FAQs for First Time Home Buyers

+FIRST TIME HOME BUYER PROCESS:

Step 1: Get Pre-Qualified for a Mortgage

Step 2: Selecting a Realtor

Step 3: Selecting a Lawyer

Step 4: House Hunting

Step 5: Make the Offer

Step 6: Home Inspection

Step 7: Finalizing the Deal

Step 8: Moving Preparations

Step 9: Closing Day

+What’s A Deposit
After you’ve made an offer on a property in Canada, you’ll need to provide a deposit – usually around 5% of the purchase price in Toronto – within 24 hours. That deposit is held in trust by the listing brokerage and forms part of the down payment when it comes time to take possession of the property. It’s a good idea to open a Canadian bank account and have the deposit in the bank account when you start the search for a property – when you are ready to pay the deposit, they can either issue a certified cheque for you, or they can arrange to send the deposit funds via wire transfer.
+ How Much Do I Need To Put Down And When Do I Need It?
 

BEFORE CLOSING
Deposit + Downpayment Usually 5% of the purchase price in Toronto, paid within 24 hours of your offer being accepted
Property Appraisal $400-$500 (often paid by lender)
Home Inspection $400 - $600
ON CLOSING
Balance of the Purchase Price  the purchase price - your initial deposit. Usually, the bulk will come from your lender and become your mortgage
Legal Fees  Approximately $1,800 for a $500,000 purchase
Fire Insurance $800/Yr
Property Survey  $1,000-$2,000 (if Required)
Ontario Land Transfer Tax  varies depending on purchase price
Toronto Land Transfer Tax varies depending on purchase price
HST Applicable on RESALE homes only
+What Kind Of Closing Costs Should I Expect To Pay?
  1. RRSP
  • The HomeBuyer’s Program allows people to take out up to $25,000 tax-free out of their RRSP to finance the purchase of a house. Just keep in mind that the money must be in your RRSP at least 90 days before the purchase of your house. This is advantageous for Canadians because generally speaking, early withdrawals from RRSPs are considered taxable income. In this case, they’re exempt but you must start repaying the amount borrowed from the RRSP two years after you buy over a 15-year period
  1. Land Transfer Tax Refund
  • Up to $2,000 on Ontario Land Transfer Tax &
  • Up to $3,725 on Toronto Land Transfer Tax
  1. First Time Home Buyer Tax Credit
  • Allows first-time buyers in Canada the opportunity to recover some of the costs associated with their purchase. It helps offset legal fees, inspections, and other similar closing costs. The First-time Home Buyer’s Tax Credit is a non-refundable credit and is valued at $750
  1. GST/HST New Housing Rebate
  • If you buy your home before it’s built, or if you substantially renovate an existing home, you could qualify for a rebate a portion of the sales tax GST/HST
  • The amount depends on the purchase price of the home, and can only be claimed if the net purchase price is $450,000 or less
  • This is available to all Canadians who qualify regardless of whether they’ve owned a home before
+What Government Programs are Available to Help with Closing Costs?

Most of us start out as renters because it doesn’t require a big upfront financial investment. But the downside to renting is that your monthly payments are a pure expense. In other words, once you make them, they’re gone forever.

On the other hand, when you own a home, there are some nice perks, such as:

  • A portion of each payment reduces your outstanding loan balance each month
  • The market value of your home may rise over time, allowing you to build equity.
  • Your mortgage interest and property taxes can be deducted from your taxable income each year
  • A great sense of pride in home ownership as it can establish independence
  • Have your own space and freedom to do what you want with the place
  • No longer subject to insecurities about when landlord may raise the rent or even ask you to move out