Home Buyer Education - Getting Your Finances in Order

The process of purchasing a home in Toronto can be a bit overwhelming, particularly if you are a first-time home buyer.  When we start working with new buyers, we send out weekly ‘buyer education’ emails so that our clients have easy access to important information, and we break it down into digestible chunks so it is not quite so overwhelming.

With that in mind, we thought we would start a series of educational blogs, covering all aspects of the buying process in Toronto.  Since this is the first in the series, we are going to start at the beginning - getting your finances in order!

Pre-approval

First things first, you will need to get pre-approved by your bank or mortgage broker.  This is an important first step because you don’t want to fall in love with your dream home just to find out that the bank won’t lend you the money to buy it!  You will have to provide them with tax returns, proof of income, and a list of all your assets and liabilities.  The lender will then put you through a ‘stress test’ to ensure that you would be able to carry the mortgage even if interest rates rise.  They will approve you based on the rate they are offering plus 2%, or the benchmark rate of 5.25%, whichever is higher.  Here is a handy mortgage affordability calculator to help you determine how much you can afford.  Also important to keep in mind is that there are stricter qualifying requirements for self-employed individuals. 

Whether you go through your bank or a broker, they should walk you through the different products they offer, the difference between a fixed and variable rate mortgage, along with their corresponding interest rates, the varying amortization periods, and pre-payment options.  Once you have been approved for an amount and have decided which product is the best fit for you, the lender will provide you with a pre-approval for that amount at the current interest rate, for a period of 90-120 days.  In the fast-paced Toronto market, this pre-approval is also important because it allows you to submit an offer without a condition on finance.

Mortgage Insurance

A conventional mortgage is considered to be a mortgage with a downpayment of at least 20%.  If the home you are purchasing is over $1,000,000 then a 20% downpayment is required.  If the purchase price is less than $1M and you don’t have 20% to put down, you can put down 5% on the amount up to $500,000 and 10% on the amount between $500,000-$1M.  In this case, the mortgage would have to be insured through CMHC, Sagen, or Canada Guaranty.  You can calculate the cost of the insurance premium here.

First Time Buyer Incentives

Home Buyers’ Plan (HBP)

This government program allows first-time buyers to withdraw up to $35,000 from their RRSPs, without being taxed on it, to buy or build a qualifying home.  The money has to be paid back into your RRSP within 15 years, starting 2 years after the initial withdrawal.  A first-time buyer is defined as someone who has not owned a principal residence or someone who has not owned or sold a home in the past 5 years.  To qualify the home must be a principal residence and the money can be withdrawn up to 30 days after buying a home.  You can find more information on the HBP here.

Land Transfer Tax Rebates

Land transfer taxes are a large expense that must be taken into consideration when purchasing a home.  When purchasing a home in Toronto, buyers are subject to both a municipal and provincial land transfer tax so the amount can be staggering - for example, the LTT on a $1M home in Toronto is $32,950.  Here is a calculator to determine what the land transfer taxes would be based on the purchase price.

First-time home buyers in Ontario can receive a land transfer tax refund of up to $4,000 and first-time home buyers in Toronto can receive an additional municipal land transfer tax rebate of up to $4,475..

First Time Home Buyers Tax Credit (HBTC)

There is also a First Time Home Buyers Tax Credit (HBTC), which offers a $5,000 non-refundable income tax credit amount on a qualifying home acquired during the year. For an eligible individual, the credit will provide up to $750 in federal tax relief.  Learn more here.

First-Time Home Buyer Incentive

The First-Time Home Buyer Incentive helps qualified first-time homebuyers to reduce their monthly mortgage payments without adding to their financial burden.  The program offers 5 or 10% of the home’s purchase price to put toward a down payment.  This portion is a shared-equity mortgage with the Government of Canada which means that the government shares in both the upside and downside of the property value, up to a maximum gain or loss equal to 8% per annum (not compounded) on the Incentive amount from the date of advance to the time of repayment.  The additional down payment lowers mortgage carrying cost, which makes homeownership more affordable.  First-time homebuyers purchasing a home in the Toronto Census Metropolitan Area are now eligible for an increased Qualifying Annual Income of $150,000 instead of $120,000, and an increased total borrowing amount of 4.5 instead of 4.0 times their qualifying income.  Learn more about this program here.

Deposit

Once you have your finances in order, it is time to start looking at some houses!  When you find a home that checks all your dream home boxes and decides to move forward with an offer, there will be a deposit required.  A deposit is different from a downpayment, a deposit is an amount you submit either with an offer (herewith) or within 24 hours of acceptance of the offer (upon acceptance).  This amount is deducted from the downpayment, the balance of which is paid on closing.

In Toronto’s fast-paced market, deposits are often expected herewith so you should be sure to have this money readily available and be available to go to your bank to obtain a draft made out to the listing brokerage.  This deposit is held in trust by the listing brokerage until closing.  Typically a deposit is about 5% of the purchase price.

If you have any questions about purchasing your first (or second or third) home, please feel free to reach out - we are always available for your questions! And stayed tuned for the next blog in our buyer education series.

7 Benefits of Downsizing your home

We teamed up with Delmanor Prince Edward to provide a free information session on the benefits of downsizing and why it is important to be proactive about the process of downsizing your home. Some of our favourite clients have been those who have been downsizing from their current home to a smaller, more manageable home or condo, a family suite in a family member’s home or to a retirement residence. We love taking the time to guide these clients through this big life transition and help them to start this new chapter in their lives.

Many of these clients have been in their homes for decades and some as long as half a century. These clients endear themselves to us with their stories about how the neighbourhoods have changed, the neighbours who have come and gone, the home renovations they have undertaken and the families they have raised within the walls of these homes. We are honoured and grateful to take this journey with them and consider it a privilege to play a part in this transition.

Downsizing can be an overwhelming and emotional process, which is why it is important to be proactive and have a solid plan in place. However, there are many upsides to downsizing and here are a few of the clear benefits.

A more manageable space

Some of these clients are in their 70’s, their children have long left home and they are finding that they either don’t want to or can’t manage the responsibilities of maintaining a house any longer. These clients require special attention because most have not moved for many years, they often have accumulated decades worth of belongings that need to be sorted and organized, and it is common for them to feel overwhelmed by the process and all the decisions that need to be made. However, once they have made the move to a smaller home, condo or retirement community, they find the space to be much more manageable and they will often experience the added benefit of a wider social network as well!

financial freedom

Not everyone considers downsizing later in life, some other motivating factors can be a need to reduce household expenses or pursue a simpler lifestyle, a divorce, an empty nest or the desire to reduce responsibilities in order to enjoy more financial freedom and travel. Downsizing can free up finances to allow for more options such as travel, gifting money to loved ones or pursuing new activities and hobbies. Regardless of the reason or motivation, the process is similar for everyone and requires compassion, sensitivity and proactive planning.

minimalism

We take a very thoughtful approach to the downsizing process and are sensitive to the many emotional components that this transition can trigger. Dealing with items belonging to family members who have passed away, engaging grown children in the downsizing process, getting rid of sentimental items that no longer fit or serve and dealing with estates or the division of assets are just a few of the unique obstacles that we need to consider and navigate. Once the process is complete however, there is a certain freedom that comes with owning less ‘stuff’ which can open up possibilities that were not previously a consideration.

choices

Being proactive about downsizing provides the time to research what the next best step is and weigh the pros and cons of each option. You are in a far better position to make the best decision for you if you start the process early, as opposed to being in a situation where you are forced to make decisions quickly and without forethought. With these considerations in mind, we often suggest beginning this process far in advance of the proposed move in order to avoid undue stress and overwhelm. We sit down with our clients and map out a detailed plan of how to get them from where they are to where they want to go, and implement a timeline and provide resources to help get them there.

the luxury of time

With less space to manage, this not only frees up finances but something equally as valuable, time. Without lawns to mow or big homes to clean, our clients find that they have more time to spend with friends and family, travel and pursue interests that they didn’t have time for previously.

Social Life

We touched on this earlier, but it is important to consider the social aspect of downsizing, particularly if you are currently living alone. If a condo or retirement community is your best next step, there are often many organized group activities, exercise classes, movie nights and outings, which provide opportunities to socialize and make new friends.

Health & Safety

The increased social interaction alone can improve quality of life, but if your current home has safety risks such as stairs, or if you find that you need some amount of care or supervision, downsizing can certainly help not only improve the quality of your life, but extend it as well.

You can find more details about how we approach the downsizing process on our downsizing services page. If downsizing is something you are considering but don’t know where to start, we would be happy to sit down with you and chat through your options. With a good plan and an experienced team behind you, downsizing doesn’t have to be overwhelming and can open you up to a world of possibilities!

Is an Investment Property the Right Investment For You?

Purchasing an investment property could be the right investment for you if you have maxed out your retirement fund & your children's RESP, your mortgage payments are manageable and you have some extra money that you are looking to invest wisely in order to maximize the return on your investment. Real estate is hot and interest rates are low so purchasing an investment property may seem like a no-brainer, but is it the right no-brainer for you?

I purchased an investment property in Roncesvalles with a friend of mine in 2009, and I have to say it has been a great investment and a good decision, but not without its drawbacks, so best to educate yourself and be prepared before you take the big leap….

Get Your Finances In Order

The banks have different financing requirements for a personal residence than for an investment property. A larger down payment (minimum 20%) is required and the qualifications are more stringent, so make sure to pay a visit to your bank or mortgage broker first to ensure that you qualify.

Pick The Right real estate Agent

Do some homework in this regard and make sure you choose an agent who knows the area where you want to buy, understands the principles of investment properties (cap rates, tax implications, income/expense reports…..more on this later) and has a good grasp on the the local rental market and the rules and regulations set out by the Residential Tenancies Act.

Risk comes from not knowing what you are doing

Warren Buffet

Do You Want To purchase an investment property Alone or with a partner?

I invested with a very good friend of mine and it has worked out well because we are both on the same page. We split the responsibilities and when issues arise with the house we pick up the slack for each other, depending on what is going on in our lives. If you can find someone to invest with, I think it’s great, you only have to come up with half the capital and you can split the workload. However, it doesn’t come without its pitfalls, you have to make sure that they are someone you trust implicitly and that you both have the same long term goals & vision. If you do decide to invest with a friend or family member, have frank conversations about expectations and make sure you see a lawyer to legally document your agreement.  Also, be sure to have this agreement documented in your will as well.

Location, Location, Location

How do you decide where to invest? With the rental market being what it is, it won’t be hard to find tenants pretty much anywhere in Toronto, so the best advice I can give would be to stick to what you know. In other words, buy in an area that you are familiar with or an area close to where you live. My investment property is around the corner from my house. I would like to take credit for that savvy decision, however it was really just a bit of a fluke, but I can’t tell you how convenient it is to be 2 minutes away when your tenants are calling with a problem or emergency!

What Kind of Investment Property?

Multi-unit? Single family? Condo? The type of property you decide to purchase really depends on how much you are willing to take on. The more units, the better the investment; the more tenants, the more maintenance and problems to contend with.

The Tenants

Yes, you have to deal with tenants.  This is where it can get a little tricky. Personally, I have had good luck with tenants and all our current tenants are a dream, but everyone has heard the horror stories, and the Residential Tenancies Act definitely protects the rights of the tenant over the landlord, so do your homework, follow up on your reference and credit checks and keep your fingers crossed!

....and The Maintenance

You know the old adage whatever can go wrong, will go wrong, this could not be more true than with an income property.  Nobody likes a slumlord so staying on top of maintenance and repairs is imperative.  If you are handy all the better, but if not, you will need to have a roster of reliable trades people at your disposal.

All that said, if you are up for it, an investment property can be a lucrative addition to your portfolio and when done properly can provide an additional nest egg for your retirement or future housing for yourself or your family members.

This is the first in a series of blogs on real estate investing.  The next one will tackle how to read the financials so you are able to pick out the good investments from the bad ones....so stay tuned!

If you have any specific questions about real estate investing, don't hesitate to get in touch, we would be happy to answer any questions!

West End Toronto Real Estate Market Update - March 2021

For the third straight month of 2021, record home sales continued in March across the Greater Toronto Area (GTA) with buyers taking advantage of favourable borrowing costs and continued improvement in many sectors of the economy.

GTA REALTORS® reported 15,652 sales in March 2021 – close to double that of March 2020. While sales were strong, it is important to remember that for the second half of March we are comparing against the initial impact of COVID-19 in the second half of March 2020 when sales activity dropped off dramatically. With this in mind, it is important to consider annual sales growth for the pre-COVID period (March 1 to 14, 2020) and COVID period (March 15 to 31, 2020):

- There were 6,504 sales reported during the first 14 days of March 2021 - up 41 per cent compared to the pre- COVID period in March 2020.

- There were 9,148 sales reported between March 15th and March 31st 2021, an increase of 174 per cent compared to the COVID period of March 2020. This is a stark reminder of the initial impact COVID-19 had on the housing market and overall economy a year ago.

For March 2021 as a whole, new listings were up 57 per cent year-over-year to 22,709. While representing a strong year-over-year increase, the annual growth rate for new listings was well-below that of sales.

The MLS® Home Price Index Composite Benchmark for March 2021 was up by 16.5 per cent compared to March 2020. The average selling price, at $1,097,565 was up by 21.6 per cent over the same period. Following the recent trend, low-rise home sales in regions surrounding the City of Toronto drove price growth.

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Click here if you would like to compare these numbers to last month’s numbers.

If you would like further information about current market conditions, or if you are considering a move and would like to know how much your house is worth, feel free to get in touch, we are always available for your questions!

Home design trends for 2021

grandmillenial style by hadley court

Without a doubt, the pandemic has affected every aspect of our lives; from working from home, navigating online school, eating at home more due to restaurant closures and lockdowns restricting our movements; the pandemic has certainly changed how we live and interact within our homes. Combine that with the fact that we have been staring at the same four walls for over a year, and a lot of us are feeling the desire to either redecorate, reconfigure our current space or move to a different space altogether. If you are considering a renovation or a move, here are a few design trends that we are seeing, many as a result of living life during a pandemic.

the home office

Working from home full-time means it is no longer feasible to just set up your laptop at the kitchen island or dining room table. Online meetings require privacy, tech capabilities and a way to separate work from home. A comfortable desk chair, ample storage, a proper tech set-up, good lighting and a pleasing zoom background are all factors to consider when designing a dedicated home office. In smaller spaces such as condos, where square footage is a premium and a separate room is out of the question, designating and designing a space within a space strictly for work is equally as important.

A screen is a great way to create a decorative partition in a smaller space. Designed by Charu Ghandi of Elicyon. Credit: Courtesy of Elicyon

multi-functionality

Spending so much time at home has also made us realize that we need to maximize all the space in our house and some spaces, such as formal living and dining rooms, get very little use and are taking up prime real estate in our homes. As a result, we are seeing a trend towards multi-functional space and furniture, so that we can get the most out of the space that we have. It has also forced us to re-examine our need for walls and privacy as we trend away from the open concept floor plan that has been so popular, and towards separated multi-use space.

outdoor living

Since our movements have been so restricted, we are all craving the ability to get outdoors, so there is a big trend towards blending the outdoors with the indoors and creating luxurious spaces to enjoy all-season. Creating outdoor living & dining areas allows for pandemic socializing or even just a change of scenery. Fireplaces, outdoor kitchens, swimming pools and hot tubs are popular ways to add luxury to these outdoor spaces.

Credit: Neue Focus Photography

go natural

We all also want to be cozy and comfortable these days so there is a trend away from the sleek, sterile modern look towards a more warm and welcoming esthetic. This can be achieved through the use of natural fabrics, wood accents, earth tones & (real) greenery. Natural materials such as rattan and cane are also seeing a resurgence, and we are seeing a move away from the design equivalent of fast fashion, with homeowners choosing to invest in more sustainable furnishings.

colour

We are seeing a real trend towards pops of dark colour, whether it be in a statement couch, accent wall or kitchen cabinetry. Dark green is particularly in vogue at the moment.

italianbank.com

grandmillenial style

Goodbye midcentury modern and hello grandmillenial grandeur! This style, also referred to as ‘granny chic’, incorporates pattern and texture in order to infuse individuality and personality into a space. It is old school design trends (think toile, chintz, floral wallpaper, heavy woods, vintage prints) with a modern twist.

kitchens

Kitchens are seeing a boost of colour these days with kitchen style trending towards darker and two-tone cabinetry, wood grain accents and statement range hoods.

elledecor.com

mix it up

The old rules no longer apply, you now have permission to mix it up, whether it be metals, patterns, styles or vintages, anything goes. This does take some skill, but when done right, the effect can be stunning.

If you are considering a move or a renovation and don’t know where to begin, feel free to reach out to us, we are always available for your questions!

West End Toronto Real Estate Market Update - February 2021

Record home sales in the Greater Toronto Area (GTA) continued in February as buyers remained confident in their employment situations and took advantage of ultra-low borrowing costs. With multiple buyers continuing to compete for many available listings, double-digit annual price growth was the norm throughout the GTA, with stronger rates of growth in the suburbs surrounding the City of Toronto.

GTA REALTORS® reported 10,970 sales through TRREB’s MLS® System in February 2021 – a 52.5 per cent increase compared to 7,193 sales reported in February 2020. Looking at all areas of the GTA combined, the condominium apartment segment led the way with a 64 per cent sales increase compared to last year, with similar rates of increase in the ‘416’ and ‘905’ area codes.

“It’s clear that the historic demand for housing experienced in the second half of last year has carried forward into the first quarter of this year with some similar themes, including the continued popularity of suburban low-rise properties. It’s also evident that the supply of listings is not keeping up with demand, which could present an even larger problem once population growth picks up following widespread vaccinations later this year and into 2022,” said TRREB President Lisa Patel.

The MLS® Home Price Index Composite Benchmark was up by 14.8 per cent year-over-year in February 2021. Over the same period, the average selling price was up by 14.9 per cent to $1,045,488. While market conditions were tight throughout the GTA region in February, the detached, semi-detached and townhouse market segments in suburban areas were the drivers of average price growth, with annual rates of increase above 20 per cent in all three cases.

“In the absence of a marked uptick in inventory, the current relationship between demand and supply supports continued double-digit average home price growth this year. In addition, if we continue to see growth in condo sales outstrip growth in new condo listings in Toronto, renewed price growth in this market segment is a distinct possibility in the second half of the year,” said TRREB Chief Market Analyst Jason Mercer.

We have broken down the west end Toronto real estate numbers so that you can see exactly how your neighbourhood is doing!

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Click here if you would like to compare these numbers to last month’s numbers.

If you would like further information about current market conditions, or if you are considering a move and would like to know how much your house is worth, feel free to get in touch, we are always available for your questions!

The Importance of Staging Your Home

The market is crazy at the moment so you may question whether it is worth staging your home before you list it for sale. Our answer is a resounding YES! Chances are, at this moment in time, your house is going to sell regardless (and most likely in competition), but wouldn’t you like to know that you received the most money that you possibly could by showcasing your home in its best possible light? There are many compelling reasons why staging is worth the investment, both in time & money.

people buy homes based on emotion

When someone walks into your home they want to be able to imagine themselves living there, they are drawn to homes that are not like the home they just left, but ones that are clean, stylish & serene. No one lives like that in real life, but staging provides buyers with a blank canvas where they can picture their future life, without the distraction of clutter and personal belongings, and by doing so it can represent a new beginning in their lives.

best use

You obviously adapt your house to suit your lifestyle, but that may not be the best way to present your home when it goes onto the market. We will likely recommend removing excess furniture so that the home feels more spacious, and we will also recommend ensuring that each room is set up to maximize functionality. Small bedroom that you use for extra storage? Let’s set that room up as a den, office or nursery (depending on the target demographic) to optimize the space and show prospective buyers how useful it can be. By staging rooms to showcase their best use, it highlights to buyers how much functional space the home has, while also answering any questions they may have about what to do with a particular space.

it is not as expensive as you think

We do all our own staging and include it in our commissions. We are big proponents of working with what you have and only doing what is necessary. We will always provide a list of suggested ‘to-dos’, which will often include de-cluttering, moving out some furniture (and perhaps renting a few missing pieces) and small repair jobs such as painting and patching, but we also want prospective buyers to get a feel for the house and the people who live there. We shy away from the ‘sanitized’ staging look and like to work with our seller’s belongings so that the home has character and is a reflection of the people who live there.

“They were very effective at preparing the house for sale, only what was necessary, no over the top expectations, and what a difference it made!!”

— Irene

the market will not always be like this

Just because the market is hot at the moment does not mean staging is not worth it. Staging will always maximize your sale price and, given that your home is probably your biggest investment, wouldn’t it be nice to know that your got the maximum sale price that you possibly could? Also, the real estate market ebbs and flows, so there are always going to be dips in the market, and when these dips occur, staging is going to make your house stand out above others that don’t show as well. Even in the hottest markets, for whatever reason, sometimes a house just doesn’t sell as expected, but staging will definitely lessen the chance of this happening and if there is a delay, it will be a short one.

let us take this off your plate

We have a keen eye for design and a stockpile of accessories to fit every style of home. Once your ‘to-do’ list has been completed, we come in and do a staging inventory to determine what we will need to showcase your home in its best possible light. We co-ordinate the rental and delivery of any furniture (if necessary), and arrive with carloads of items to accessorize and style your home. We will often spend days getting your house ready, so that it is picture perfect when our photographer arrives for the photo shoot. We are also not afraid to roll up our sleeves and we have been known to patch, hang, mow, weed, plant, scrub, clean, hang, move and any number of other things in order to ensure that your home stands out amongst the rest!

“They have warm personalities, an artistic flair for staging and we feel blessed to have had them as our agents. Highly recommend.”

— Trish

no cookie cutter solutions

No green apples and bottles of San Pellegrino here! Every homeowner and home is different so we approach every house that we stage differently. Again, we like the home to be a reflection of the style of the house and the people who live there, so we dedicate a lot of time to putting together a staging plan that achieves this. We particularly love combining our client’s belongings with our own, to create a unique and beautiful backdrop, which allows buyers to picture themselves living there while highlighting the distinctiveness of the home.

no regrets

We can’t tell you exactly what the outcome is going to be when you sell your home, but we can assure you that our staging is going to put you in the best possible position to maximize your sale price and allow you to move into the next chapter with the confidence that the outcome could not have been any better. Our ultimate goal is to ensure that you get the most out of your investment, in your home and in us!

If you are considering a move, we would love to talk to you about how we can help showcase your home and maximize your sale price. You can click here to see some of our staging before and afters and here to read testimonials from some of our many ecstatic clients!