FAQ for First-Time Buyers

We know that buying your first home can be overwhelming; there’s a lot to learn as a first-time buyer.

To improve your experience, here are the answers to some of our most popular FAQs - Frequently Asked Questions.

Does the government offer any programs or rebates to help first-time buyers?

There are a number of programs available. The Home Buyer’s Plan allows you to redeem up to $25,000 tax-free from your RRSP. The Land Transfer Tax Refund for First-Time Buyers provides a refund on closing (meaning you don’t really ever to come up with the money) of up to $2,000 on Provincial Land Transfer Tax and up to $3,725 on the Toronto Land Transfer Tax. The First-Time Home Buyer Tax Credit provides a tax credit of up to $750 for closing-related costs when buying your first home.

What is mortgage loan insurance?

Mortgage loan insurance is provided by the Canada Mortgage and Housing Corporation (CMHC). This insurance is required by law to insure lenders against default on mortgages with loan-to-value ratios greater than 75%. The insurance premiums, ranging from .50% to 3.75%, are paid by you and can be added directly to your mortgage. Mortgage loan insurance is not the same as mortgage life insurance.

Do you have a list of contractors or renovators you’ve worked with?

Of course–send us an email and we’ll provide you with a list.

What are real estate comparables?

Comparables are properties similar to the home you’re making an offer on. We look at specific details: the buy-sell history, availability of similar properties and whether or not there are competing bids. This allows us to accurately calculate current market value and neighbourhood pricing. With this information we’re able to assess the fairness of the asking price and make an educated offer.

When should I start the mortgage process?

The best time to look for a mortgage is before you look for a house. This allows you to determine what you can afford when buying your first home.

We have pre-approval, now what?

Once you find your dream house, we suggest you contact your mortgage specialist to confirm your financing before you make an offer.

What are the elements of an offer?

  1. Price: This is what you’re offering to pay for your new home.
  2. Deposit: This amount of money demonstrates your good faith to the seller. It can be all or part of your down payment.
  3. Closing Date: This is the date when money changes hands and you take possession of your new home.
  4. Conditions: Freehold and condominium conditions vary. They also vary by individual property and are put in place to protect your interests. Typical conditions include the necessity of a home inspection, status certificate, and financing specifics.

What is a home inspection?

Homes, whatever their size or type, are complicated machines with a lot of moving parts. A home inspection identifies the problems you’ll have to deal with before you finalize the purchase. Many flaws aren’t obvious to the untrained eye. A home inspection covers structural, electrical, heating and air systems, plumbing, roofing, along with exterior and interior checks. Your home inspector will identify existing and potential problem areas, suggest practical solutions, and provide estimates regarding costs for any work required. Shortly after the inspection, a report summarizing the findings will be provided to you. Home inspection costs range according to size, age, and location of the home. We can introduce you to reputable home inspection providers. In some cases, the sellers might already have commissioned a recent home inspection to speed up the process.

What amount should my deposit be?

The industry standard is 5%-10% of the purchase price. This deposit is held in trust until closing and is then applied to your down payment. Deposits must be either certified cheque or bank draft and payable to the listing brokerage. Your deposit is due within 24 hours of the offer being accepted.

Do you know of any real estate lawyers?

A lawyer’s role is to represent your interests and process the legal documentation. Feld Kalia has served several of our clients and they specialize in residential and commercial real estate. They offer all-inclusive fees and are there to guide you through the closing process. Visit their web site at www.feldkalia.com for more information. You may–of course–choose your own lawyer.

What should I expect for my closing costs?

The land transfer tax will be your largest cost at closing. This is money in addition to your down payment. Use the Feld Kalia cost calculator that allows you to determine your land transfer tax and legal fees. You should set aside an additional $5,000 to cover other related expenses.

What is the land transfer tax?

The land transfer tax is the most significant closing cost you can expect to pay when buying a home. In addition to the Provincial Land Transfer Tax, Toronto buyers are also responsible for the Municipal Land Transfer Tax. First-time buyers, however, are eligible for a rebate up to a maximum of $3,725.

What is the status certificate?

The status certificate is a document dealing with the financial status of a unit and of the condo corporation. Its main focus is to inform you, the prospective owner, of the fees, of any large increase that is going to come into effect, of any special assessment that is being contemplated by the board, and any arrears or liens that a particular suite might have. In addition, it contains the condo declaration, by-laws, budget, reserve fund, insurance, management contract, rules, minutes of the last annual general meeting, and mention of any lawsuit involving the corporation. This certificate can run into one hundred pages.
The seller is most often responsible for ordering the status certificate. The seller will typically have 10 business days to provide the document to your representative. Once received, your lawyer will have three days to review it. Your lawyer will review the status and then report their findings. If all is in good standing, i.e. the building reserve fund is strong, there are no assessments planned and the building is in good health overall, the lawyer will advise you to proceed with the deal.

What is a waiver?

Waivers remove conditions from the offer making it firm and binding. Fulfillment of conditions can include arranging financing, requesting a status certificate, or booking a home inspection.

What is the average cost of parking in a condo building?

The average is $20,000 – $25,000 for downtown condominiums. If a parking space isn’t included with your condo unit, you might have the option of buying or renting a space separately.

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