Getting Started
The first question you’re bound to ask is: “How much home can I afford?” That depends on a number of factors:
- Your selected location. Are you set on a specific area? Downtown? The suburbs? A rural setting?
- Your preferred type of home. Detached? Semi? Duplex? High-rise? Link? Townhouse?
- New or resale? There are a variety of home styles you will want to explore.
- Your income. It’s not just the mortgage — there are property taxes, utilities, and in some cases condo fees. As a general rule, your monthly home-carrying cost should not exceed 30–35% of your gross income.
- Market conditions. Is it a buyers’, sellers’, or balanced market?
Be specific about what you want and what you can afford before you begin your search. The more you’ve thought it out, the better Heidi can meet your needs.
Heidi’s Dual-Licence Advantage for Buyers
- As a licensed Mortgage Agent, Heidi can get you pre-approved in-house — no separate broker appointment needed
- She shops multiple lenders through Centum Financial Group to find you the best rate and product
- As your Real Estate Sales Representative, she then finds the property, negotiates the offer, and guides you to closing — one expert, one relationship
- 22+ years of GTA market knowledge means she knows what to look for and what to avoid
What Can You Afford?
Knowing what you can afford at the beginning of your search saves you time and disappointment later. Lenders use two key ratios to determine your borrowing capacity:
Rule 1 — Gross Debt Service (GDS) Ratio
Lenders allow you to spend approximately 32% of your gross monthly income on housing costs — including mortgage principal and interest, property taxes, heating, and 50% of condo fees if applicable.
GDS Calculation Example
Rule 2 — Total Debt Service (TDS) Ratio
Your entire monthly debt load should not exceed 40% of your gross monthly income. This includes housing costs plus car payments, credit cards, student loans, and all other debts.
TDS Calculation — Same Example
Note: Many lenders are prepared to exceed these guidelines in certain situations. As your licensed Mortgage Agent, Heidi reviews your complete financial picture to find the right product — not just the one that fits a formula. Contact her for a free, no-obligation pre-approval consultation.
Government Programs for First-Time Buyers
- First Home Savings Account (FHSA) — contribute up to $8,000/year ($40,000 lifetime), tax-free growth, tax-free withdrawal for a qualifying first home
- Home Buyers’ Plan (HBP) — withdraw up to $35,000 per person from your RRSP ($70,000 per couple) toward a down payment
- Ontario Land Transfer Tax Rebate — up to $4,000 for eligible first-time buyers
- First-Time Home Buyers’ Tax Credit (HBTC) — up to $1,500 back on your federal tax return
- CMHC Mortgage Insurance — purchase with as little as 5% down
Your Buyer Team & Their Roles
Purchasing a home is a team effort. With Heidi, your real estate and mortgage needs are covered by one expert — but here is everyone you’ll work with through the process:
🏠 Real Estate Sales Representative
Your primary advisor — fine-tunes your search, negotiates offers, and guides you through every step. Heidi brings 22+ years of GTA experience and holds the ABR® (Accredited Buyer’s Representative) designation.
📈 Mortgage Agent / Broker
Secures your financing by shopping multiple lenders for the best rate and product. With Heidi, your Sales Rep and Mortgage Agent are the same person — no gaps, no miscommunication.
⚖ Real Estate Lawyer
Reviews your Agreement of Purchase and Sale, searches the title, prepares mortgage documents, and manages the transfer of funds and title on closing day. Always use a lawyer you trust.
🔍 Home Inspector
Provides a professional assessment of the property’s structure, systems, and condition. Ensure your inspector is a member of OAHI or PACHI and carries Errors & Omissions insurance.
🏭 Insurance Broker
Arranges property insurance — required by your lender before closing. Shop around for the best coverage and rates; an independent broker can save you significant money.
🔨 Contractor
If renovations are planned, get at least three quotes, check references, verify credentials, and ensure every contract is detailed — specific finishes, timeline, and total cost cap included.
Mortgage Types
Conventional vs. High-Ratio Mortgages
A conventional mortgage requires a minimum 20% down payment, with the mortgage not exceeding 80% of the appraised value — no mortgage insurance required.
A high-ratio mortgage is for buyers with less than 20% down. It requires mortgage default insurance through CMHC, Sagen, or Canada Guaranty. The insurance premium ranges from 2.80% to 4.00% of the mortgage amount and is typically added to your mortgage balance.
Second Mortgage
An additional loan secured against your property, ranking behind your first mortgage. Second mortgages carry higher interest rates due to increased lender risk. Useful in specific financing situations — Heidi can assess whether this is the right tool for your situation.
Key Mortgage Features to Understand
- Prepayment Privileges — the ability to make lump-sum payments against your principal, above and beyond your scheduled payments, to pay off your mortgage faster
- Portability — transfer your existing mortgage to a new property when you move, maintaining your current rate and terms
- Assumability — allow a buyer to take over your existing mortgage; useful when your rate is more favourable than current market rates
- Expandability — increase your mortgage principal if you need additional funds down the road, often at a blended rate
Heidi’s tip: As your licensed Mortgage Agent, Heidi compares all of these features across multiple lenders — not just the rate. A mortgage with strong prepayment privileges and portability can save you thousands over the life of your loan.
Mortgage Terms & Closing Costs
Understanding Your Mortgage Term
The term is the length of time your interest rate, payment schedule, and lender agreement are in effect — typically 1 to 5 years (though terms up to 10 years are available). At the end of each term, you renew or pay off the mortgage. The amortization is the total time to repay the full mortgage — typically 25 years for insured mortgages.
- Fixed Rate Mortgage — your rate and payment stay the same for the full term; ideal if you want predictability or expect rates to rise
- Variable Rate Mortgage — your rate fluctuates with the lender’s prime rate; potential savings when rates fall, but payments can increase
- Open Mortgage — can be paid off at any time without penalty; higher rate but maximum flexibility
- Closed Mortgage — locked in for the term; prepayment is limited but the rate is typically lower
- Convertible Mortgage — starts as a short-term closed mortgage with the option to convert to a longer term without penalty
Closing Costs — What to Budget For
Beyond your down payment, set aside 1.5% to 4% of the purchase price for closing costs. Common costs include:
- Land Transfer Tax — Ontario: 0.5% to 2.5% of purchase price (Toronto buyers pay an additional municipal LTT)
- Legal Fees — typically $1,500–$3,000+ depending on complexity
- Home Inspection — approximately $300–$600 depending on property size
- Title Insurance — typically $150–$400; protects against title defects and survey issues
- Mortgage Default Insurance Premium — 2.80%–4.00% of the mortgage if your down payment is under 20% (added to mortgage)
- Appraisal Fee — $300–$500; sometimes covered by your lender
- Property Tax Adjustment — reimburse the seller for any prepaid property taxes
- Moving Costs — budget $1,000–$5,000+ depending on distance and volume
- Status Certificate — up to $100 for condo purchases (outlines the condo corporation’s financial health)
- Utility Hook-Up Fees — telephone, internet, and other services at your new address
Making an Offer
When it’s time to make an offer, Heidi provides current market data and negotiation strategy to help you present the strongest possible offer — whether the market is competitive or balanced.
Firm Offer to Purchase
A firm offer has no conditions. If the seller accepts it, the property is yours unconditionally. Firm offers are preferred by sellers and can be advantageous in competitive situations — but require careful due diligence in advance (financing pre-approval, prior home inspection if possible).
Conditional Offer to Purchase
A conditional offer includes one or more conditions that must be satisfied within a set period before the deal becomes firm. Common conditions include:
- Subject to financing — gives you time to secure your mortgage commitment
- Subject to home inspection — allows a licensed inspector to assess the property
- Subject to status certificate review — for condo purchases, allows your lawyer to review the corporation’s finances and rules
- Subject to sale of buyer’s existing home — protects you if you need to sell before buying
The Offer Process
Heidi presents your offer to the seller or their representative at the earliest opportunity. The seller may accept, reject, or submit a counter-offer adjusting price, closing date, or conditions. Offers can go back and forth until both parties agree or negotiations end. Throughout this process, Heidi negotiates firmly on your behalf with your best outcome always the priority.
Protecting Yourself as a Buyer — Heidi’s Checklist
- Always get a mortgage pre-approval before you start shopping seriously
- Include a home inspection condition unless market conditions and your research make a firm offer clearly advantageous
- For condos: always review the status certificate with your lawyer before waiving conditions
- Understand exactly what is included (fixtures) and excluded (chattels) in your offer
- Factor all closing costs into your budget — not just the purchase price
- If buying before selling: use a “sale of existing home” condition or arrange bridge financing
- If selling before buying: use a “purchase of new home” condition in your sale agreement
Common Real Estate Terms
A quick-reference glossary of terms you’ll encounter throughout your home purchase.
- Amortization
- The total time period over which a mortgage is repaid — typically 25 years for insured mortgages.
- Appraisal
- A professional estimate of a property’s market value, typically required by the lender.
- Assumable Mortgage
- A mortgage that can be transferred to a new buyer, who takes over the existing rate and terms.
- Balanced Market
- Supply and demand are roughly equal; prices are stable and homes sell in reasonable timeframes.
- Blended Payment
- A regular mortgage payment combining both principal repayment and interest.
- Bridge Financing
- Short-term financing to cover the gap between your new home’s closing date and your sale’s closing date.
- Buyer’s Market
- More homes available than buyers; prices tend to be lower and buyers have more negotiating power.
- Chattel
- Removable personal items not normally included in the sale (e.g. appliances, light fixtures).
- Closing Costs
- Costs beyond the purchase price payable on closing day — legal fees, land transfer tax, title insurance, etc.
- Closing Date
- The date the sale becomes final and the buyer takes possession of the property.
- Conditional Offer
- An offer to purchase subject to specified conditions that must be met within a set timeframe.
- Condominium
- Shared ownership where buyers own their individual unit plus a proportionate share of common elements.
- Counter-Offer
- The seller’s response to your offer, amending terms such as price or closing date.
- Deposit
- Money held in trust by the seller’s broker when your offer is accepted; applied to the purchase price on closing.
- Down Payment
- The portion of the purchase price you pay from your own funds, separate from the mortgage.
- Equity
- The difference between your property’s current market value and what you owe on your mortgage.
- Fixtures
- Permanent improvements included in the sale (e.g. built-in appliances, wall-to-wall carpet) unless excluded.
- Foreclosure
- Legal process where the lender takes possession of a property after the borrower defaults on the mortgage.
- GDS Ratio
- Gross Debt Service ratio — monthly housing costs as a percentage of gross monthly income. Lenders typically allow up to 32%.
- High-Ratio Mortgage
- A mortgage with less than 20% down payment, requiring mortgage default insurance.
- Land Transfer Tax
- A provincial (and in Toronto, municipal) tax payable on the purchase of real property.
- Lien
- A claim registered against a property for unpaid debts (e.g. unpaid contractor work).
- MLS®
- Multiple Listing Service — the cooperative database used by REALTORS® to list and search properties for sale.
- Mortgage Term
- The period for which your mortgage rate and conditions are set — typically 1 to 5 years.
- Portability
- The ability to transfer your existing mortgage to a new property, keeping your current rate and terms.
- Power of Sale
- The lender’s right to sell a property when the borrower defaults on their mortgage, without court proceedings.
- Prepayment
- Additional payments made toward your mortgage principal, above your regular scheduled payments.
- Principal
- The amount of money borrowed — the portion of each payment that reduces your outstanding loan balance.
- Seller’s Market
- More buyers than available homes; prices rise and properties sell quickly, often with multiple offers.
- Status Certificate
- For condo purchases — outlines the condo corporation’s financial and legal health; always reviewed by your lawyer.
- TDS Ratio
- Total Debt Service ratio — all monthly debts (housing + other) as a % of gross income. Lenders typically allow up to 40%.
- Title Insurance
- Insurance protecting against loss from title defects, encumbrances, or survey issues discovered after closing.
- Title Search
- A detailed review of ownership records to confirm clear title and identify any liens or encumbrances.
- Variable Rate Mortgage
- A mortgage where the interest rate fluctuates with the lender’s prime rate throughout the term.
- Vendor Take-Back Mortgage
- The seller finances the buyer’s purchase directly, with the buyer making mortgage payments to the seller.
- Zoning
- Municipal rules restricting how land may be used — residential, commercial, agricultural, mixed-use, etc.
