There has been much chatter and news about the housing market in the Greater Toronto Area since the start of 2018. Some sources claim that the housing market is robust, citing record setting prices for certain types of properties. Others suggest that the market may not be what it’s cracked up to, weaving stories about families that have lost hundreds of thousands of dollars because of the gambles they took in buying properties that they could either not afford or who were misled by real estate industry insiders promising the world but not being able to deliver financing when it became required. Somewhere between the doom and gloom narrative and the incredible tales of the real estate gold rush vested industry interests dole out as the only truth – is the reality that no one seems to know what the Greater Toronto Area real estate market will look like in the coming months or years.
There is money to be made (and lost), but ultimately, a house will need to be a home for someone, and changing the view of prospective property buyers from looking at real estate as only a purely speculative investment, to a purchase for individuals and families is what is recommended for people looking to buy a home during this time. The priority when purchasing a house should be the family and not the bank account. So now you have saved up enough for a down payment, set your heart on a house and arranged for a mortgage – below are a few tips to keep in mind for those of you looking to buy a house in the near future:
1. Try not waive your conditional financing clause during negotiations.
You will be pressured to waive your financing clauses during bidding wars, or in exchange for a reduction in the purchase price. Many sellers seeking a “quick sale” will claim they do not want to deal with a buyer looking to slow down the purchase and sale process by consulting with their financial institution or lender prior to finalizing the Agreement of Purchase and Sale (“Agreement”), By ensuring your Agreement contains a conditional financing clause, you could save your self thousands in the event there is a situation where you will not have a Lender ready and willing to provide you a mortgage. Your entire deposit might be subject to a forfeit if this clause is not maintained as part of the Agreement.
2. Do your best not to waive the buyer’s review provisions.
A key provision to protect buyers are the review provisions inserted in most Agreement’s for the benefit of the buyer. Briefly, the buyer’s review provisions allow the buyer a certain amount of days to have their Agreements or status certificate reviewed by a lawyer. Often, an experienced lawyer will be able to determine if condominium boards are properly managed and advise if there is a chance of significant increases in maintenance fees expected. Lawyer’s will also be able to advise on matters such as assumption of rentals like hot water tanks and furnaces, or easements that may affect the value and marketability of the property.
3. Your pre-approved mortgage is not approved until an appraisal.
You will likely be sold on an idea that you have been approved for a mortgage on the basis of your income or other financial holdings alone. Be aware that your Lender reserves the right to cancel your mortgage commitment if after their appraisal of the property, they find significant deficiencies or the value of the property is too low. You will be left trying to scramble to arrange for another mortgage or even forfeit your deposit if this occurs. Understanding the terms of your mortgage and the requirements for funding involves excellent communication with both your mortgage agent and your lawyer. Do not be afraid to ask questions from either.
4. Be prepared for closing costs.
Shortly before your scheduled closing date, you will be required to bring in funds to your lawyer for closing costs. One of the largest closing costs that buyers are not aware of is the Ontario Land Transfer Tax, and in certain municipalities the Municipal Land Transfer Tax. Depending on your circumstances this costs could be in the thousands of dollars. If you are a first time home buyer, the good news is that you will be eligible for the First-time Home Buyer Tax credit of $4000.00 that can be applied instantly at your lawyer’s office. Other costs to be aware of are title insurance costs, your lawyer’s fees and disbursements and any debts that require a discharge by your Lender. These costs will be itemized and charged to you separately in a document called a “Trust Ledger”.
5. Prepare for issues, but expect a smooth transaction.
Most Purchase and Sale transactions occur without many issues but that does not mean that there are not certain common issues that can and do arise for some buyers. These can include anything from title insurers’ refusing to issue policies, parties requesting extensions, daisy chain transactions, and technical issues with registration. Be prepared, but work with your lawyer, real estate agent and/or mortgage agent to make the transaction as smooth as possible.
Enjoy your new home!
If you have any questions regarding any of the information and content, or would like to schedule a meeting, please contact me at firstname.lastname@example.org or contact my office at 416-320-6008.
405 Britannia Road East, Unit 101B
Mississauga, Ontario L4Z3E6
Fax : 866-320-6008
*All information and content posted by the author is their opinion alone and does not reflect the views held by any other corporation, firm or individual. All information and content is for entertainment purposes only and can in no way be construed as legal or financial advice.