When is the Right Time to Buy Toronto Real Estate?

There has never been a better time to buy a home condo in Toronto than at the present with house prices down and interest rates at an all-time low. All across the Toronto area, there are potential buyers waiting in the wings for the right deal to come along. Even those who are not ready to buy right now have their eye on the Toronto real estate market. It makes more economic sense to buy a home rather than continue renting because you are paying the monthly payment to yourself and building up equity in your home.

There are out of pocket expenses associated with buying Toronto homes. These include having the money needed for the down payment, which is usually 15% of the purchase price and the closing costs, which include administrative fees and legal fees. To make it easier to obtain approval for a mortgage, you should play it safe and have about 20% of the purchase price to put down on the loan.

There are lenders that can approve a mortgage without the 15% or 20% down payment. Some will offer a deal of only 5% down for first time home buyers. However, this means that you will have to take out private mortgage insurance in addition to the regular insurance on your home. Private mortgage insurance will cover the rest of the down payment.

You should add about another 5% for the closing costs. You may have the option with the lender you choose to have these included with the mortgage, but this means that you will end up paying more because they are added to the balance of your loan, which you pay out over the length of the term. Take stock of your finances to determine how much you can afford to borrow based on your savings and the amount of the monthly payment that will be required. The mortgage payment should not be more than 25% of your monthly income.

Although you may be paying high rent, there are also other costs associated with buying a home that you may not be aware of. Lenders require that you have an insurance policy in place, which you may have to pay monthly if you cannot afford to pay the premiums in one lump sum. Then there are utility costs, property taxes and the regular home maintenance that you don’t have to pay when you are renting.

Your credit report is of utmost importance when you decide that the time is right to buy a home. The information contained in this report will tell lenders whether or not you are a good risk to repay the money you borrow. Before you make an application for a loan, get a copy of your credit report to make sure that the information is accurate and that all of your accounts are up to date. Having an excellent credit rating will mean you will get the best interest rate. If you have negative items on your report, such as missed or late payments, then you will be charged a higher rate of interest because you will be seen as a higher risk to the lender. Checking your credit report well in advance of applying for a mortgage will give you time to correct any inaccuracies you find or bring your accounts up to date. If you have less than perfect credit, it will take time to repair it – years rather than months.

You will be making a big commitment when you decide to buy a home. The typical mortgage term is for 25 years, so you will be looking at making monthly payments well into the future. You need to get the best deal possible so that you won’t have to pay away more of your hard-earned money in interest. Shop around to find a lender that can offer you the best deal and make sure your credit report gives this lender a good view of your spending and repayment habits.
 

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