How to Buy a Condo in Toronto: The Ultimate Guide
How to Buy a Condo: Days 1-7 – Get Your Finances in Order
Day 1: Prepare the important paperwork. Your lender will need a few things from you to pre-approve you for a mortgage:
Your credit check (the lender will run this report for you)
An employment letter (stating your status, start date, position and salary)
Last year’s T-4 (verifying your income)
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.
Day 2: Get your downpayment together. 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.
If the money isn’t easily accessible – for example, it’s locked away in mutual funds or is in an international bank- put a plan together to liquidate it so that you have access to it on closing.
If your downpayment is in a high-risk investment, consider cashing it out now so that it isn’t subject to any blips in the market.
If part or all of your down payment is being gifted, your lender may require that it’s in your bank account for a minimum number of days (and the bank will request a letter from the person who gave you the gift).
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.
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.
Day 3: Make sure your deposit is accessible. You’ll need to provide a deposit (usually 5% of the purchase price in Toronto) within 24 hours of your offer being accepted (and possibly 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 plan for it now.
If your deposit in an online bank, make a withdrawal and transfer it to an easily accessible bank account.
If it’s in an RRSP, you usually have one year to buy the home after the downpayment is withdrawn from the RRSP (but check with your lender to be sure).
Click here to read more about deposits.
Day 4: Find out about Government programs and rebates – everybody loves free money! There are several programs to help first-time homebuyers buy a condo:
The Home Buyer Plan, where first-time buyers can borrow up to $35,000 tax-free from their RRSP (note: you have to pay it back within 15 years)
Land Transfer Tax refunds in both Ontario and Toronto
The First-Time Home Buyer Credit (a tax credit of up to $5000 to help defray closing costs, which results in a refund of up to $750)
CMHC loan insurance if your downpayment is less than 20% and the purchase price of the home is less than $1 million.
If you’re buying a condo for under $565,000, you may be able to participate in the First Time Buyer Incentive.
Day 5: Get pre-approved for a mortgage. It’s essential to know how much you can afford before you start shopping or buy a condo, so getting pre-approved for a mortgage is an important step. Getting a mortgage for a condo is slightly different than getting a mortgage for a house:
Lenders will take into consideration the expected maintenance fees when determining how much you can afford.
Many banks will require a 20% downpayment for properties under 500 sqft (and some banks won’t finance them at all).
Many banks won’t finance condo-hotels.
CMHC and most lenders have a secret list of condos they won’t finance, usually because of problems with the building.
Always put in a financing condition in your offer or talk to your lender before you make an offer.
Day 6: Educate yourself about closing costs. While the Seller likely pays your REALTOR’s fees, you’ll have to pay provincial land transfer tax, 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.
You can read more about closing costs here.
Day 7: Be ready for the costs of owning a condo:
Condo Maintenance Fees: It may come as a surprise to learn that condo fees vary significantly between buildings. While maintenance fees will almost always include water, garbage, common elements and building insurance, they may or may not include hydro, gas and air conditioning. What’s included/not included in your maintenance fees can significantly change your financing options and monthly carrying costs. Note: 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.
Other Expenses: You’ll also need to pay for home insurance, internet or cable, and property taxes.
Special Assessments: Sometimes, condos have unexpected or unbudgeted expenses that must be paid by the residents. These special assessments, while not that frequent, can be expensive. Find out the history of special assessments and 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).
How to Buy a Condominium: Days 8-15 – Figure Out What You Want
Day 8: Get your team in place. Buying a condo is a team effort, and you’ll want to make sure you have the right team in place:
Your REALTOR – Your REALTOR plays a critical role in making sure you buy the right condo, in the right neighbourhood – and of course, negotiating the price and terms of the agreement. Do your research before hiring a real estate agent – read online reviews and get recommendations from friends and family. Trusting the wrong agent could cost you tens of thousands of dollars and cause you a lot of grief. Click here to read How REALTORS help Buyers.
Real Estate Lawyer – Your lawyer will review the status certificate, manage the closing and deal with any closing issues. Make sure to hire a lawyer who is experienced in helping condo Buyers. Click here to read How a Lawyer Helps 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, involve them early in the process.
Helpers – the friends/family involved in the purchase – It’s not unusual for first-time condo Buyers to involve family and friends in the purchase. Decide who you want to be involved and make sure to communicate with them exactly how you want them to help (and when you want them to butt out).
Day 9: Determine your needs and wants: Neighbourhood – Condominiums can be found in almost every neighbourhood 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 TTC?
Check it out: We’ve written more than 75 detailed guides about our favourite neighbourhoods.
Day 10: Determine Your Needs and Wants: 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 varying degrees of shared and private outdoor spaces, services and amenities
Hard lofts – authentic loft conversion with lofty finishes like exposed brick and beams
Soft lofts – newly built to resemble a loft, soft lofts have taller ceilings and finishes like concrete ceilings or exposed beams.
Townhomes – 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 boutique building with fewer units and amenities or do you dream of a high rise with all the bells and whistles and a concierge?
Building Amenities – In Toronto, we’ve got condos with 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 will use – you’ll be paying for them every month as part of your condo fees.
Day 11: Determine Your Needs and Wants: Condo Unit
Unit Size – How much space do you want? How much do you need? Condos are usually 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 $75,000 or $100,000 it might cost?
Unit Features – Fancier finishes = money. Don’t forget: there are some great opportunities to buy 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 from $25,000 to over $75,000 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 to the concierge).
Storage – How much storage do you need in the condo? Do you need a locker? Lockers add anywhere from $3,000 to $25,000 to the price of a condo. Can you build in storage in the unit? Is it time to purge your high school yearbooks and adopt a minimalist life?
What compromises are you prepared to make? Everybody makes compromises.
Day 12: Get To Know the Market
Read market reports (overall and specific)
Start looking at sold prices
Talk to your agent and understand what the sold prices and reports mean
Day 13: Get Your Helpers Onboard
If there are others involved in the process (spouse, partner, parents), get them onside.
Day 14: Finalize Your Budget At this point, you should be pre-approved for a mortgage, so you know how much you can spend; 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 to spend to buy a condo?
Day 15: If you haven’t already, call the BREL team! We’ve sold hundreds of condos and pride ourselves on helping condo Buyers navigate the path condo ownership.
How to Buy a Condo: Days 16-20 – The Property Search
Day 16: Start searching online – Pretty much every condo Buyer first sees the condo they eventually buy online. There are a few ways to search for properties online:
www.realtor.ca is the website owned by the Canadian Real Estate Association. It pulls available properties for sale directly from the system that agents use, the MLS (multiple listing services). Unfortunately, realtor.ca is usually a day or two behind what’s happening in the real world, but a great way to explore what’s for sale and start to get a feel for what’s available.
Custom Listings from your REALTOR. Another way to get quick and easy access to properties for sale is to have your agent send you a daily email with new listings that match your criteria.
The best way to search online is to have your agent set you up on Collab. It’s a great tool that allows you to set up multiple searches and get instant notification of new listings.
Contact a BREL agent to set you up on a property search.
Day 17: Start looking at condos in person – Let the house hunting begin!
Working with your REALTOR, you’ll be able to book private showings at the condos that interest you.
You can also visit open houses (though note that they aren’t as frequently 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 endlessly harassed by them.
Day 18: 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 a big role here, as will the status certificate that your lawyer will review after you’ve successfully 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 developers are great, and there are plenty of mediocre builders out there, who build cheap condos.
Quality of Construction – Just like there are good and bad developers, there are good and bad condo buildings – buy a good one. The quality of the construction doesn’t only impact appearance – it impacts maintenance, costs, noise and resale values. Work with a REALTOR who’s familiar with the condos and builders in your target area – they’ll have great intel about the buildings that may not be obvious to you.
Unattractive Features – When shopping for a condo, look out for things that might detract from value – small windows and dark spaces with 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 good care of the common elements (hallways, pools, the gym, etc.) because they know that if they need to be replaced, it’s their $$$. The percentage of tenanted units is identified in the condominium’s status certificate.
Condo Management – Property management companies vary in quality, and well-managed buildings hold their value better and are more pleasant to live in. The condo board is responsible for hiring and managing the property management company, which in turn hires the staff (on-site property manager, concierge, cleaning company, etc.). Find out who the property management company is and do some research.
Building History – You can tell a lot about how a condo is run by looking at its history. Is the progression of maintenance fee increases in line with what’s normal? Have there been special assessments? Lawsuits? Are they hiring a new property manager every year?
Building Appearance and Maintenance – Toronto is home to some of the most beautiful – and the ugliest – condos. Will the building you’re considering buying in be attractive to other buyers? Is it in a good state of repair? When you walk into the lobby after a long day at the office, will it feel like home?
Day 19: Unit Due Diligence
View – Don’t ever get attached to a view (unless it’s the lake, and even then…). In a city that’s changing as fast as Toronto, anything can happen. Above all else, never trust a parking lot – there’ll probably be a condo there in a few years. And while you may have paid for a great city view when you bought the condo, that new building with a 20-foot setback will affect the resale value of your home
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?
Day 20: 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
Proximity to grocery stores, parks, schools and night-life are not only important for your enjoyment, but they’re critical for resale.
Read our How to Choose a Neighbourhood Guide: 88 Considerations here for more details.
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.
How to Buy a Condominium: Days 21-28 – Offer Time + Closing
When it comes time to make an offer on a condo, all of these steps will happen simultaneously. In the meantime, educate yourself about each phase of the offer and closing process.
Day 21: Price – 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:
What floor the unit is on
Location on the floor (eg across from an elevator or on the corner)
Upgrades and renovations
The ratio of owners to renters
The reputation of the building
For a complete review of how condos are priced, check out Valuing a Condo.
Day 22: The Paperwork – There’s a ton of legal paperwork that you’ll need to sign when you start working with a REALTOR to buy a condo, including:
Working with a REALTOR – summarizes the different ways that real estate agents can represent a Buyer
The Buyer’s Representation Agreement or Customer Service Agreement– confirms the terms of your relationship with your REALTOR/their brokerage, the commission that will be paid if you buy a property during the period of the agreement, the role of the agent and what happens if they are also representing the Seller.
FINTRAC – mandatory identification document required by the federal government.
Agreement of Purchase and Sale – the legal document containing the price, terms and conditions of the sale, agreed to by both the Buyer and Seller.
Confirmation of Cooperation – details the relationship that both the Buyer and Seller have with their agent/brokerage and the commission agreement between the brokerages.
For a full review of the paperwork that a Buyer needs to sign, click here.
Day 23: 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 during the 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.
You can read more about deposits here.
Day 24: Conditions – 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:
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); click here for more details
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.
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.
Day 25: Offer process – Your agent will prepare the offer, including your initial offer price, terms and conditions. It will be valid for a certain amount of time (we call this irrevocable period). Once you’ve signed off it, your agent will present the offer to the Seller’s agent/the Seller. The Seller can:
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.
You can read more about what to expect when making an offer on a condo here.
Day 26: Bidding wars – If there’s more than one offer on the condo at the same time, you’re in a multiple offer situation, more commonly known as a bidding war. Bidding wars are relatively common for condos in Toronto, and a different approach and strategy is required to buy the condo.
You can read more about condo bidding wars here.
Day 27: 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:
Your condo home insurance policy needs to be ready
You’ll sign all the final paperwork with your lawyer
You’ll get title insurance
You’ll need to provide a certified cheque for the balance owing on your downpayment
Your lender will advance the mortgage funds.
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. Congrats!
Day 28: Celebrate! You bought a condo! Whether buying took you five days, 30 days or six months, it’s time to celebrate. You’ve earned it.