Are You Really Ready to Buy?

Many Canadians have the dream of homeownership, but wishes aren’t always linked to reality. Before you embark on this adventure, take a moment to see if you are really ready emotionally and financially to take such a big life step.

1) Do you have a steady income and stable employment?
2) Do you have an established and positive credit report?
3) Have you attended a homeownership seminar?
4) Have you compared the costs of homeownership versus renting?
5) Have you established a budget to see what you can afford as mortgage payments?
6) Have you considered all of the other costs of homeownership (utilities, insurance, and repairs)?
7) Have you saved enough money for a down payment and closing costs?
8) Have you met with a mortgage professional to set up a pre-qualified mortgage?
9) Do you plan to stay in the same location for an extended period of time (three to five years)?
10) Are you planning on having children or do you anticipate other major expenses such as a new car in the next three to five years?

If you answered yes to eight or more questions, then you are most likely ready to get into the homeownership game. For any questions that you answered no, take a closer look and determine if you need more time to save, or if you need to find out more information. For extra help and to learn more about homebuying, visit

Buying Tips

1. Don’t let emotion cloud your judgment when buying a house. It’s the biggest investment you’ll make, so make it with a clear mind. Any house can be renovated to look beautiful.

2. If planning to renovate, try to find a house that has good bones. Anything on the inside can be changed. It’s easier to change a kitchen than put in a new foundation.

3. Talk to the professionals. Try to get a handle on the scope of renovation you are willing to take on and what that could possibly cost.

4. Consider the things you can’t change, such as the neighbourhood, the proximity to transit, amenities and size of the lot, rather than just the “pretty things”.

5. Don’t over-renovate. If it’s going to cost you more to renovate than you would get back if you sold after improvements, it’s not worth it. Please refer to our tab labelled “Selling” under the heading ‘Condition’ to view various improvements and their average return.

6. Where will you stay during the reno? Living through a reno can be stressful to a relationship. It might be better to take possession early on a new place and renovate prior to moving in. Talk to your realtor regarding the financial logistics of doing this.

What is a Buyer Representation Agreement?

Just as a seller of a property must have a valid “listing agreement” with a real estate brokerage, a buyer must now have a valid “buyer agreement”.

This document is generally signed at the time a buyer begins looking for a property with a sales representative and at the latest must be signed when an offer on a property is presented.

It is in the buyer’s best interests to have a sales representative working to negotiate the best price and terms for them on a property purchase. In practically all cases the sellers agent offers the buyers agent a commission which is how a buyer agent gets paid. We explain this document in much further detail.

Obtain a Pre-Approved Mortgage

Having a pre-approved mortgage will give you the confidence of knowing exactly what you can spend on a home before you start looking. You will also be protected against interest rate increases while you look for your new home.

Your mortgage specialist will answer your questions and help you determine which financing terms and options are right for you. Your mortgage specialist and sales representative work as a team to help you find the right home and select the best financing.

What is the Difference Between a Deposit and a Down Payment?

When an offer to purchase is submitted to a seller there is a requirement that a nominal amount of money accompany the paperwork, referred to as the ‘deposit’. The amount is negotiable but 5% of the purchase price would be a very typical amount. These funds are generally held in trust by the listing brokerage and the amount is credited toward the ‘downpayment’ at the time of closing. The ‘down payment’ represents the buyer’s cash payment toward the property, which is the difference between the purchase price and the amount of the mortgage loan.

Legal Fees & Disbursements & Adjustments on Closing

All real estate transactions and transfer of deeds must be over-seen by a lawyer. Base fees can vary widely from lawyer to lawyer so it is wise to shop around or ask your sales representative for some recommendations.

Disbursements are a legal cost on top of fees, covering any title or name searches, registration costs, photo copies, couriers, etc.)

Adjustments on closing would involve any payments that have already been made by the seller for periods extending beyond the closing date, such as property taxes and/or utility bills.

Provincial Land Transfer Tax

This is a tax calculated on the purchase price and paid by the Buyer.
The rates are as follows:

$0 - $55,000
$55,001 - $250,000
$250,001 - $400,000
$400,001 and up
1% minus $275
1.5% minus $1,525
2.0% minus $3,525

Example: To calculate the land transfer tax on a purchase price of $275,000, multiply the purchase price by 1.5% and deduct $1,525 ($4,125 - $1,525 = $2,600).

City of Toronto Tax

If the sale is in the City of Toronto this is a second tax payable by the Buyer. It is calculated cumulatively on the purchase price as follows:

$0 to $55,000
$55,001 to $400,000
$400,001 and up



Example: To calculate the Miller tax on a purchase price of $275,000, multiply the first $55,000 by .5%,
add to that $220,000 multiplied by 1%

($55,000 x .5%) + ($220,000 x 1%) = $275 + $2,200 = $2,475

First time buyers receive a rebate of this tax up to $3,725.00.

What is Title Insurance?

Title insurance is an alternative to a lawyer’s opinion that protects you if someone else claims a legal interest in your property. It can compensate against pre-exisiting municipal work orders, frauds, and forgeries which can affect the legal ownership of the property.

Most lenders will waive the requirement for an up to date survey (ie.less than 5 yrs.old) if you have title insurance.

What is FINTRAC?

The government has implemented measures to help prevent the practice of money laundering in Canada. It is now mandatory for all real estate brokerages and lawyers to ask for and keep a record of the identity of their clients. Usually a drivers license is sufficient proof.

Home Inspections

When you have submitted an offer to purchase a property you would be wise to make it conditional on a home inspection. Is the house sound, what kinds of repairs may in order, and what can reasonably be anticipated in the way of repair costs? It is sometimes necessary to re-open negotiations on the purchase price or even walk away if there are extremely high repair costs.

Basic Cost Considerations to Carry a Home

Property Taxes
Upkeep & Repairs
Property Insurance
Garbage Collection

© Alan Coulter & Karen Kaiser. All Rights Reserved.