How to Buy a Condo in Toronto: The Ultimate Guide
person CondoGo | watch_later 2022-01-07
How to Buy a Condo in Toronto: The Ultimate Guide

Get Your Finances in Order:

Get your paperwork together, Your lender needs a few things from you to pre-approve you for a mortgage:

1) Your credit check.

2) An employment letter (stating your status, start date, position and salary).

3)  Last year’s T-4 (proof of your income).

4) The previous year’s Notice of Assessment (NOI), confirming that your income taxes were paid. If you didn’t file your taxes last year, you won’t be able to get a mortgage.

Get your downpayment together 

1) You’ll need at least 5% of the purchase price as a downpayment to buy a condo under $1 million, and a 20% downpayment for condos priced over $1 million.

2) If the money isn’t easy to get access – for example, it’s locked away in mutual funds or is in an international bank- put a plan together liquidating it so that you have access to it on closing.

3) If you’re accepting a gift toward your down payment, your lender may require that the funds be in your account for a specific period of time (and the bank will request a letter from the person who gave you the gift).

4) If you’re want to flip your downpayment through an RRSP to help you buy a condo with the $35,000 Home Buyer’s credit, note that it’ll need to be your RRSP for at least 90 days to qualify for the plan.  You can read more about the Home Buyer’s Plan here.

5) If your downpayment is coming from outside of Canada, it’ll need to be in your bank account for at least 90 days before closing.

 Make sure your deposit is fully accessible: 

You’ll need to provide a deposit (typically 5% of the purchase price in Toronto) within 24 hours of your offer being accepted (and probably earlier if you’re in a bidding war). The deposit forms part of your downpayment come closing time. If your deposit is in an RRSP or an online bank, it can take a few days to get the $$, so make a sure to plan now.

1) If your deposit in an online bank, make a withdrawal and transfer it to an bank account that is easy to get access to.

2) If it’s in an RRSP, you usually have one year to buy the home after the downpayment is withdrawn from the RRSP (but check with your lender to be sure).

Learn more about Government programs and rebates:

Everybody loves free money! There are several programs to help first-time homebuyers buy a condo. Make sure to check out our blog about Government Programs and Rebates which is available.

1) here first-time buyers can borrow up to $35,000 tax-free from their RRSP (note: you have to pay it back within 15 years) The Home Buyer Plan.

2) if your downpayment is less than  20% and the purchase price of the home is less than $1 million. CMHC loan insurance

3) If you’re buying a condo for under $565,000, you may be able to participate in the First Time Buyer Incentive.

4) in both Ontario and Toronto Land Transfer Tax refunds 

5) Tax credit of up to $5000 to help defray closing costs, which results in a refund of up to $750)  First-Time Home Buyer Credit 

Get pre-approved for a mortgage:

It’s important to know the amount of the mortgage you can afford before you start shopping or buy a condo. As a result, it’s crucial to get pre-approved for a mortgage well before you start shopping because getting pre-approved for a mortgage is an important step in buying anything.

1) Lenders will take into consideration the expected maintenance fees when determining how much you can afford.

2) Many banks won’t finance condo hotels.

3) CMHC and most lenders have a secret list of condos they won’t finance, usually because of problems with the building.

4) Always put in a financing condition in your offer or talk to your lender before you make an offer.

Educate yourself about closing costs.

You will likely have to pay a provincial land transfer tax, perhaps municipal land transfer tax if you buy a condominium in the city of Toronto. Other closing costs include legal fees, lender or appraisal fees (possibly), and any adjustments for example, reimbursing the Seller for prepaid expenses. 

Be ready for the costs of owning a condo:

1) Condo Maintenance Fees: The costs of owning a condo vary significantly between buildings. Many include water, garbage, common elements and building insurance in the monthly fee; however, some do not include hydro, gas or air conditioning. Keep in mind, condo fees generally increase each year. If you’re buying a brand new condo, you can expect the first few years of increases to be quite significant.

2) Other Expenses: You’ll also need to pay for home insurance, internet or cable, and property taxes.

3) Special Assessments: Sometimes, condos have unexpected or unbudgeted expenses that must be paid by the residents. These special assessments, while not that often, but can be expensive. Find out the history of special assessments and make sure to have your lawyer review the status certificate for details. (the status certificate is the document that outlines the financial and legal guts of the condo).

Get your team together. Buying a condo means you’ll want to make sure you have the right team members:

Real Estate Agents

A REALTOR can help you buy the right condo in the right neighbourhood – and of course, negotiate the price and terms of the agreement. Before hiring a real estate agent, do your research – read online reviews and get recommendations from friends and family. You should trust the agent you hire to ensure your best interests are being looked after. CondoGo agents have it all. We will guide you through the process and will be with you along the way from start to finish.

Real Estate Lawyers:

When it comes time to buy a condo, your real estate lawyer can help you identify and close on the right property. Your lawyer will review the condo's status certificate, manage the closing and deal with any closing issues. Make sure to hire a lawyer who is experienced in helping condo buyers.

Banker or Mortgage Broker

Whether you choose to work with your current bank or bring in a mortgage broker to find you the best deal, engage them early in the process.

Determine your Neighbourhood  

Condominiums can be found almost everywhere in Toronto, though of course there’s a massive concentration of them downtown. Do you want to live in the middle of the action or on a quieter residential street? How important is easy access to highways and public transportation?

Type of Condominium

Condos vs Lofts vs Townhomes: Which one is right for you? Condominiums come in all shapes and sizes.

Condos in low-rise, mid-rise or high-rise buildings: and have different levels of shared and private outdoor spaces, services and amenities.

Hard lofts: genuine loft conversion with lofty finishes such as exposed brick and beams

Soft lofts: Newly built to look like a loft, soft lofts have taller ceilings and finishes like concrete ceilings or exposed beams.

Type of Townhouses There are two kinds of townhomes:

Condominium townhomes (with common or shared elements and monthly maintenance fees) and

Freehold townhomes (where you own everything, including the roof and windows). Condominium townhomes tend to have few (if any) amenities and lower maintenance fees than traditional condos.

Building Size: Would you rather live in a small building with fewer units and amenities or in a high rise with all the bells and whistles and a concierge?

Building Amenities: In Toronto, we've got condos with amenities such as fitness centres, pools, 24-hour concierge, bowling alleys, massage tables, dog washing stations and billiards rooms; media centres, golf driving ranges, hot tubs, aerobics classes and more. Think long and hard about which amenities you'll use — you'll be paying for them every month as part of your condo fees.

Determine Your Needs and Wants: Condo Unit

Unit Size: How much space do you want? How much do you really need? Condos are generally priced by the square foot, meaning that the bigger the condo, the more expensive it is. How will you use your space? Is a second bedroom for guests worth the extra $70,000 or $120,000 it might cost?

Unit Features:  More luxurious finishes = money. Don’t forget: there are some great opportunities to purchase slightly older condos in need of a refresh and save some cash.

Parking: Not all condos in Toronto have private parking. Owned parking spots are expensive, and can add anywhere between $25,000 to over $100,000 to the price of the condo. If you don’t absolutely need parking, this might be an opportunity to save some money. Also: it may be cheaper to rent a spot in the building than buy one (check the bulletin board or talk with the concierge).

Storage: How much storage do you need in the condo? Do you need a locker? Lockers add anywhere from $3,000 to $30,000 to the price of a condo. Can you build in storage in the unit? Is it time to clean up your high school yearbooks and adopt the minimalist life?

Get To Know the Market: Read market reports, Start looking at sold prices, Talk to your agent and understand what the sold prices and reports mean ( CondoGo agents will be more than happy to guide you through everything ) We’re only 1 form / call / text / email away.

Finalize Your Budget: At this point, you should be pre-approved for a mortgage, so you know how much you can afford; you’ve become familiar with asking and sold prices in the neighbourhoods and buildings that interest you; now it’s time to decide: how much do you want spend to buy a condo?

If you haven’t already, contact CondoGo Agents! We’ve sold hundreds of condos and pride ourselves on helping condo Buyers navigate the path condo ownership.

 Start searching online on CondoGo.ca and make sure Contact a CondoGo agent to set you up on a property search then you will start to get instant notification of new listings.

 Start looking at condos in person: Let the house hunting journey begin! Working with your REALTOR, you’ll be able to book private showings at the condos that interest you. There lot's of benefits working with CondoGo agent We offer our clients same-day showings! You can also visit open houses (though note that they aren’t as often held for condos as they are for houses). Just make sure to tell the open house host that you’re working with an agent, so you don’t get constantly harassed by them.

Building Due Diligence 

When you find a building or condo unit that interests you, it’s time to do some due diligence. Your REALTOR will play an important role here, as will the status certificate that your lawyer will review after you’ve effectively negotiated an agreement of purchase. Here are some of the things to be on the lookout for:

Developer Reputation: Who originally constructed the condominium? What’s their reputation and history with similar condominiums? Not all the developers are great, and there is plenty of mediocre builders out there, who build cheap (low-cost) condos.

Quality of Construction: Just like there are good and bad developers, there are good and bad condo buildings—buy a good one.Construction quality doesn’t only impact appearance—it impacts maintenance, costs, noise, and resale values.Hire a real estate agent who is familiar with the buildings and developers in your target area—they’ll have great intel about the buildings that isn’t obvious to you.

Unattractive Features:  When looking to buy a condo. Look for things that might diminish value such as small windows and dark spaces with the minimal natural light, bad odours coming from neighbouring businesses, bad views and noises from ground-level tenants or nearby garbage facilities.

Owner/Occupiers vs Tenants –  If you’re a tenant right now, you’ve probably never considered the impact tenants can have on property values. Generally speaking, the higher the percentage of owners who live in their suites, the better maintained the building (which usually translates to a better appreciation of prices). Owners tend to take care of the common elements because they know that if they need to be replaced, it’s their money. The percentage of tenanted units is identified in the condominium’s status certificate.

Condo Management – Property management companies differ in quality, and well-managed buildings hold their values better and are more pleasant to live in. The condo board is in charge of hiring and managing the property management company, which hires the staff (on-site property manager, concierge, cleaning company, etc.). Find out who the property management company is, do some research, and then talk with other tenants to see what they think of it.

Building History: A condo building’s history can tell you a lot about its operations. Are the maintenance fees typical of comparable buildings? Have there been any special assessments or lawsuits? Is the building hiring a new property manager this year? Is the progression of maintenance fee increases in line with what’s normal?

Building Appearance and Maintenance: When it comes to condos, Toronto has some of the most beautiful – and the ugliest – buildings. Will you be moving into a building that looks attractive to other buyers? Is it in good repair? When you walk into your lobby after a long day at the office, will it feel like home?

Unit Due Diligence

View: Do not get attached to a view. Toronto is a fast-changing city, and it may be difficult to keep track of the changes around you. Above all else, never trust a parking lot –overtime it will probably be replaced by a building with its own setbacks. And no matter how good the view from your new condo feels, always remember that the value of your property will decrease once a new building goes up nearby.

Neighbours – While your neighbours will come and go, it doesn’t hurt to find out what you can about them. Do they have a lonely chihuahua who barks all day? Do they work at a bar and entertain at 3 am?

Use all your senses – What do you hear? What do you smell? What do you see?

Neighbourhood Due Diligence As with all real estate decisions, location, location, location is key.

Consider: Transportation options, demographics in the area and building and the stage of development of the neighbourhood, Nearness to grocery stores, parks, schools and night-life are not only important for your enjoyment, but they’re critical for resale.

Prices: You can expect prices to change during your search. If you buy a condo in a market that’s appreciating (going up in price), you’ll pay more for it this month, than you would have paid for the identical unit last month. Make sure you’re keeping an eye on how prices are changing.

Price of the unit? How much is the condo worth? What should your offer be? Your REALTOR will play a critical role in helping you understand the value of the condo. While the price per square foot in the building is an important factor, There are plenty of other things to consider when comparing one condo to another, including:

1) What floor the unit is on

2) View

3) Exposure (north/south/east/west)

4) Layout

5) Location on the floor (eg across from an elevator or on the corner)

6) Upgrades and renovations

7) Ceiling height

8) Maintenance fees

9) Parking/locker/outdoor space

10) Building amenities

11) Location

12) The ratio of owners to renters

13) The reputation of the building

If you’re wondering how much your condo is worth contact us by filling out the contact us form.

Make Sure Your Deposit is Ready!

I know we covered this before, but it’s REALLY important to be able to access it. The deposit is provided to the Seller after a successful condo purchase has been negotiated. The deposit is held in trust (usually by the Seller’s brokerage). Deposits must be paid (usually by bank draft or electronic funds transfer) within 24 hours of your offer being accepted. If you don’t fulfil the conditions of your offer (for example, you have a financing condition and are unable to obtain financing while conditional period), the deposit gets returned to you. If you have a firm sale (meaning there are no conditions to fulfil and you have committed to buying the condo), you may very well lose your deposit.

Conditions are part of an offer to purchase and allow the Buyer time to complete their due diligence. These are the most common conditions we see in Toronto.

1) Financing Condition: a condition that allows a Buyer to back out of a sale if they don’t obtain financing (usually 3-5 days long)

2) Status Certificate Review Condition: a condition that allows a condo Buyer to have the condominium status certificate reviewed by their lawyer – usually the certificate must be provided within ten business days, and the lawyer has 1-3 days to review); click here for more details on the status certificate review condition.

3) Home Inspection Condition: while these aren’t common in condo purchases, a home inspection condition allows a Buyer to bring in a professional inspector to inspect the unit and back out of the sale if it isn’t satisfactory to them (usually 1-5 days, depending on market conditions). Note that condo inspectors can only inspect the unit and what is owned and controlled by the individual owner, so they won’t provide an opinion on electrical, plumbing, roofing, etc.

Your agent will work with you to prepare an offer for the property, including your initial offer price and the terms and conditions. The offer will be valid for a specific amount of time (we call this irrevocable period) Once you’ve signed it, your agent will present it to the seller’s agent or directly to the seller. The seller has several choices:

Accept the offer as-is:  They agree to the terms and conditions you’ve offered and sign it. Congratulations!

Sign back the offer with different proposed terms: (for example, at a higher asking price, with a different closing date, etc.). This now becomes a counter-offer from the Seller back to the Buyer. This is the most common scenario–usually, several back-and-forth negotiations take place with each side making concessions until hopefully a mutually agreeable contract is reached.

Decline the offer:  If your offer is completely unacceptable to the Seller, they have the option of simply declining it–no negotiation, no anything. We’ve seen Sellers decline low-ball first offers, and we’ve seen offers declined mid-negotiation.

Bidding wars If there are two or more offers for the same condo during the same time, you’re in a multiple offer situation, More commonly known as a bidding war. Bidding wars are common for Toronto condos, and require a different approach to buying a condo.

Closing When we refer to ‘closing’, we mean the date that you take ownership and pay for the condo. A few days before the closing date:

1) Your condo home insurance policy needs to be ready

2) You’ll sign all the final paperwork with your lawyer

3) You’ll get title insurance

4) You’ll need to provide a certified cheque for the balance owing on your downpayment

5) Your lender will advance the mortgage funds.

6) On closing day, the money will transfer to the Seller and ownership will transfer to you. At last, you’ll be able to pick up the keys to your condo. Congratulations!

 At CondoGo real estate brokerage we’ve helped many buyers and sellers with the process of buying and selling. Whether if you’re planning to buy soon or invest or sell your property you can trust that we will be by your side along the way, and we’ll take care of everything for you and make sure the process will be very smooth for you. Contact us today to get started.