Purchase A Property

A Simple Guide To Buying Your Home With Real Pavel

Buying a home is an exciting milestone. However, it is also one of the most important financial decisions of your life. Whether you’re buying a condo in Toronto or a semi-detached house in GTA, the entire process can seem overwhelming without the right guidance and knowledge of an experienced real estate agent. 

We, at Real Pavel, walk alongside you at every step of your home buying journey and help you make the right decisions to become a proud homeowner in Toronto and GTA.

A Simple Guide To Buying Your Home With Real Pavel

Steps for Buying a Home

First-Time Home Buyers  

The process of buying a house might seem daunting and exhausting if you are a first-time home buyer. Do not fret as Pavel and his team of experienced realtors are here to break down the home buying process into 6 easy steps:

1. List down factors that make your ideal home

You might already have a vision of what your dream home looks like. But have you considered all the factors that can influence your preferences and choices while buying a house? The first step of home buying involves answering a series of questions that will help us figure out your ideal home preferences. 

  • Type of home: Condo, Co-Op Housing, Apartment, Townhouse, Detached House, Semi-Detached House, Cottage
  • Features of Home: Number of bedrooms, Number of Bathrooms, Backyard, Swimming Pool, Number of Storeys, Fully Renovated or Fixer Upper, Garage, Flooring 
  • Location: Urban/suburban/country,  Preferred city/town/neighbourhood, the distance between home and work, proximity to schools, Neighbourhood attractions.

2. Budget and Mortgage

The budget for your dream home is often dictated by the mortgage amount you are approved for. Apart from saving the minimum 5% down payment towards buying the house, you also must ideally look for a pre-approved mortgage from a bank. You can choose between fixed and variable mortgage rates according to the current market trends. Mortgage amount is calculated based on two factors:

i) Ratio of Gross Debt Service with your monthly income

ii) Ratio of Total Debt Service with your monthly income  

To get the best deal on a pre-approved mortgage, we advise you to work with a reputed mortgage broker. If you are paying less than 20% on a down payment, then you must opt for mortgage insurance. Apart from getting a mortgage, at the time of making an offer, you would need a minimum of 5% deposit, and money to pay for mortgage insurance, real estate lawyer fees, and land transfer tax. 

Our experts at Real Pavel can help you figure out your budget and mortgage needs as it is the most crucial step in the home buying process.

3. Hiring the right people in your team

Buying a home requires teamwork. To guide you through the various nitty-gritty of the home buying process, Pavel with The Matt&Ben team have curated a list of reputed mortgage brokers, home inspectors, real estate lawyers, etc in Toronto and GTA.

  • Real Estate Agent - From figuring out finances and hunting the ideal house to negotiating while making the offer, you need a trusted realtor by your side throughout the home buying process.    
  • Mortgage Broker - They can help you get the best mortgage deal in terms of mortgage rate and mortgage amount. We can put you in touch with the best mortgage brokers in and around Toronto.  
  • Home Inspector - They inspect the house for any structural flaws and major repairs. Their findings often influence the offer you make towards buying the house. We can arrange for a professional home inspector once you have your heart set on a house.  
  • Home Renovation Contractors - If you buy a fixer-upper or are planning to remodel your home to your preferences, you would need construction contractors to get the job done. We can connect you with the best home renovators and construction specialists in Toronto and GTA.   
  • Real Estate Lawyers: Lastly, you would need a knowledgeable real estate lawyer who can take care of legal paperwork to make you the lawful owners of a fantastic house.

4. House Hunting

Randomly browsing through house listings on Realtor.ca doesn’t constitute house hunting. A proper house hunt is driven by a sense of urgency in finding your dream home. We, at Real Pavel, carefully go through hundreds of online house listings and filter out potential houses based on your preferences and budget. We share this customized list of houses with you for online viewing. Once you like a property, we arrange for an in-person house viewing. If you like the house, we move on to the next steps. Otherwise, we repeat the house hunting cycle again till you find the house you deserve.

5. Making an offer

Once you like a house and have it examined by the home inspector, it’s time to make an offer. As a first-time home buyer, making an offer can be a stressful process as it involves a lot of documentation and tests your negotiation skills. In the able hands of expert realtors like Pavel, be rest assured that they will negotiate smartly with the seller to make the best offer for the house on your behalf. The process of making an offer involves submitting an Agreement of Purchase and Sale. 

Agreement of Purchase and Sale is a legal document that consists of the following: 

  • The final amount you agree to pay for the house
  • The deposit or down payment amount 
  • Closing date 
  • List of appliance inclusions if any 
  • Fulfillment of all necessary conditions - Financial obligations like mortgage, mortgage insurance, etc., home inspection report, sale of property condition. etc.
  • FinTrac background checks if a deposit amount of $10,000 or above is paid in cash.

Once you make the initial offer through the Agreement of Purchase and Sale, we will hold rounds of negotiations with the seller and try to get your dream home for a fair deal.

6. Closing the deal

If the seller accepts your offer, then congratulations! You are almost a new home buyer. We still need to close the deal by handling the paperwork for transferring the property deed from the seller to you. Once all the conditions mentioned in the offer have been met, the deal will be closed by the real estate lawyer with the help of your lender and realtor.

And Voila! You are a first-time homeowner now!

 

Seasoned Home Buyer

Anyone who already owns a home or a property and wishes to buy another house is referred to as a seasoned home buyer. Buying a house as a seasoned home buyer is not much different compared to the process of first-time home buying.

Apart from the six standard steps of first-time home buying, you also have to decide on your current house. We, at Real Pavel, help you make the right decision with regards to your existing home by asking a series of questions:

  1. Do you want to sell or rent your current house? Most homeowners sell or lease their property while buying a new home. While selling the house reduces their need for a hefty mortgage amount on the new home, leasing the house covers the monthly mortgage premiums on the new home. 
  2. Do you have an outstanding mortgage on your current home? If you haven’t repaid your mortgage on your existing home, you can either close that mortgage before moving on to a new mortgage for a new home or opt for a second mortgage.
  3. How do you plan to finance your new home? If you are not selling your current property and are still repaying the mortgage, we will have to discuss your options for financing your new home. Would you be interested in a second mortgage or HELOC? 

 

If you are looking to sell your home before purchasing a new house, check out Real Pavel’s Selling Your Property page.

Want to know the benefits of working with Real Pavel? Click here.

For all your queries about buying a home, please contact us with your needs and preferences!

Frequently Asked Questions

Here are some commonly-asked questions by homebuyers:

Do I really need a realtor to buy a home?

Many homebuyers wonder about the role of a realtor in the home buying process as they feel they can directly contact the listing agent and make an offer. You must understand that the listing agent is working to get the best possible price for the seller, so they do not have your best interest while accepting the offer. A realtor’s knowledge not just guides you through the financial and legal paperwork involved in buying a home, but can also help a great deal in finding the perfect home and negotiating the offer.

I’m thinking about buying my first home. Where do I start?

If you are a first-time homebuyer, figuring out the budget is possibly the best place to start. Get in touch with a bank or a reputed lender to ascertain the maximum mortgage amount you can get for buying a home. Knowing your mortgage amount helps you decide your buying budget, and puts you on the right track on the search for your dream home. We can connect you with trusted mortgage brokers to help you secure a good mortgage deal.

How do I get the best mortgage rates?

In general, mortgage amount and mortgage rate are decided by a number of factors such as your credit score, your monthly income, gross debt service, total debt service, and the current Bank of Canada key interest rate. The rates might also differ based on fixed or variable mortgage rates. In order to simplify the process of mortgage approval, we recommend getting in touch with a reliable mortgage broker in GTA. We can put you in touch with the best mortgage brokers in the city to get you the best possible mortgage rates.

Do I need to pay Realtor Fees?

Many first-time homebuyers wonder if they need a realtor since they don’t want to spend money on realtor fees. What most homebuyers don’t know is that, on most occasions, it is the seller who pays realtor fees to the buyer’s realtor. We pledge on finding the perfect home for you and do not expect any commission or fees for our service.

How long will it take to seal the deal when buying a house?

Depending on various factors, buying a home that meets your requirements can take anywhere between a week to a couple of months. From getting the mortgage approved and finding the house to making an offer and closing the deal, a buyer needs to be patient throughout the process of homebuying. Working with an experienced realtor like Pavel not just simplifies the steps you need to take as a homebuyer but also helps you deal with the stress of the homebuying process.

Is it necessary to pay a 20% down payment?

While the higher the down payment amount, the lesser will be your mortgage and the higher will the chances of the seller accepting your offer, you don’t necessarily have to pay a 20% down payment. 

 

If your deposit is less than 20%, you will have to get mortgage loan insurance. The closer your deposit is to 20% of property purchase price, the lesser will be your mortgage loan insurance.

 

To know more about the down payment, check out: https://www.canada.ca/en/financial-consumer-agency/services/mortgages/down-payment.html.

Do I have to pay a land transfer tax in Ontario?

Apart from the deposit amount, the homebuyer has to pay home inspection fees, real estate lawyer fees, mortgage insurance and land transfer tax. The real estate lawyer will perform a land title search to find any claims or liens that need to be taken care of by the seller. Once all is clear in the title search, paying land transfer tax marks the transfer of ownership of the property. In Ontario, a buyer has to pay municipal as well as provincial land transfer tax. 

 

Here’s how municipal and provincial land transfer tax works in Toronto: 


 

Property Purchase price

Municipal Land transfer Rate

Provincial Land Transfer Rate

$ 0.01 to $55,000

0.5%

0.5%

$55,000.01 to $250,000

1%

1%

$250,000.01 to $400,000

1.5%

1.5%

$400,000.01 to $2,000,000

2%

2%

Above $2,000,000

2.5%

2.5%

 

If you are a first time home buyer, you get a maximum municipal tax rebate of $4,475 and a maximum provincial tax rebate of $4,000. 

 

For example, if you are buying a house of $500,000 in Toronto, your land transfer tax will be: 

 

Municipal Land Transfer tax: ($55000 * 0.5%) + (($250,000-$55,000) * 1%) + (($400,000 - $250,000) * 1.5%) + (($500,000 - $400,000) * 2%) =  $6,475

 

After first-time homebuyer tax rebate of $4,475, municipal land transfer tax = $6,475 - $4,475 = $2,000, 

 

Provincial Land Transfer tax: ($55000 * 0.5%) + (($250,000-$55,000) * 1%) + (($400,000 - $250,000) * 1.5%) + (($500,000 - $400,000) * 2%) =  $6,475

 

After first-time homebuyer tax rebate of $4,000, provincial land transfer tax = $6,475 - $4,000 =  $2,475

 

Thus, the total land transfer tax that the buyer has to pay for purchasing a $500,000 house in Toronto is $4,475

What is mortgage loan insurance?

If your down payment towards a house is less than 20%, you will need to get mortgage loan insurance. This helps protect the lender in case you are unable to make payments. It also ensures that you can still get a reasonable interest rate even with a lower percentage of down payment. It ensures a win-win situation for both the buyer and the lender.

Can I skip the home inspection?

Well, you do have the option to not conduct a thorough home inspection. However, we at Real Pavel strongly recommend a home inspection from a qualified home inspector prior to making an offer. A home inspection can save you a world of trouble and a truckload of money by highlighting the damages and repairs to the home that would require fixing. Working with Real Pavel of The Matt and Ben team puts you in touch with qualified home inspectors.

What happens after I make an offer?

Once you make an offer to buy a home, the seller can either accept the offer, send a counter offer, or reject the offer. If the seller accepts the offer, you are very close to becoming a homebuyer. If the seller sends a counter offer, it starts a negotiation process between the seller and buyer’s agent in an attempt to get a fair deal for both parties. The seller can reject your offer for numerous reasons but they are not legally obliged to disclose the reason for rejection. Also, please note that it is not advisable to put in offers on two different houses at the same time as it might lead to trouble if both get accepted.     

What are my options if a seller rejects an offer?

A seller could reject your offer for a lot of reasons:

 

i. If your offer is way too low compared to the market price. 

ii. If they have better offers in terms of money from other potential homebuyers. 

iii.If your deposit money is low enough to make the seller doubt your purchasing capabilities. 

iv. If your offer has financing conditions, and the seller finds another offer without financing conditions.  

 

If a seller rejects your offer, you still have the option of sending a new purchase offer for the seller to reconsider. On the other hand, if a seller rejects your offer, you can look for other properties to make an offer.

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