From The Condo Guide

Where are we going to live? This single question facing first time Toronto homebuyers opens the floodgate to a slew of others: Buy or rent? How much can we afford? Downtown, or uptown, or out of town? And these are just for starters. The answers to these burning questions lie in lifestyle and economy, says Sandra Rinomato, a property expert in the Toronto area for over 12 years, and the host of HGTV’s popular series, Property Virgins, which sees Sandra take young couples on the real estate ride as they search for their perfect home.

Right off the bat, it seems that buying a home is more costly than renting, not to mention more time consuming. The old adage, “you have to spend money to make money” rings true. If you can comfortably afford to purchase, and you have plans to stay at your location for a while, buying a home has significant advantages.

For those with financial stability, home ownership is generally promoted as the better choice than the renting alternative. A home is an investment – money in the bank. As the value of your home appreciates, and your monthly mortgage payments reduce your debt level, your home equity appreciates.

To rent or not to rent? That is the question. Paying rent can be a double-edged sword. The average rent across Canada is $1,200. In the span of one year, you will pay $14,400 in rent, and you will lose an opportunity to earn five per cent or more in home equity. The $1,200 per month that you handed over for rent could have covered the monthly cost to carry over $200,000 in mortgage on a house that would have appreciated by over $10,000 in one year. As a renter, not only did you pay the $14,400 in rent towards someone else’s mortgage, you also lost the chance to make $10,000 in tax-free funds on your principal residence while losing out on $14,400 that could have gone towards your own mortgage.

If you are ready to jump into the Toronto real estate market, there are a few things to consider – namely, budgeting issues and lifestyle changes, like compromising to find a place that suits both your and your family’s needs for now and for the future.

How much can you afford? The first step is getting professional help. Find a Toronto real estate agent for a comprehensive consultation on the steps involved in a home purchase. This is also the time to meet with a mortgage broker to establish a budget. Down the line, you’ll also need a lawyer to handle the legal side of things.

Seek professional advice to stay within your budget and remember the carrying costs – the expenses that are routinely incurred for the ongoing operation and upkeep of your home. These costs include your mortgage payments, property taxes, heating costs, home insurance, utilities and maintenance costs, among others. Be sure to include an exhaustive list of costs and other expenses when calculating your budget. Be realistic.

For new homes, request a breakdown from the builder on approximate closing costs, which can range from $3,000 to $5,000, depending on the size of the home. Some average examples of what to expect: Grading Deposit – $350-$750; Tarion Fee, applicable on new-home purchases – $400-$741 (purchase price up to $450,000); Meter Charges (gas, hydro, water) – $1,200 (plus taxes); Realty Taxes/Deposits – $500-$1,000; Boulevard Tree Planting/Landscaping Fee – $250-$500 (for new homes); HWT Rental Agreement or Purchase – $20-25 monthly or up to $2,000 for purchase; Electronic Registration Fee – $100; Law Society Fee – $50; Legal Fees (for new homes) – $750-1,500; and Land Transfer Tax. Upgrades are paid for up-front when you purchase a new home. Also for new homes, the driveway is part of the offer where indicated (one or two coats as specified by the municipality in the Subdivision Agreement). The fence, unless of an acoustical nature, is the responsibility of the homeowner.

Research! After determining how much you have to spend, do your research. Familiarize yourself with the neighbourhoods you can afford and decide which community and which housing type is best suited to accommodate your lifestyle, whether it’s a condo, or a detached house, townhouse, semi-detached, etc.

Source builders and their products by checking with Tarion – www.tarion.com. Visit builders’ websites. Pick up real estate publications such as New Homes and Condo Guide. Compare product, pricing and, of course, location.

Look for up-and-coming neighbourhoods, or neighbourhoods with solid proven values. Go to the city planner’s office and find out what projects are planned for the future. Working with a Toronto real estate agent on a signed contract is vital. Your Toronto real estate agent will perform due diligence for you and offer advice on what influence they will have on property values.

Think ahead How long do you plan to live in the home? If you purchase a house and subsequently get a job transfer, or for whatever reason should you decide to move within a short time-frame, you may end up paying money to get the home off your hands. The value of your home may not have appreciated enough to cover the costs that you paid to buy the home and the costs that it would take you to sell your home.

The time it takes to cover those costs depends on economic factors. Most parts of the country have an average of five per cent appreciation per year. In this case, plan to stay in your home at least two to three years to cover buying and selling costs. If the area you buy your home in experiences an economic upturn, the length of the time to cover these costs could be shortened, and the opposite is also true.

It’s all in the details. While location is the most important factor in choosing the right home, design is a key characteristic that a buyer shouldn’t overlook. Consider the features you require in your home to satisfy your lifestyle, now and five years from now.

Depending on how long you plan to make this your home, you’ll need to ensure that the home is equipped with all the extras you’ll need. While a one-bedroom condo may be perfect for the time being, you may outgrow the space as circumstances change.

Today’s must-haves include open-concept spaces, large and practical kitchens fit for entertaining with the latest in stainless-steel appliances, home office spaces with high-tech connections, three to four bedrooms and high-quality finishes, to name a few. While you may be tempted to choose something off-the-wall, you should try to avoid atypical designs that may not be appreciated by others. That unusual house might be harder to sell down the road.

Won’t you be my neighbour? You wouldn’t share your home with someone you’ve never met – apply the same principles you would in that scenario to your future neighbours. A common bit of advice to homebuyers is to introduce themselves to their potential neighbours and get a feel for who they are and what the neighbourhood is like.

Your first home is just the beginning of many wonderful things to come. By considering your needs for today, tomorrow and well into the future, by educating yourself on what’s available to meet those needs, and by enlisting the right help, you can make the purchasing experience one that you’ll always remember, and for all the right reasons.

The Condo Guide Magazine is an excellent source of housing information for those looking for information on new condos in Ontario, Canada. We offer the most up-to-date information on new condominiums across the greater Toronto area.

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Contact Laurin Jeffrey for more information