Foreigners make up about one-fifth of Canada’s population—one of the highest ratios within the Western hemisphere. One of the most popular cities for these individuals to settle is Toronto. The city is a multicultural hub with iconic landmarks, universal health care, an abundance of green spaces, and a stunning skyline. Moreover, Toronto is Canada’s business and financial capital, making it one of the strongest job markets in the country.
In this article, we will discuss the process of buying a house in the greater Toronto area and outline the steps you should take to ensure a smooth transaction.
Like most open economies, Canada allows non-residents to buy property in the province of Ontario with little to no restrictions. In fact, the buying process for foreigners is more or less the same as for Canadian citizens, with the sole difference being the Non-Resident Speculation Tax (NRST) that foreigners are required to pay.
Besides regular purchase fees and property tax, individuals who are not citizens or permanent residents of Canada must pay a tax of 15% on the purchase or acquisition of an interest in residential property located in the Greater Golden Horseshoe Region.
Buying a property in a foreign country can seem like a daunting task. This is especially the case if you are a first-time homebuyer. Fortunately, Canada has a fairly straightforward buying process. Below is a breakdown of all the steps involved in buying a house in Toronto.
The first thing you need to do when buying a house in Toronto is find a local real estate agent or realtor who can guide you through the process. Toronto real estate agents know the ins and outs of the local housing market and can demystify many aspects that are specific to the area. Working with a local agent will save you the hassle of having to conduct a real estate market analysis yourself and allow you to identify the right homes and neighborhoods without prolonged house hunting.
Another critical area where a real estate agent can be of great help is during the mortgage application and approval. An experienced agent can help you navigate the entire process, from helping you submit your application and securing pre-approval to monitoring your mortgage commitment and ensuring your credit score remains in good standing.
Buying a house in another country may involve costs with which you are not familiar. To avoid any surprises when buying a house in Toronto, take some time to factor in all the expenses associated with the purchase and make sure you budget accordingly. Here are some costs you may incur when buying property in Toronto:
Unless you are planning to buy a property outright with cash, the next step of the purchase process is getting pre-approved for a mortgage. Keep in mind that you need to get pre-approved first before you can submit an offer on a house. As part of your application, a mortgage broker may ask for:
Ensure you stay in touch with the lender during the processing of your application and be prepared to answer inquiries and provide extra documents if requested.
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A home appraisal is generally required by lenders — making sure the price of a house is in line with its market value helps mortgage providers protect their investment and ensures the property can be quickly offloaded in case the borrower defaults.
On top of helping you get pre-approved for a mortgage, a home appraisal offers you a host of other benefits. First, determining the actual value of the home helps you avoid overpaying for the home and provides a reason to negotiate a lower house price. Moreover, appraising the home before buying it ensures you will pay the right amount of taxes on it.
A home inspection is an important step when buying a house in Toronto. Inspecting the property can reveal major structural issues, which can provide grounds for negotiating the price or pulling out from the deal altogether.
To get a house inspected, you need to retain the services of a professional home inspection company that operates in Toronto and the GTA area. When working with a professional home inspection outfit, expect to pay fees ranging between $300 and $500, depending on whether the property is a condo, single-family home, or townhome.
Hiring a real estate lawyer is legally required in the province of Ontario. A lawyer will act on your behalf in the purchase and provide legal guidance when negotiating the details of the transaction. The real estate lawyer will also handle the closing for you.
Once you have narrowed the list of homes for sale down to a single option, it is time to submit an offer and sign an agreement with the seller. Having mortgage pre-approval and letting an experienced local real estate agent handle the negotiations will increase your odds of getting your first offer through without too much hassle.
Your purchase agreement highlights several key elements. This includes the final home price, information about your mortgage broker, and the closing date. To avoid any potential issues, get your offer approved by your real estate lawyer before submitting it.
Now that you are a homeowner, the next step is starting the process of moving to Toronto. Homeownership alone does not grant you the right to live in Canada indefinitely. This means that you should get your immigration status sorted out before committing to a home purchase in Toronto.
Generally, Canadian immigration laws recognize four immigrant categories:
The Federal Skilled Worker program, which falls under the economic classes category, is the most popular way to get permanent resident status in Canada. The program uses a point system that considers the applicant’s work experience, language skills, and education.
The home-buying process can be difficult to navigate in your home country, let alone somewhere else. Dig deeper into relevant topics related to buying a home in Canada and browse through qualified Advisors in Canada to receive a tailored consultation for this important matter.
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