How to Succeed as a First Time Home Buyer in Ontario

June 27, 2022

You’re finally in the market to buy your first-ever home. It may feel daunting to take this big scary leap in your life but the excitement of owning your very own home overwrites any negative, scary emotions. No more paying rent, or asking the landlord if you can get a dog. You will be your own landlord soon! But, first…what neighbourhood in Toronto tickles your fancy? High Park? The Annex? Downtown? North York? Liberty Village? Or maybe outside of the GTA? Regardless of where you’re headed, we’ve put together our top tips to help guide you in buying your first home.

Before you start on your house hunt

Before you start your house hunt, let’s take a step back and find out just how much of a home you can afford. You can check out our handy mortgage calculator to see how much you can realistically afford a month or reach out to an experienced mortgage broker. Maybe Forest Hill or a Harbourfront condo is out of your budget right now but, that’s ok. The Shirriff Wells Real Estate collective is here to help you search in your area of choice while staying within your budget. It’s also good to get pre-approved by a mortgage broker ahead of starting your house hunt to lock in those lower mortgage rates before they increase. It’s free to get pre-approved for a mortgage and securing a mortgage is a task that you will have to take care of sooner than later so you might as well knock it off the list first and foremost.

In order to buy a home as a first-time home buyer, you will need a down payment that is 5% – 20% of the overall purchase price. So, if you plan on buying a million-dollar home, you’ll need $200,000 upfront. If the home you’re purchasing is $500,000 to $999,999, then you will need 5% of the first $500,000 + 10% of the portion of $500,001 to $999,999. If you’re self-employed, they may require a larger down payment to ensure you’re able to afford the home if you have an “off” month. And just remember the smaller your down payment, the higher your monthly mortgage payments will be. That could make a huge difference if rates go up. Understanding mortgages and the overall process of buying a home can be tricky but, don’t worry. We’re always here to help answer any questions you have and we like to look at buying a home as an adventure not just a transaction. Buying your first home is exciting, and fun. This is why we do everything we can to help eliminate your stresses and worries throughout the process.

What you need to know about the real estate market in the GTA

More and more people are returning to the city now that the world is slowly going back to normal after COVID-19. Businesses are returning to the office and international travel is back up and running. The housing market is also showing signs of a possible cooldown after breaking housing records in the past couple of years. Many people in the GTA moved out of the city in the past two years but are ready to move their families back into the hustle and bustle closer to their work.

The average cost of a home in Toronto as of June 2022 is $1,212,806.00.

What does this mean for you? The housing market is competitive right now which could make buying your first home a challenge. Make sure you are prepared to go into your house hunt with funds secured in advance (aka with your mortgage pre-approval in hand) so you can put in an offer quickly before someone else scoops up your dream home.

There are Government incentives to help out first-time home buyers

There are many free resources and grants for you to take advantage of as a first-time home buyer in Ontario. They were designed to help Canadians buy their first home. Let’s take a look at the opportunities you might qualify for.

  1. The Home Buyers’ Plan

This program allows you to withdraw up to $35,000 from your registered retirement savings plan (RRSP) to put towards a down payment – a couple can withdraw up to a total of $70,000. However, don’t forget that you have to repay yourself annually over 15 years, otherwise, the money is treated as taxable income.

  1. The First-Time Home Buyer Incentive

This program is a shared-equity mortgage with the Government of Canada which covers 5% or 10% of the purchase price of your home. This is an interest-free loan. When you sell the house, or after 25 years, you must pay the government back the same percentage you originally borrowed to purchase your home. The homebuyer can repay the incentive in full at any time without a pre-payment penalty. Eligibility depends on your household income, mortgage amount, and location of the home. This program has been extended until March 31, 2025, so it’s definitely worth taking a look at.

  1. The Land Transfer Tax Rebate

When you buy land in Ontario, you pay a land transfer tax. First-time homebuyers may be eligible for a rebate of up to $4,000 for any land transfer tax paid on the first $368,000 of a qualifying home. To be eligible for this rebate, you must be over 18 years of age and have never owned a home before. This also includes your spouse. It’s also important to note that first-time buyers in the city of Toronto are eligible for an additional rebate of $4,475.

  1. The Home Buyers’ Tax Credit

This tax credit is available for Canadians who have purchased a home after not owning a home for four or more years. Anyone who bought their home after January 1, 2022, will be able to claim up to $10,000 for a rebate of up to $1,500. Other buyers who meet the criteria can claim up to $5,000 for a rebate of $750.

We are your experts in the Toronto real estate market

Whether you are searching for your first home or your 10th, we are always available and excited to help you find your dream home. With years of experience in the real estate industry, we have helped hundreds of clients buy their first homes. We know the ins and the outs of the housing market and strive to help you make this house hunt a breeze. Get that Shirriff Wells feeling, by allowing us to help you put the keys to your new home in your hand. When you’re ready to get started give us a call at 416-495-2746. Whether you have a quick question or need help finding the perfect home in your budget we’re here for you.