If you’re looking to enter the Toronto real estate market as a first-time buyer with limited funds you’ve come to the right place. While your budget might be limited, you’ll simply need to be strategic in your approach and quick to act. Below we share more details on how to get the most out of your limited budget.



Should you buy a home in Toronto?


Before deciding to relocate to the city, consider if the decision is suitable for you. There are numerous benefits to living in such a busy metropolis, but there are also many drawbacks. It is best to know early whether you will not love city living before investing so much money. You’ll also want to consider the fact that your options in Toronto likely consist of just condos.


The city is ideal if you want to be close to a variety of activities or your Downtown job. Toronto features a plethora of shopping, restaurants, nightlife, events, concerts, and other attractions to keep you engaged. It is also a wonderful option for business and career-minded persons since the city has a lot of business and industry going on.


Families may also find various possibilities in the city’s many schools and parks. Furthermore, Toronto is one of the most preferred places for new Canadians. With slightly under half of its people being immigrants, the city is quite international. Toronto is a city home to vibrant communities of people from many cultures.


Now for those who could struggle in the metropolis. For starters, the city is not the ideal location to be if you like nature. While there are some nice parks, trails, and green areas in Toronto, they just don’t compare to the type of outdoors that many Canadians are accustomed to.


Anyone who requires a lot of space is another sort of individual who may struggle in the city. Toronto is extremely populated; therefore, you will constantly be in close proximity to many other people. Consider searching outside of the city if you need more room to expand, particularly if you have a family. Finally, the city is not a good choice for someone searching for a good price on housing. Simply said, Toronto has among of the highest property costs in the nation, forcing many buyers to look outside of the city.



What kind of funding do I require?


The amount of money required to purchase property in Toronto will, of course, be determined by the kind of property purchased. At the moment, detached homes in Toronto cost more than $1.8 million, while semi-detached, townhouses, and condominiums cost $1.5 million, $980,000, and $750,000 correspondingly. Average costs in the GTA are somewhat cheaper than in the city proper. Therefore, generally your $100K down payment will go further the further out from the city you are.


However, given that you will almost certainly be taking out a mortgage, how much money will you truly need to get started? For starters, every property worth more than $1 million is required by law to have a 20% down payment, which means you’ll need at least $200,000 to get into the typical Toronto home before you even consider closing fees (which we will cover more in depth later on). Of course, there are still some alternatives in the city for properties under $1 million that need a lesser down payment.


In terms of loan serviceability, a recent piece on lowestrates.ca predicts that, on top of your down payment funds, you would need an income of around $155,000 to purchase a $1 million property in Toronto. To get started in the Toronto real estate market, you will require a substantial sum of money. As a result, your first step should be to start saving for a substantial down payment – but necessarily the whole 20%.




Once you’ve saved up your down payment, it’s important to get preapproved for a mortgage so you know precisely how much you can afford and so sellers know you’re serious. A mortgage broker may assist you in locating the lowest mortgage rates and making the greatest use of your money. Ask us for an introduction to a great mortgage advisor.



What kind of property should I buy?


Before you begin the home-buying process, you must first determine what you are looking for. Toronto offers everything when it comes to property to purchase (except maybe space), from sky-scraper condominiums with tons of amenities to low-rise buildings with privacy. When deciding on the kind of property to buy, examine your circumstances as well as what best meets your wants and budget.


Condos are ideal for those who do not have children or who cannot afford a $1 million home, but they are also ideal for those who wish to live in the center of the city. Townhouses are ideal for families that want more room than a condo can provide – but you’ll be pressed to find one in your budget Downtown, if you’re looking for more space opt for a property in the GTA


Any real estate in the city might be an excellent investment for investors, depending on how you utilize it. Make sure to do thorough research about the neighborhood and the home you want to purchase so that you can be confident in your investment. Or better yet, hire a great realtor to guide you the entire way!



Should I buy a new condo or a pre-construction condo?


In Toronto, there are some new construction options. For starters, constructing your own house gives you entire control over the design of your ideal home. However, there isn’t much available property in the city, so you’ll probably have to purchase a whole new home just to demolish the old one and build a new one. You might be surprised when I tell you that the land and a bungalow to demolish on Toronto’s east is now north of $1,500,000. This is, unsurprisingly, a highly expensive alternative, and unachievable with a limited budget.


There are also several new and pre-construction condo buildings throughout the city. Purchasing a pre-construction condo gives you the opportunity to be the first owner of a brand new property. However, you may have to wait many years before you can move in or begin renting. More importantly you’ll want to consider the typical pre-construction deposit structure. They require 15% upfront and the remaining 5% when you take occupancy of the building. This is a good option for anyone who expects to earn or save more in the coming years.





How to choose the right property to buy?


Purchasing the perfect home is critical to living a good life in the city. There are a few things you should know before starting your property hunt. These include things like the kind of home you want to purchase, the places you’re most interested in, and your budget. Finding a house in the city may be challenging, so if you don’t walk in knowing what you want, you may squander your chances.



Different neighborhoods in Toronto


The city of Toronto is home to over 140 distinct neighborhoods, each with its own distinct personality. You should attempt to limit your search to a few neighborhoods where you would be pleased.


Here are some things to think about while searching for a good neighborhood:


  • Is there public transportation? Will you be able to simply drive, cycle, or get a ride to your destination?
  • Is it close to basics like grocery, health care, amusement, and so on?
  • Is there somewhere close to go shopping or eat? Are there local schools and parks for families?
  • What is the atmosphere like in the neighborhood? Are there any unique events or activities that they host?
  • What is the price prognosis of the neighborhood for a real estate investment? How many tenants are there in the neighborhood, and what kind?

With so many diverse neighborhoods in the city, there are certain to be a few that check off a lot of your boxes. Finally, go visit these regions before you decide to purchase so you can get a sense of what it’s like to live there.

Related: The Average Home Price In Toronto and What This Gets You By Neighbourhood



Should I buy a home in Toronto or in other parts of the Greater Toronto Area?


Beyond the city of Toronto, there is a conglomeration of adjacent municipalities known as the Greater Toronto Area (GTA). The GTA is made up of 25 municipalities, both large and small, urban, and rural. Each local market in the GTA, like each community in Toronto, has its own distinct characteristics.


The GTA emerges as a consequence of urban expansion that has combined several cities into a single metropolis. As a consequence, living in the GTA allows you easy access to the region’s various other cities. As a result, if you thought you were set on settling in Toronto, don’t rule out the GTA as a possible choice.


There is an astounding diversity of houses and neighborhoods across the area, and there really is something for everyone. The GTA distinguishes itself from Toronto in that it has greater area and may be less densely built, giving you more breathing room. Costs throughout the GTA are similarly cheaper on average than in Toronto, however a few notable exceptions, such as Oakville and Richmond Hill, might have higher prices.



Do I need a real estate agent?


If you’ve identified some places you like or need a second opinion, a real estate agent should be your first port of call. A real estate agent can supply a wealth of information about the city, its neighborhoods, and the residences that inhabit them. A real estate agent will be your primary point of contact throughout the home-buying process, so find one with whom you feel comfortable and who knows your requirements and desires.


Look for a realtor that has expertise in the locations you wish to purchase in for an even better experience. The correct real estate agent may make all the difference, and there are plenty to choose from, so don’t feel obligated to choose the wrong one. People often interview a few agents before deciding on the best one for them.


Once you’ve connected with a realtor, they’ll begin providing you listings to pick from, and you’ll be able to start home searching in earnest.



Completing your deal to buy a property


Because of the fierce competition for properties in the city, it may be difficult to finalize a purchase in the Toronto property market. Be prepared to pay a little more for a property than it was initially advertised for, and don’t get too connected to anyone’s home until you know it’s yours. It may also be difficult to attach restrictions to the sale, such as financing or a house inspection since others may waive constraints to gain an advantage.


For the last procedures, consult with your mortgage broker and a real estate lawyer. If you were successful in your house searching and located a property that is a good match for you, and your offer was accepted, you just have a little more work to do. At this stage, it’s a good idea to contact a real estate lawyer, who will be needed to assist you seal the sale. You will now collaborate with your real estate lawyer and mortgage broker to ensure that everything is in order, including the documentation and legal elements of the transaction.



What are the closing expenses?


When it comes time to close on the purchase of your house, there are several closing charges that will pile up. These may include legal expenses, house inspections, and home insurance, among other things. The land transfer tax, which Toronto imposes on all real estate acquisitions, is one closing expense to keep in mind. In addition to the provincial land transfer tax, this tax is levied.


In general, closing expenses in Toronto should be between 4% and 7% of the purchase price of your house.


–       First-time purchasers


For first-time purchasers in Toronto, you may save money on municipal and provincial property transfer taxes, which can save you hundreds of dollars off your purchase price. There are other incentives, such as the First-Time House Buyer Incentive, which enables qualified home purchasers to receive up to 10% of the purchase price for a down payment that may be returned over a period of up to 25 years.


–       Buyers from other countries


Every year, many foreigners purchase property in Toronto, but there are a few things to be aware of that make purchasing a house a little more difficult for international buyers. The non-resident speculation tax, which imposes a 15% tax on any residential property purchased in the Golden Horseshoe area by anybody who is not a Canadian citizen or permanent resident of Canada, is one example.



Final words


Now you know how to enter the Toronto real estate market with just $100K. Keep these facts in mind and you will end up with securing the maximum returns out of what you can spend.


If you’d like to talk about starting your Toronto condo search please book a call and we’d be happy to discuss how we can help you find and secure your future home.


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