THE A-TO-Z GUIDE TO BUYING REAL ESTATE (2024)

Appraisal

When buying a home or condo a home appraisal is typically required by the financial institution as part of the lending process. The lender will want an independent company to provide a valuation of the property most times to ensure they agree with the purchase price of the home.

Budget

Buying a home is one of the largest transactions you’ll make so it’s important to create a budget to ensure you’ll be able to pay your down payment, closing costs, and still afford your monthly carrying costs. Use our Mortgage Calculator to help you determine what your monthly carrying expenses may be.

Condos

Condos are quickly becoming the go-to option for many Torontonians looking to buy their first home. Condos vary in size, style and come with a variety of amenities. Price-wise, they’re also one of the fastest growing home types in Toronto. Read about condo maintenance fees here.

Down Payment

The minimum down payment required on a property depends on its purchase price and whether you’re approved by the lender. For properties under $500,000 you’ll need to pay a minimum of 5%, with 10% on any remaining amount up to $1,000,000, beyond which you pay a flat 20%. Keep in mind, with less than 20% down, you’ll be required to pay mortgage insurance which will affect your monthly carrying costs.

Equity

The equity you have in your home is the amount of money you’ll make from your home if you were to sell it. The fair market value of your home minus the remainder of your mortgage equals the total equity you have in your home. For example, if you bought your home for $400K and the value has increased $200K and you have $250K remaining on your mortgage, your home equity is $350K. (400+200-250=350) Learn more about equity here.

Financing

Having your finances in order is the first step to buying. Getting a mortgage pre-approval helps determine what you can afford, what your interest rate will be and what your monthly mortgage payments will look like. Remember you need to have your down payment and closing costs in good ol’ hard cash.

Gains

The earnings, or gains, you make from your principal residence are 100% tax-free. It is the number one means of getting ahead without giving most of your income away in taxes. For investment properties, any profits you make are Capital Gains and are taxed at only 50% of your net profit.

Houses

Whether it’s detached, semi-detached or a townhome, each type of house will perform differently in the market. Detached homes will typically command a higher price than semi-detached and semi-detached higher than townhomes. Don’t forget, just because you’re not in a condo doesn’t mean you’re free of maintenance fees. Ensure you have an Oh Sh*t Fund to save for unexpected repairs and maintenance.

Inspection

Home inspections are a worthy investment especially with older homes. They will help to identify any hidden issues within the house that may cost you post-sale. If any issues are discovered, your Realtor may be able to negotiate an abatement.

Joint-Venture

It’s always easier when you have a partner (spouse, friend or family) with whom to buy a property. Having two incomes will likely qualify you for a higher mortgage.

Knowledgeable

Having a knowledgeable Realtor who understands how to best navigate the market is imperative to getting you the home you want at the best possible price.

Leverage

In a nutshell, leverage is a strategy where you use borrowed money to increase the potential return of an investment. If you own a home, you can borrow up to 80% of the fair market value of your home, minus any outstanding mortgage due. Leveraging the equity you have in your home into additional properties is a great way to get your money to start working for you. Learn more on our leverage strategy here.

Mortgage

Your mortgage is the loan provided to you to finance your home. The greater the down payment the smaller your mortgage will be. You can choose between a fixed or variable rate mortgage depending on what makes sense for your financial situation. Use our Mortgage Calculator to get an idea of what your monthly payments could be based on different down payments.

Neighbourhoods

Different neighbourhoods have different trends and different price points. If you’re looking to earn good equity on your home, your Realtor can help guide you towards a home in an up-and-coming neighbourhood that may see a lot of price growth in the coming years. Popular or already established neighbourhoods will command a higher price point from the get-go.

Offer

Your offer or “Agreement of Purchase and Sale” is a legally binding document which outlines not only the price you wish to pay but any conditions you want included in the offer (financing, status, etc), any inclusions with the property (fridge, washer/dryer, etc), and your ideal closing date.

Pre-Construction

An alternative to buying resale is pre-construction. The payment structure is different, typically broken down into three payments of 5% over the first year, without any additional payments, including your mortgage, until it takes occupancy 3 to 4 years later. This gives you time to save money. Working with Pierre gets you Platinum Pricing on pre-construction projects around the city which means you get lucrative pricing opportunities before the masses. For a comprehensive look at this type of purchase, download our free Guide to Investing in Pre-Construction Condos.

Questions

It’s important that youask you realtor questionsand are well-informed on the process. Your Realtor should be able to successfully explain and defend their strategy and suggested offer price so that you know you’re in good hands.

Renovations

You may find a property with a smaller price tag that will require some renovations, or that you simply want to customize to your style. Keep in mind that any funds needed for a renovation will need to be factored into your home-buying budget. You can’t finance your reno, it needs to be paid for with hard cash. Read our Reno VS Ready blog for a full analysis on buying a move-in ready versus a fixer-upper.

Square Footage

What size property are you after? When comparing prices of similar properties, the price per square foot is a key way to get a true comparative value. Similarly, when it comes to determine any maintenance fees, they are calculated based on the square footage of a condo plus a flat rate for parking and locker.

Title

The title is the ownership of the property that gets transferred from the seller to the buyer on the closing date. This is the same date when your closing costs are due and include Land Transfer Tax, Title Insurance and any legal expenses.

Unique Features

Depending on your buying goals, unique features can increase the value of a home. Whether it’s exposed brick-work, a wrap around terrace or high-end appliances, these unique features will add to the purchase price of a home. Keep in mind, when you go to sell your home, these will earn you extra dough come resale too.

Value

An experienced Realtor will be able to determine the market value of a property by comparing it with similar properties that have recently sold, unique features, location and more. Their expertise in pricing will help establish the right strategy when making an offer on a property. Get your property valuation here.

Wait

Wait to sell — in other words — prepare to hold on to your property. The longer you hold your property, the more equity it will earn. Real estate is an investment, and you should never be making an investment with the assumption of having to sell it for a purpose. The only reason you should sell your property is if the profit from the sale is enough that the returns you gain from reinvesting it outweigh the returns from keeping the original asset.

Xposure

Depending on the location of a property, different exposures offer different or preferential views. This can have a positive or negative impact on the price of a property. Also be wary of any new buildings that may potentially obstruct these views in the future.

Year-Over-Year

Year-over-year compares home prices or other market stats to the same time the previous year. When analyzing market stats and trends, it’s important to not only pay attention to month-to-month price changes, but also year-over-year prices for a full understanding of the market.

Zoning

Not all zoning is created equal. There are different types of zoning for properties from residential to commercial and even life/work hybrids.