time in Ontario, you're probably more than a little nervous. Don't be; thousands have done it and survived. You can too!!
The process is as simple as 1,2,3. First, find a house in your price range. Second, sign an offer that protects you and that is acceptable to the vendor. Third, close the purchase and move in.
I recommend that you get informed about the process and surround yourself with a good team who can deal with all of the issues and problems that may arise in the case of finding and buying the right home for you. In other words:
- Get informed. Canada Mortgage and Housing Corporation (CMHC) has a great website for new home buyers called Home Buying Step-by-Step: A Consumer Guide and Workbook, which is highly recommended.
- Get a good Real Estate Agent who will take the pain out of finding the right house in the right location at the right price for you. Make sure you know who the agent is working for (you, the seller, or both).
- Get a good Mortgage Broker who will "shop" your financial information to get you the best mortgage with the best rate, without any cost to you. They can pre-qualify you for a mortgage so you will know how much you can afford.
- Get a good Home Inspector who will inspect the home you wish to buy and provide you with a report of any defects, difficulties or problems.
- Get a good Lawyer who will "quarterback" your purchase and coordinate you and your team to a smooth closing. He or she will also provide you with assurance of good title (by way of his/her opinion or title insurance) If asked, the lawyer will review or prepare offers to purchase and will ensure that clauses designed to protect you are included (such as conditions for financing, home inspection, etc.).
- Determine how much you can afford - Why waste time looking at homes that are not in your price range?
- Determine your down payment - This will allow you to calculate how much you need to borrow and establish a price point.
- Arrange a pre-qualified for a mortgage - This will give you peace of mind knowing that you've already qualified for the mortgage you will require in order to purchase the home in your price range.
- Know where you want to live - Do some neighbourhood research ahead of time and narrow down the areas that best suit your needs.
Things to watch out for
Home buyers in Ontario should be aware of the following:
- "Buyers Beware" is still the law in Ontario, with certain expectation, so be sure to check the home you are planning to buy very carefully. Also insist on the Vendor delivering a completed and signed Vendor Disclosure Statement before your offer to buy. In other words, be sure to do your due diligence investigations.
- Land Transfer Tax ("LTT") is payable by the buyer on registration of the transfer. LTT is a percentage of the purchase price for the home: One-half of a percent on the first $55,000, one percent thereafter to $250,000 and 1.5 percent thereafter, and an additional tax of one half of a percent for lands value at more than $400,000 if it contains one or two single family residents.
- In Ontario, agreements respecting land must be in writing, signed and witnessed to be enforceable. Be sure the written offer includes terms, conditions and warranties respecting everything that is important to you.
- Fixtures and Chattels. Fixtures are attached to the lands; chattels are not, but there is confusing case law on the issue, so "when in doubt, spell it out" in the contract. For example, a dishwasher may appear to be a fixture, but it may not be, so stipulate in the Agreement that it is a fixture that is included in the purchase.