Ready to buy a new home? Better get your house in order.

Before you move forward with buying a new home, there are several housekeeping items you need to prepare.

Helpful Tips on Buying A New Home in Toronto

1. Get Pre-Approved for a Mortgage

Before making an offer on a new home, getting pre-approved for a mortgage is essential. It allows you to understand your budget and demonstrates to sellers that you are a serious buyer.

• Tip: Get pre-approved by multiple lenders to compare interest rates and terms.

• Online Resource for Mortgage Pre-Approval:

  Check out these links to CIBC, RBC, and TD Bank mortgage pre-approval or use Ratehub to compare mortgage pre-approval rates from various lenders.

Prepare yourself for buying a home. Get pre-approved for a mortgage first

2. Have your Deposit and Down Payment ready and easily accessible.

The federal government's Home Buyer's Plan (HBP) can help home buyers access their RRSP savings without incurring a penalty. If you borrow money for your down payment, please be advised that the bank will ask. If your parents are gifting you the down payment, they will need to provide a letter stating that the money is a gift and not a loan. Any loan may affect your ability to qualify for a mortgage, depending on the size of that loan.

• Home Buyers' Plan (HBP)

The HBP allows first-time home buyers to withdraw up to $60,000 from their RRSP to use toward the down payment on a home, tax-free. This is a valuable tool for buyers who need help accumulating a down payment.

You can make a withdrawal from more than one RRSP as long as you are the annuitant of each RRSP account. Your RRSP issuer will not withhold tax on withdrawn amounts of $35,000 or less. Some RRSPs, such as locked-in or group RRSPs, do not allow you to make a withdrawal from them.

Certain conditions must be met in order to be eligible to participate in the HBP:

• you must be considered a first-time home buyer. If your participation is in respect of a specified disabled person, this condition does not have to be met

• you must have a written agreement to buy or build a qualifying home, either for yourself or for a specified disabled person

• you have to be a resident of Canada throughout the period that starts when you make your first eligible withdrawal from your RRSPs under the HBP and ends when you buy or build a qualifying home

• you must intend to occupy the qualifying home as your principal place of residence within one year after buying or building it. If you buy or build a qualifying home for a specified disabled person, or help a specified disabled person to buy or build a qualifying home, the specified disabled person must intend to occupy the qualifying home as their principal place of residence within one year after buying or building it

  
  

In all cases, if you have previously participated in the HBP, you may be able to do so again if your HBP balance on January 1st of the year of the withdrawal is zero and you meet all the other HBP eligibility conditions.

The Federal Government's Home Buyers Plan can help you borrow your down payment from your RRSPs interest free

3. Calculating Closing Costs

Closing costs can range from 1.5% to 4% of the home's purchase price, so it's essential to budget for these costs when buying a home. Typical closing costs include land transfer taxes, legal fees, home inspections, and more.

• Tip: Use a closing costs calculator to estimate the extra fees on top of your mortgage.

• Tip: First-Time Home Buyers may qualify for tax rebates.

  
  

Closing costs can come as a surprise when new home buyers close the deal. Don't be caught off guard. Check out the closing cost calculator link provided in this article.

4. Buying Pre-Construction Homes: Tips and Cautions

When purchasing a pre-construction home, there are several things to consider:

• Understand The Deposit Structure: Pre-construction homes typically require larger deposits, often paid in instalments.

• Be Aware of Delays: Construction timelines can be delayed, so ensure flexibility in your plans.

• Review the Purchase Agreement Carefully: These contracts are detailed and complex, so hire a real estate lawyer to review the agreement.

• Tip: Investigate the builder’s reputation and financial stability to ensure the project will be completed as promised.

For more details on pre-construction homes, check out Tarion, which offers protection for new home buyers, including information on builder warranties and home enrolments.

Cooling Off Period for Pre-Construction Condos

In Ontario, there is a 10-day cooling-off period for pre-construction condos but not for pre-construction or new homes. Buyers may rescind their agreement of purchase and sale that begins after you receive some of these documents.

Pre-construction homes come with their own challenges and pitfalls. Consult a realtor before entering in a contract with a builder.

Making your next move

Home ownership is a big decision. Enlist the help of an experienced and patient realtor to help simplify and guide you through every stage of your journey.

Working with Donald

Donald's real estate practice began in 2013, buying, selling and leasing residential and commercial properties across the Greater Toronto Area and the province of Ontario. Working closely with buyers, sellers, and landlords, Donald combines a decade+ of experience, attention to detail, and strategy, with a sunny, practical disposition. Clients respond very positively to his full-service approach to real estate transactions, where his clients' satisfaction matters most.

Reach out to Donald Bilodeau, experienced realtor with Sutton Group-Associates realty Inc., a reputable brokerage based in Yorkville.

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