It was a surprise to see a high volume of activity in Toronto real estate market despite the COVID-19 pandemic and its consequences. Working from home during the pandemic has made suburban areas more popular. However, after full implementation of the vaccination and the resumption of immigration, it is predicted that the condo market will return strong. Here, we are going to review everything about buying a condo in Toronto in 2021.
During the last year, we saw no signs of slowing down in condo development projects. Based on the reports from Canada Mortgage and Housing Corporation, approximately 55% of under construction houses in Ontario are condominiums and 13% of Ontario households live in condos.
Due to the lockdown and obvious damper of the real estate market and the subsequent economic deceleration, the BoC has brought down interest rates to 0.25% to make things easier for buyers. So, if you decided to buy a new Toronto condo, you better start the process now, before the prices increase!
Buying a condo both as an investment and as a dwelling is an important decision which should be made completely carefully. Here are some important things to consider for buying a condo in Toronto:
1.Start with evaluating your financials
The first and most important step in buying a Toronto condo is financial evaluation in order to find out about your affordability. In other words, it will help you to align your budget with your wish list. This step requires some paperwork to do for mortgage and downpayment.
First of all, the lender institution checks your credit. It means they will examine your financials. They’ll ask for an employment letter, salary and your job’s start date. They also check whether you paid your income taxes last year or not using NOI (Notice of Assessment).
Then, you should figure out your downpayment. Normally, you would need to pay 10% of a condo priced less than $1 million ( Only if you are a first time buyer and eligible for it). You’d need a 20% down payment if a condo priced more than $1 millions.
Related articles: Downpayment for a condo
Besides, you should pay 5% of the condo price as a deposit less than 24 hours after your offer is accepted. So, your deposit should be easily available.
Next step in this process is to get an official pre-approval letter for your mortgage from the lender who has assessed your financials. This is an important step which can officially show your affordability to buy a condo.
You should know that the conditions of getting a mortgage for a condo is somehow different from a house. Besides, sometimes the lender institutions have a blacklist of some condos which cannot receive any mortgage (mostly for building problems).
Related articles: How to afford a condo in Toronto
The wise action is to talk to your lender before making any offer. And certainly, hire a Top Toronto real estate agent to help you during the whole buying process.
2.Do your own research
Before buying a condo, you should do your own research about the reputation of Condo Construction Corporation and condo management. If you don’t make sure about the history of the corporation, it is probable that you buy a place and then find out it is under a heavy debt. You can find out more about the condo corporation in the Status Certificate.
For more information check the Canada Mortgage and Housing Corporation website.
Learn about all the costs. Do you know how much it costs to buy a condo apartment in Toronto? The most general costs include downpayment, land transfer tax, legal fees and title insurance and packing and moving.
Finding the best place to live in Toronto is your next important step. So take your time and explore the neighborhoods that you like. Whether you want to buy a condo for investment or for your family residence, there are some important factors that you should consider.
You should try to find out about future construction around your condominium (more condos around may block your view or light), demography of the neighborhood, public transit access, best schools in the area, and proximity to other amenities and services (parks, grocery store, hospital).
You can try to know the residents. When you are going to live in a condominium, your neighbors and community would be important factors. For example, the residents of downtown condos are mostly young couples or singles; so you might expect too much come and go or loud parties. Or try to know how friendly the condominium is, the percentage of owners vs. renters, the environment is kid-friendly or not, etc.
Related articles: best condos in toronto
4.Evaluate the condo price
Since buying a home can be the biggest financial purchase in your life, it is very important to assess everything. Using the help of your real estate agent, evaluate the final condo price and fees and ask your agent for a market valuation.
For example, consider the fact that if you buy an older condo, the monthly or annual repair costs would be higher. Certainly the experience and knowledge of your real estate agent can help you so much. However, there are some important factors affecting the condo price, including:
- Location of condo on the floor
- Which floor the condo is on
- Exposure (north/south/east/west)
- Ceiling height
- Maintenance fees
- Parking/locker/green space
- Reputation of the condominium
4.Condo maintenance and insurance costs
One of your monthly expenses after buying a condo would be the maintenance fees. So you better find out what are the services that condo management is going to charge you for. Or simply how much you should monthly pay for services like cleaning, general repairs, concierge and security, gym or swimming pool, green spaces, superintendent and a part of the condo corporation’s insurance.
You can even ask about the monthly utility fees. There might be no standard for maintenance fees in Toronto, but utility fees are standard (water, hydro, gas). Another important thing to find out is the corporation’s standard insurance coverage. If you know that, you can determine if you need extra insurance or not. Then check whether the maintenance fees have been increased each year or not.
5.Offer process and closing
The required paperwork for the initial offer price, terms and conditions will be prepared by your agent. These documents are valid for an irrevocable period of time. When you sign them, your agent will send the documents to the Seller’s agent.
Then, if the seller accepts your offer, it means they will sign and agree all your terms and conditions. Sometimes they sign but propose different terms (counter-offer). It is not uncommon, there would be some negotiations until you both reach a mutual agreement. If the seller declines your offer, it means they completely disagree with your offer or conditions. So, there won’t be any negotiations.
When the seller accepts your offer and signs it back, the closing process starts. For this process, the condo insurance policy should be prepared, you must sign all the final documents, and you should provide a valid cheque for the balance to the downpayment.
After you transfer the money on closing day, the condo ownership will also be transferred to you. Congratulations! The keys are yours and now you own a Toronto condo.