Due to inflating home prices across Toronto, many first time homebuyers are being forced to trade in their dreams of owning a single family home for a less expensive option such as a condominium.
Despite the high real estate prices, Toronto is still a hot spot for people looking to purchase a place to live. Over the years, the GTA has become a magnet for active, young people and even more specifically, millennials.
Here’s how to buy a condo in Toronto on a budget.
Know what you can afford
Before you even begin the search for a condo, you need to know how much your budget will allot. The first thing you need to know is how much you have available for a down payment, and you may also have to factor in added costs like mortgage insurance. As someone who has experience helping Torontonians find their first home, my best advice is don’t break the bank to get into a pricey condominium. There are plenty of affordable options available if you take the time and look.
Once you know your budget, the next step is getting a mortgage pre-approval. This will tell you how much you’ll qualify for when seeking a mortgage. It’s important to note, a pre-approval can often be a bit more than what you’ll actually be approved for in the end. Enlist the help of a mortgage officer who can guide you along the way and tell you about any important documents that you’ll need to present.
Know what you want
When you’re buying a condo on a budget, you will want to understand that you may need to adjust some of your wish-list items. Instead of fancy amenities, focus on your must-haves like space, parking, and location.
Search for savings where you can
As a first-time homebuyer I often tell my clients - there are always opportunities to look for savings. Choosing an interior unit over one that faces the garden or those with an obstructed view can offer significant savings. Similarly, if you are willing to live in a suburb outside of Toronto with close proximity to public transit, you can save money upfront.
Buying your first condo is exciting, a little overwhelming and fun at the same time. In a competitive real estate market like Toronto, it’s all about getting your foot in the real estate door and jumping on an opportunity as soon as it becomes available. You can always upgrade when your budget allows it. Happy hunting!
Ready to make the jump from living in an apartment or with your parents to your first home? Many millennials today are realizing the advantages of buying rather than renting, and are actively looking at purchasing. If this describes you, you’re probably aware that buying a home isn’t inexpensive. Here in Toronto, as well as in many other cities, home prices continue to be on the rise, while availability can be an issue.
Buying your first home isn’t easy, especially if you’re a millennial. It’s been estimated that people in our age group need to save for three full years in order to have enough money for a down payment. Of course, that’s not a hard and fast rule that applies to everyone, but the fact is that some of the issues that could complicate saving include not having enough income, student loan and credit card debt, and the high cost of living.
As a real estate professional I specialize in helping millennials navigate the uncertain waters of buying their first homes. While every situation is different, I can and will help you achieve your goals. I’m glad to share a few tips to help you prepare.
First, don’t just save for your down payment; save extra. While it’s difficult enough to have a down payment as quickly as you’d like, you also need to consider other costs related to buying your home, like closing costs and fix-up expenses. Unless you purchase a newly built property, once you’re in the house you may encounter a number of expenses that you didn’t anticipate upfront. You’ll also have some general expenses. Maybe you’ll want to buy new furniture and repaint and redecorate. And, of course, maintenance costs are a fact of home ownership.
Second, look at how you can restructure your spending habits while you save. It helps to have a budget that you follow strictly. You likely have some fixed expenses that are non-negotiable, like rent, an auto payment, a gym membership, and maybe utility bills. Then there are the expenditures you can modify. Spend less on clothing and entertainment. If you dine out often, consider cutting back on that. Pack a lunch for work rather than going to a restaurant. There are many ways you can contain your expenses. There are also some great digital apps that allow you to keep track of your budget. Download and install it.
Third, learn and monitor your credit score. I’m sure that there are many people who’ve never even considered their credit scores until they had to make a major purchase. What you need to know, though, is that your credit score can affect your future purchasing power. Look it up, learn it and vow to keep it at a good level. Be assured that mortgage lenders, credit card companies and others have access to your credit profile.
Do these things, and please contact me for more information. I’m glad to help.
Another election has come and gone for Canada and with it, a precarious outcome. A Liberal minority, though considered strong by most experts, will need the support of other parties in order to enact its agenda.
Experts point to the Liberal/NDP combined majority as the likely avenue going forward considering the parties align on many issues. With some provincial and municipal policies at play in certain provinces and cities, there are a number of things home-buyers can expect from government policy decisions.
Recent policy changes on the provincial and municipal levels across the country have seen a number of issues addressed and seen the housing bubbles of Toronto and Vancouver cool. There are other issues however which need to be addressed, such as, foreign-owned homes left empty for long periods, affordable rental housing availability and first-time home buyers struggling to take the leap.
Possible outcomes from the minority government are varied. The Liberals have the most seats, so one of the first orders of business on housing will probably be their promise to increase the qualifying purchase price for the recently launched First-Time Home Buyer Incentive to almost $800,000 in cities like Vancouver and Toronto. In order to get votes on this, the NDP may try to push for their policy of reintroducing 30-year amortization periods on insured mortgages for first-time buyers. They have another bargaining chip however in their promise to double the Home Buyers' Tax Credit to $1,500.
The NDP also promised more purpose-built affordable rental housing, which will include their pledge of an additional $5 billion fund to build 500,000 affordable units over 10 years. Above that, the parties seem to align on a foreign home-owners tax of a form to be later determined.
In addition to policies directly affecting home-buying, the Liberal’s and NDP aim to improve finances for students. With one aiming to eliminate interest on loans and another promising a larger portion in grants and extending time to repay, it’s possible a combination could start making life a lot more affordable for young people. With a number of ideas from all parties on how to tackle this important issue, only time will tell how Canada’s housing situation will fare.
In one of the country’s hottest housing markets, Toronto is seeing increases in sales but also in prices as of September 2019 according to a recent report. In the TREB report, the GTA’s strong economy, cultural diversity and ranking of 16 in the Mercer Quality of Living Survey are attracting newcomers to the area each year.
Increasingly attractive to millenials, the city has unfortunately not kept up to the housing demands of a growing population of younger and increasingly diverse citizens..
Following Toronto’s market boom, luxury properties have increased in number and housing in general has increased in price, risking a bubble. In the current state it is especially difficult for younger people to enter the ownership market. Despite the increase in millennial population requiring affordable housing, there have still been increases in sales revenue and the average home price.
In lieu of a cooler market, many young people are looking at buying options outside the core, utilising the GO Train system which services the entire GTA. Other options are downsizing or living in a lower valued neighbourhood. With the increase in tech ventures in the city, the people working for them will be looking for affordable options in the city’s core.
Affordability is a key driver in homelessness in Toronto as a result of average income increases of 30% while housing costs have increased by 131%. More and more people are relying on rental options but the rental market is getting so hot that most young people are forced to reevaluate their needs and consider sacrifices that can be made in terms of location, or making due with smaller units. While affordable rental properties are needed, renting is perhaps still the best way to give people an opportunity to save for a home purchase.
So the question being, how to buy a house in Toronto? With a growing demographic of millennials finding it difficult to enter home ownership traditionally, it doesn’t seem possible in a bubbling market. But don’t lose hope because the market is beginning to adapt and with the right push Toronto can see an influx of purposeful housing availability able to meet the unique needs of today’s home buyer.
Buying a new home is an exciting time, particularly if it’s your first. But homebuying can also be a stressful – and overwhelming – process. After all, you want to buy a home you love and at the same time protect your long-term financial goals. Follow these tips to help make homebuying a positive experience.
Be Financially Prepared
Owning a home is expensive, much more so than renting. Even if your monthly mortgage payments are similar to what you currently pay in rent, there are additional costs to consider, such as property taxes and home maintenance.
Before you even start the homebuying process, you should be debt free and have an emergency fund that covers three to six months worth of expenses. You should also create a budget and stick to it.
Figure Out How Much House You Can Afford
Before you start house hunting, you need to work out a ballpark figure of how much you can afford to spend on a new home. A good rule of thumb caps your monthly housing costs (including mortgage, taxes and insurance) at no more than one-third of your gross annual income.
If your monthly housing and housing-related costs don't leave you enough money for your other expenses, then you have a few options, such as reducing “lifestyle” costs, such as new clothing and restaurant meals. You can also consider a lower-priced home that still meets your needs.
Save for a Down Payment
Paying for a house outright is out of the question for most young homebuyers, so you’ll need a down payment and a mortgage. One way to save for a down payment is to contribute to a Registered Retirement Savings Plan (RRSP). Along with a tax credit, you can withdraw up to $35,000 from an RRSP to buy your first home. The only catch is that the money must be paid back within 15 years. Check with your financial planner to see if this is a good option for you.
Save for Closing Costs & Incidentals
Along with your down payment, you will need to set some money aside for closing costs, which can amount to as much as 4% of the purchase price of your home. Those expenses include home inspection costs and legal fees. And if you haven’t budgeted for it already, don’t forget that you have to furnish your new home as well, so consider the cost of some new furniture.
It’s going to be expensive, so you need to start saving quickly and aggressively if you’re looking for a short-term home purchase. Don’t be afraid to put your retirement savings on hold for a while. And if it takes you a few years to be financially prepared for a new home, that’s OK too. It’s better to have a cash cushion rather than be in a situation where you can’t afford the myriad costs surrounding home ownership.
While home ownership was the norm for previous generations, millennials’ home-buying habits have changed the face of real estate. Unlike Baby Boomers and Generation X, millennials are not purchasing a home as young adults.
For starters, millennials are waiting longer than any other generation to buy their first home. They choose to rent for longer for a number of reasons. Home prices have risen significantly and student debt is higher than ever, making it more difficult for millennials to get a mortgage. In addition, fewer millennials live with a partner or spouse, a milestone that often comes before purchasing a home.
Because they are waiting longer to buy a house, therefore having more income and a more settled lifestyle, millennials have all but eliminated the “starter home.” Past generations purchased smaller, more affordable homes at a younger age, then upgraded to a larger house as they grew their income and family. However, millennials are saving their money for a longer amount of time to buy a larger or more luxurious house when they do purchase real estate. Some millennials even choose to rent in a city for their primary residence and buy a vacation home as their first property.
Millennials are also hitting life milestones in a different order than previous generations. Baby Boomers and Gen X usually got married before buying their first home, while more millennials purchase a house with a partner before saying “I do.” The reason? Higher home prices and larger amounts of student debt make splitting a mortgage with a significant other one of the only viable ways to own a home. Many younger couples value owning property together and sharing expenses over getting married.
While previous generations valued large, fancy homes, millennials look for quality over size in a home. Giant houses with ornate interior design doesn’t appeal to millenials. Instead, they look for open floor plans and minimalist design in smaller homes. They also prefer a location with easy access to neighborhood amenities, eco-friendly features like solar panels, and fun pieces of technology like a smart home system.
Finally, in their search for more affordable housing, millennials are flocking to suburbs and even “exburbs,” commuter communities that require a longer drive into nearby cities. However, they are being more selective about which of these neighborhoods they choose to live in. Good weather and jobs within the community are two factors that millennials look for.
As the cost of living and home prices continue to rise, more and more millennials are choosing to hold off buying their first home or purchasing real estate in communities further away from city business centers. This generation is changing the way we look at home ownership to fit their lifestyle and the current economic conditions.
Condominium living can be an appealing option, especially for those in a big city. Condos are affordable and someone else takes care of maintenance and upkeep, such as shovelling the snow, cutting the grass or even replacing the roof. In addition, many condominiums have enhanced security features and some offer a range of social, entertainment and recreational activities.
However, condos are a unique type of ownership structure and potential owners should be aware of special considerations surrounding the purchase of a condo, which are different from a conventional home.
According to the Canada Mortgage and Housing Corporation (CMHC), when you purchase a condominium, you own a private dwelling called a unit. The unit is registered in your name. You also share ownership of the common elements and assets of the building.
It’s important to be aware of your unit’s boundaries before you purchase. You’ll want to know, for instance, whether you’ll be paying for window washing or whether the condominium corporation will be responsible for this. This information can be found in the condominium’s governing documents.
In addition to paying for your unit and a share of the common property, you will also pay monthly condominium fees. This is intended to cover the upkeep and replacement of common elements. The fees also pay for the corporation’s insurance policies, utilities and services such as snow removal, CMHC notes.
Some of the fees may be put into a reserve fund, which is intended to cover the estimated cost of future maintenance and repairs. Some provinces require that condos conduct a regular reserve fund study, which can tell unitholders how much should be paid into the reserve fund. The study is a detailed examination of all of the condo’s components along with an analysis of future replacements and repairs, including costs.
Keep in mind that condominium fees can be raised to reflect the changing costs of operating a building and the state of the corporation’s reserve fund.
Condos also have rules and bylaws that unitholders must follow. These cover contentious issues related to condo living, such as pets and parking. Make sure you carefully review the condo’s bylaws before you make an offer.
Condominiums offer an attractive lifestyle, but they’re not for everyone. For instance, you won’t have a private garden and you’ll likely have limited storage space. But for many people, condos offer an ownership option without the hassles of maintenance and repairs. And even with additional fees, condo living is less expensive than home ownership. That may be the biggest reason for the condominium’s enduring popularity.
Purchasing a new home can be an exciting time, especially for first-time homebuyers. But before you start popping the champagne, make sure you are properly prepared. Here are some tips aimed at first-time homebuyers.
Pay Off Your Debts
Owning a home is expensive, usually much more than renting, with additional maintenance and upkeep costs. So don’t even think about buying a home until you have paid off all your debts. Credit card debt is the worst in terms of interest rates, but you should also try to tackle long-term debt such as student loans. Experts also suggest building an emergency fund that will cover 3-6 months of expenses.
Determine How Much House You Can Afford
Before you get attached to a beautiful house, check your monthly budget to determine exactly how much house you can afford. You need to leave room in your budget for added expenses, so make sure your total monthly housing costs (including property taxes and insurance) add up to no more than 25-30% of your monthly take-home pay. For example, if you bring home $5,000 a month after taxes, multiply that by 25% to establish a monthly maximum house payment of $1,250.
Save for a Down Payment
It’s unrealistic to expect to pay cash for your first home, but you should aim to save enough for a down payment of at least 20%. If your down payment is less than 20% of the price of the home, you’ll need to purchase mortgage loan insurance. And if you’re self-employed or have a poor credit history, you may also be required to get mortgage loan insurance, even if you have a 20% down payment.
Get Preapproved for a Loan
If you are confident you have enough money saved to cover a 20% down payment (as well as closing costs), you’re ready to handle the other 80% by talking to a mortgage lender. Getting a pre-approved loan shows to sellers that you are a serious buyer. It’s also a great way for first-time home buyers to get ahead in a competitive market.
Your first home is a big deal – likely the biggest purchase in your life so far. Because of that, you don’t want to make mistakes. Consult a trusted real estate professional who can help you to find a home, negotiate a deal, and see the process through until closing.