Pre-approval a good initial step

The decision to buy a home brings you to an exciting period of your life. Purchasing your very first home is an exceptionally great experience. This is the time when you feel that everything is coming at you all at once, with so many options to be considered: new home or resale? Detached house or townhome? High-rise or low-rise?


Working or living in the city of Toronto makes that decision a little easier. With all the new condos going up, it seems everywhere, choosing to purchase a condo is common place. But settling on a new condo is only the first step. Once you have made your decision, you will need to do some searching and decide which area of Toronto you would like to live in.


Before you go out and start looking, you have to think about how you will pay for it and how much can you afford. You would go to your bank, financial institution or mortgage broker and get pre-approved for a mortgage. A pre-approval lets you know the exact mortgage amount and purchase amount you qualify for. This is very important and should always be done first. The last thing you want to do is find that dream condo and not be able to afford it.


You must think about how much you have available to put as a down payment on the condo. A very effective way to save for your down payment is within registered retirement savings plans (RSPs). You can withdraw up to $20,000 from your RSP without being taxed. You will have to pay the amount back over the next 15 years, beginning the year following your condo purchase. The funds being withdrawn must have been in the RSP for at least 90 days.


Another perk of being a first-time homebuyer is the land-transfer tax instant refund. A maximum of $2,000 will be refunded.

You can even purchase your condo with no money down and 100 per cent financing. All you need is a good credit history and good cash flow. You must show that you have the 1.5 per cent from your own resources to cover closing costs. You could also choose an amortization period of up to 40 years which will help land you a mortgage, although you will pay higher fees.

Looking for your dream condo is the fun part. Paying for it is the not-so-fun part. Once you have found your place, time to revisit your mortgage specialist and turn that pre-approval into an approval, or firm up.

Now comes the waiting game. Since the condo will not be built for approximately one to four years, you will have plenty to do as you decide on all the upgrades, color schemes, flooring, carpet, paint and everything else. You will make this place your dream home!

If you have any questions, concerns, comments or just looking for advice, please call 647-220-2484 or e-mail me at