Unless you’re new here (if that’s the case… hi!! Welcome!!) you probably know that I’ve recently purchased a new home with my parents in downtown Toronto (mostly because I won’t shut up about it and suddenly my Instagram/YouTube is now filled with home content and you’re all like YES WE GET IT). One of my biggest goals when starting my blog (and now I’ve diversified to all these other platforms including TIKTOK oh god – I’m just trying to stay young ok?) is to help people out and I thought… why not share my home buying experience since I was super intimidated and stressed so HOPEFULLY some of these tips will be extremely helpful to you!
Before I get into my experience and tips/tricks, I just want to preface this by saying that I did this entirely on my own mostly because my parents live in Vancouver so I ended up having to manage this all by myself 🙁 That being said, if you are a realtor/mortgage broker/someone related to the real estate industry, you might find any/all of the content below extremely obvious for you so I’d like to think of this more as a home-buying-101-for-clueless-people (aka me!!).
I also want to say that these tips/tricks are based on my own experience so PLEASE still do your research and talk to professionals because I ain’t about to show up in court from this blog post k??? Do your research. 🙂
Tip 1: Get A Pre-Approval
What is a pre-approval you may ask? It’s the amount that you are PRE-APPROVED to BORROW (aka your mortgage amount) based on your current assets/liabilities, credit score, downpayment, monthly payment abilities.
The reason you want to get your pre-approval first is because without this number, you will not know how much you can afford to buy (unless you’re paying all in cash then… GOOD FOR YOU GIVE ME SOME OF YOUR $ but I assume we’re all looking for mortgages here).
Take it from me, you do not want to just assume that your downpayment = 20% of your house value because there are still many other factors involved. Some of these factors I’m talking about involve… how much can you afford to pay on a monthly basis? What I realized was… I needed a much higher downpayment since I wasn’t able to afford paying a huge monthly payment. This is why if you are buying a house with your significant other, you would be able to afford a larger monthly payment with the same amount of downpayment.
Additionally, you don’t know how your credit score or even some of your other liabilities will play a part in the bank’s willingness to lend you money so the BEST THING TO DO is to get your preapproval so you don’t waste time looking for houses that are either too expensive or thinking you can’t afford a nicer place!
How can you get a pre-approval?
You can either find a mortgage broker OR you can use someone at the bank. The first thing you will also want to do is to determine if you want to use a bank for your mortgage or go through a mortgage broker.
Long story short:
- A mortgage broker has access to all different interest rates/packages/mortgages (because they basically freelance and can get you anything from any bank/mortgage agency). They are also licensed.
- The bank: you are only able to get their rates and the person helping you may or may not have a license (but they are still legally able to sell to you)
Read this article here to help you better understand!
How to find a mortgage broker/bank:
Best tip is through referrals: ask people you know/trust in the city who have previously purchased homes before and check if they recommend the people they have used in the past (best method: ask your parents; in my case, I couldn’t because my parents never purchased a place in Toronto before).
Personally, I went through a bank but this is because even though I had to do all the research/shopping by myself, my parents helped me with the downpayment so they still wanted to understand the finances. That being said, they had a connection through the bank with someone who spoke English/Mandarin really well to help facilitate things between me and my parents so that’s the route that I went.
Tip 2: Find A Good Realtor
I’m sure at this point realtors are easier to find than mortgage brokers/banks but it is extremely important for you to find one that you are compatible with. Idk about you but I watched that Netflix show called Selling Sunset (it’s a show about selling extremely expensive/luxurious homes in LA by this firm that’s owned by twin brothers but all their realtors are super gorgeous women with the most amazing faces/bodies) but the one thing that bothered me about the show (maybe they just didn’t show it in the show) was when the realtors would walk around and tell the client how pretty each room is. It’s like omg thank u so much I actually was blind for this tour so I’m glad you are letting me know it’s pretty.
LIKE NO. When you look at houses/apartments, you want to know more than just whether or not something is pretty (ummm I’m pretty sure you can tell that by yourself or what if your realtor’s taste is different than yours?!?!?). You want to know things like:
- What are the trends for this building neighbourhood?? Is it going up/down??? You’d want to look at buildings that are slowly increasing in value so it’s not just a house but a good investment
- When was the last sale in this building that was the most similar to your unit? You want to see whether or not the current price is justified and if not, you can either bid higher/lower and even help determine if you even want it
- What are the future plans for buildings around you? eg. if you currently have a clear view of the CN tower but DID YOU KNOW that 2 months from now a new building is going up and will block that view??
- What is the building’s reputation/amenities/management/health like? If you’re planning to live there, it’s not just about your unit anymore, it’s about your building and what it offers
- What is the current market price for an apartment/home like this? When I purchased my home, apartments in Downtown Toronto were valued at $1000/sqft. Know what your market value is in the area that you are trying to buy. How does the price compare to what you are planning to offer?
- Is the listing price realistic or is it a CATFISH: Just like Tinder, people list their units extremely low to attract potential buyers but they know that the selling price won’t be the asking price. Ask your realtor what he/she thinks and know what a potential fair offer price would be
These are just some example questions that my realtor and I went through before purchasing my unit. The realtor I went with was actually the second one because the first realtor I had was the one where she told me how pretty everything looked and nothing else.
Tip 3: Have a “Must Have” List and a “Wishlist”
It’s extremely important to have two lists: Must-Have and Wishlist. However, be realistic with your Must-Have and also be prepared to not hit everything on your Wishlist.
I’ll give you an example of mine when I was shopping for units:
My Must Haves:
- Must be facing either South/West – since I worked full-time and Toronto is already notorious for early evenings in the winter, I didn’t want to come home to an even darker unit. Since the sun sets in the West, I would love to catch the last bit of sunlight if I can. South was a direction that IMO was a happy middle ground (the sun won’t be hitting your face but it will still catch most of the light).
- Must have a big kitchen – don’t care about the shape but ideally C shape kitchen – I cook A. LOT. when I say A LOT I genuinely mean A LOT. I cook almost every meal and I spend majority of my time in the kitchen. I wanted a C shape kitchen the most because it had the best use of space for an apartment. I ended up with a C shape kitchen and I renovated it to make it bigger!
- Must be near subway/convenient – This is extremely important to me because I don’t ever want to be in a situation where I have to rely on a car or even street cars! This also comes in handy if I ever decide to rent out my apartment because it will also make it convenient for the next tenant!
Honestly… that was pretty much my Must Have list. I tried to keep it short because like I said, the bigger list you have the more disappointed/more difficult it is for you to find. I’m not saying that you can’t have more items or you won’t be able to get what you want but it definitely depends on your budget.
- Kitchen must have big appliances/ability to put in your own appliances – I wanted this option because once again, as someone who cooks a lot, I tend to want a bigger fridge/oven/etc and also I want an ice machine!! I was able to get this in my current unit and buy the fridge with an ice machine 🙂
- Window in Bedroom – I wanted more sunlight when I wake up in the morning. Unfortunately I wasn’t able to get this but… oh well it’s my first home! Maybe the next one 🙂
- No large hallway – I didn’t want a unit with a large hallway because I thought it would waste the square footage on hallways but unfortunately this was not something I could escape LOL I ended up settling with a unit with a big hallway.
It’s really important to create these lists not just for yourself but also for your realtor so you don’t waste time looking for units that you are not going to end up buying. At the end of the day, this process takes a really long time and it will be even longer the pickier you are with a stricter budget.
Tip 4: Be Prepared To Cancel Plans/Put This As Your Priority
Depending on how fast you want to get your place, I recommend being prepared to be flexible with your plans. When I was looking at homes, my realtor would call me at 4pm and be like “I booked you an appointment for 5pm for a really hot unit that might sell quickly”. I’m not sure if this is just Toronto or if it’s just for apartments, but there were days when a unit would go on the market and that same night there would be multiple offers. This means that if you constantly respond with “oh idk… I have plans with xyz…” you might miss out on something great – not saying you shouldn’t honour your plans but I’m just saying… how bad do you want a place?
Tip 5: Be careful, but decisive
As mentioned above, there are units that sell VERY quickly. I’m not saying you should be making hasty decisions, but you also have to be able to make decisions quickly. This will come in handy since you
a) already know your budget and the maximum $ you can afford from Tip #1 of getting a pre-approval
b) already have a must-have list and a wishlist so you already know to get rid of anything that isn’t in your must-have list that doesn’t fit your budget
If the unit matches your budget and has everything in your must-have list… consider putting down an offer! The reality is… you might not even get your offer accepted if it’s a super hot unit and other people are bidding for it. Which also means… don’t lose hope but also don’t get your hopes up. I didn’t get the unit that I made the first bid for either!
Tip 6: Have a real estate lawyer
I also recommend having a real estate lawyer to look over your documents before making an official offer! I didn’t do this immediately and I had a lot of doubt during my process which would have been eliminated if I had a lawyer look over documents so everyone (me, real estate agent, lawyer) is comfortable.
Tip 7: Have some cash on hand ready
When my offer got accepted… I had NO IDEA how fast everything moves. The next morning, I had to already have my deposit amount (which, by the way, is in the tens of thousands) so make sure some of your downpayment money/cash is in your bank (and not some offshore bank account or in your parents’ bank accounts if they’re loaning/gifting you money!!!)
That being said, you never know if your offer will be accepted over someone else’s… meaning if you are already planning on making an offer, you have to have your offer ready!
First Time Homebuyer Incentives
Before I close off the blog post, I just want to mention that there are First Time Homebuyer Incentives (aka FTHBI). I’m sure many of you already know, but as a first time homebuyer, you are eligible for many benefits! I just want to remind you that these are different for each region and the government also changes these incentives occasionally. That being said, please read this site here if you’re also in Canada, and I’ve also left two files here for you!
I hope this was helpful! Please comment if you have any questions 🙂 In the meantime, I’m also working on a guide for renovations which will be released next Thursday so please stay tuned!