Maddie Stiles
Making the switch from renting to owning a home is a big step that requires a good amount of planning and intentionality. Buying a home is one of the biggest financial commitments you will make in your lifetime, and it can be exciting and nerve-wracking at the same time. When looking at homes for sale in Toronto, it’s important to do your research and know what you’re getting into before making any decisions that could cost you more than expected.
Here are 5 ways to save money when buying a home in Toronto:
1. Take Care of Credit Card Debt
Once you’ve decided to buy a home, pay off any credit card debt that you might have. It’s important when buying a home to show lenders that your debts are in order by paying down your outstanding balances on credit cards or other high interest loans before applying for financing. This will affect the amount of money that they’re willing to lend you and can help you obtain a more favourable interest rate.
Even if you aren’t planning on needing a loan, paying off your credit card debt before you start the home-buying process will leave you more flexibility later. Buying a home doesn’t stop at closing costs; you may find renovations or repairs that need to be made after the fact. It’s best to not only have an emergency fund, but to have as much flexibility with your credit card as possible.
2. Put Together a Budget (and Stick To It!)
It’s important to have a budget in place before you start house hunting. Create an accurate list of all the costs associated with buying and maintaining your home, including mortgage payments, property taxes, utilities, and insurance fees. Use this information when considering how much money you can afford for a down payment on your new home. You may find that there’s a lot more to consider than just the cost of your monthly mortgage.
Here are some basic tips for maintaining a budget when saving for a home:
- Go out to eat less, and cook at home more often
- Cut back on certain flexible expenses that may not be necessary for the time being (mani-pedis, haircuts, spas, etc.)
- Create a set amount of money per month that you can spend on things like activities and events, and don’t go over budget on it.
In addition, you should also have an emergency fund in place before buying a home. This will ensure that any unexpected costs won’t stress you out financially and throw off your budget or prevent you from being able to pay for necessities every month after purchasing a home without going into debt.
3. Put Aside Some Money For Closing Costs
When buying a home, there will be closing costs associated with legal fees and paperwork. It’s important to set aside some money for closing costs before making an offer on your new home. These expenses can come as quite a shock once you’re ready to move into your new place, but they can easily be handled with a little preparation. Closing costs are typically made up of land transfer taxes, lawyer charges and appraisal fees, and GST/HST.
- Land Transfer Tax: The land transfer tax is a percentage based on the purchase price of your home.
- Lawyer Fees: Lawyer charges depend on how complicated the transaction becomes with agents and other involved parties. With a great Toronto real estate agent, this shouldn’t be too much of a hassle.
- Appraisal Fees: The appraisal fee depends upon whether or not you’re getting a new mortgage to finance the full cost of purchasing the property.
- Goods and Services and Harmonized Sales Taxes (GST/HST): The GST/HST is charged to cover the tax on your deposit, which you’ll need to bring along with you when making an offer.
Keep these extra fees in mind so that closing costs don’t come as a surprise or take away from what little budget you may have set aside for them!
4. Look Into Market Information
When you’re making the decision to buy a home, it’s important to know what you can afford and what’s the normal price for the size of home you need. Get informed about current market trends and how they impact affordability in Toronto by checking out housing reports online or speaking with real estate agents or mortgage brokers. You should also consider asking for advice from friends who have recently bought homes of their own so that you know the type of home that best suits your needs.
By far, the best way to have all this information in the palm of your hand is to have a great Toronto area real estate agent. Your agent will be able to help you stay up-to-date on everything happening in the Toronto market, and they will do the grunt work so you don’t have to. Speak with an agent before buying so you can discover what you can afford and what will be realistic for you.
5. See If You Qualify for a First-Time Buyer Loan
Some governments offer grants to first-time buyers. These can be in the form of tax breaks or down payment assistance. Get tips on how much you need for your down payment and check with mortgage brokers about any available government incentives before making a decision on where you want to live and what kind of home you can buy.
Lucky for first-time home buyers, the Canada National Housing Strategy offers an incentive program for those looking to buy their first home. The First-Time Home Buyer Incentive is a government program that provides financial assistance to first-time homebuyers. To assist with a down payment, the program offers 5 percent or 10% of the property’s purchase price. This lowers mortgage costs and makes purchasing a home more affordable.
5 Ways to Save When Buying a Home in Toronto
Saving for a house may sound scary at first glance, but there are things you can do to make it easier. Be proactive and prepared by following the steps above, and you’ll be on your way to your new home in no time!
