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Are you a first-time home buyer? It can feel overwhelming so we're here with a step-by-step guide to help you on your journey to owning your first home.

First-Time Home Buyer’s Guide: Steps for Buying

Purchasing a new home is one of the biggest decisions anyone will ever make, especially for first-time buyers. Likewise, it’s one of the most personal choices. Hence, it doesn’t come as a surprise that most people spend a great deal of time trying to figure out what they expect from their homes. Many first-time home buyers want to make an educated decision about how to proceed. After all, they’ll occupy such homes for a long time.

Even though this decision is very personal, there are some things first-time buyers must know before they venture into purchasing a new home. The more knowledgeable they are, the easier it is for them to approach the process. To that end, the following guide will take a look at all aspects of the home buying process for first-timers in Ontario, Canada.

Step 1: A Down Payment is Important

When purchasing an Ontario home, affordability comes to mind. Then again, this term is nebulous as it encompasses several factors. Then there are other financial considerations on homeownership, including down payment, monthly payment, gross debt service ratio, and total debt service ratio. So, here is a rule of thumb. Homes under $500,000 require a 5% minimum down payment.

What about properties ranging from $500,000 to $1 million? Apply the aforementioned rule of thumb on the initial $500,000. Implement 10% on the remainder. If they are at $1 million or more, a down payment of 20% would apply. Making such big deposits can save a homeowner thousands of dollars in interest. Furthermore, mortgage insurance will be unnecessary.

Ever heard of the First Time Home Buyer Incentive? It is an initiative provided by the Canadian government. With this provision, new buyers in Ontario can get shared home equity to the tune of $25,000.

Having a Registered Retirement Savings Plan (RRSP) entitles the individual to access up to $35,000 under the Home Buyers Plan. Meanwhile, provincial rebates in Ontario cover up to $4,000. Even better, buyers in Toronto may get up to $4,475 in municipal rebates.

Step 2: Excellent Credit Score and Reliable Income

Potential homebuyers who don’t have the cash to purchase a home in Ontario will have to rely on mortgages, Mortgages are based on income and credit checks. A consistent income and good credit score provide an improved opportunity to purchase a home, compared to someone with a lower income and score. Since buying a home is a long-term investment, it’s wise to resist the impulse to splurge.

To begin, a potential buyer must have a minimum score of 600 to become eligible. In addition to eligibility, a credit score has an impact on the loan options and mortgage interest rates accessible to the individual. Hence, to improve one’s position in this regard, here are some actions to take:

  • Open a low-interest credit card
  • Monitor and reduce balances
  • Avoid defaulting on late payments
  • Keep a good credit history
  • Avoid borrowing money unnecessarily
  • Keep the credit utilization rate low

Anyone looking to buy a property in Ontario using a mortgage will have a greater chance of qualifying if these criteria are taken into account.

Step 3: Finding an Ideal Location

Choosing a good location for home-buying is critical to securing one’s financial commitment, and is thus a prime consideration in determining whether to proceed with the purchase. Factors that a person needs to consider while searching for the perfect spot in Ontario are:

  • Availability of decent lines of transit
  • Commuting distance
  • Accessibility to local services
  • Educational provision
  • Growth potential
  • Housing and rental costs
  • Low to zero crime rate, as well as increased security

Some people prefer to buy property close to friends and families; others find a home near schools and hospitals; while still, others find a home with ample parking and a bus stop nearby. A homebuyer may prefer a suburban home that is larger and less expensive than its urban counterpart. However, such property could be less accessible. To find a location with the best value, the buyer would need to evaluate pricing based on square footage.

Step 4: Considering the Closing Cost

Every purchase comes with a list of costs that must be covered before closing on the property. The most common and expensive cost is the Land Transfer Tax, which is calculated using a marginal tax bracket system based on the purchase price, followed by legal fees that can range from $500 to $2,000 or more. Other likely fees include:

  • Government registration fee, with an estimated cost of $200, depending on the papers filed
  • Title insurance, estimated to be $200, depending on the insurance company
  • A home inspection, which may cost $500
  • Property survey ranging from $350 to $600
  • Property appraisal fee, costing between $300 and $500
  • Estoppel certificate fee, which is about $100

With these fees in mind, a homebuyer will have a better idea of what to expect when finalizing a house purchase transaction.

Step 5: Hiring a Certified and Experienced Realtor

No matter the location in which a property is located, a homebuyer needs to hire a professional who knows what to look for when shopping for a home. A good real estate agent can save buyers time and money by finding the property that meets their lifestyle and budget.

With all the paperwork required to purchase a home in Ontario, the last thing a buyer needs is to have to deal with the stressful transaction alone. Having an agent ensures that necessary paperwork and forms are available and accurate to complete the home purchase.

Step 6: Making an Offer and Closing the Deal

Making an offer and completing the acquisition in Ontario is a very simple procedure. Buyers submit a written offer to the seller, agreeing on the purchase price, terms and conditions, before signing the documented contract.

Furthermore, policy rates are low, which implies an increased competition in the real estate market. Taking ownership of one’s desired property on time becomes a priority. In such instances, a real estate agent can help by providing professional guidance.

After the keys have been handed over, factors such as remodelling, pre-cleaning, and security enhancements, to name a few, must be considered.


Having learned all the fundamentals of Ontario home-buying, it’s time to apply them to find a new residence. It will not only take a lot of stress off one’s shoulders but also reduce the probability of spending too much on a property. When it comes to Ontario’s real estate market, many agents are available to help buyers in finding the best deals. It is only prudent to research these agents thoroughly to find the ideal candidate.

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