What not to do when buying a home in Toronto
Things to avoid when buying a house include committing to a price you cannot comfortably carry, making an offer without sufficient due diligence, misunderstanding the Agreement of Purchase and Sale, and arriving at closing without enough cash. Buying a house in Toronto involves more than choosing a property: the mortgage, taxes, contract terms, condition of the home and closing steps all affect the real cost and risk.
Buyers are often under pressure to make quick decisions. A careful plan before the offer, and timely legal advice after acceptance, can help identify issues while there is still an opportunity to address them.
- Set a full ownership budget, not just a maximum purchase price.
- Understand what mortgage pre-approval does and does not guarantee.
- Inspect the property and investigate documents that affect its use and costs.
- Use conditions in the offer when they are needed and workable.
- Plan for the lawyer’s closing requirements well before the closing date.
Do not set your budget using only the purchase price
Your purchase price is only one part of affordability. Before making an offer, budget for the down payment, mortgage payments, property taxes, insurance, utilities, repairs, moving, and condominium fees where the property is a condo.
Ontario Land Transfer Tax is generally payable on a purchase, and a Toronto purchase generally also attracts Toronto Municipal Land Transfer Tax. Eligible first-time homebuyers may qualify for rebates of one or both land transfer taxes, but eligibility should be confirmed for the buyers and the particular transaction.
For a resale home, HST is not ordinarily added to the purchase price in the way it may be for a new or substantially renovated home. A new-build agreement can allocate HST, development charges, utility connection charges and other builder adjustments to the buyer, so those terms need careful review before signing.
| Cost category | What to check before offering |
|---|---|
| Up-front funds | Deposit, down payment, lender requirements and the source of funds. |
| Transfer taxes | Ontario Land Transfer Tax, Toronto Municipal Land Transfer Tax and available first-time buyer rebates. |
| Legal closing costs | Legal fees, HST on legal services, title insurance and transaction-specific disbursements. |
| Lender and property costs | Appraisal, mortgage-default insurance where applicable, inspection, insurance and lender charges. |
| Ongoing ownership costs | Mortgage payments, property tax, utilities, repairs and condominium common expenses. |
| Moving and setup | Movers, storage, utility setup, locks and immediate repairs or purchases. |
Ask your lender for an estimate tied to your mortgage structure and ask a real estate lawyer for a transaction-specific estimate of legal fees, disbursements and anticipated closing adjustments. The lawyer’s estimate cannot replace a lender quote, and the lender’s estimate cannot determine legal costs or property-specific adjustments.
For example, a buyer purchasing a $850,000 Toronto resale condominium with a 10% down payment should not treat the $85,000 down payment as the entire cash requirement. The buyer must also account for both land transfer taxes, legal closing costs, any lender-required appraisal, moving expenses, and the condominium’s monthly common expenses after closing. If the buyer has less than 20% down, mortgage-default insurance may also be added to the mortgage, subject to the lender and insurer’s requirements.
Some buyers use savings, a First Home Savings Account (FHSA), or funds withdrawn under the Home Buyers’ Plan (HBP), if they meet the applicable program rules. Confirm the withdrawal rules, timing and documentation with the financial institution before relying on those funds for a deposit or closing.
Do not treat mortgage pre-approval as final financing approval
A mortgage pre-approval is useful for setting a preliminary price range, but it is not final approval for a particular home. The lender can still review the property, appraisal, title-related concerns, the complete application, income documents, debts, down payment source and mortgage-insurance requirements before funding.
A financing condition, when included in an offer, should give the buyer time to obtain financing that is satisfactory to the buyer on the wording agreed in the Agreement of Purchase and Sale. Do not assume that a pre-approval protects an unconditional offer if the lender later reduces the amount, declines the property, requires a larger down payment or changes its terms.
Until closing, avoid taking on new loans, financing a vehicle, missing payments, changing employment without speaking to the lender, or moving money without keeping clear records. These steps can affect the lender’s final review. For the sequence from planning through closing, see these things to know before buying a house in Ontario.
For example, a buyer may be pre-approved based on employment income and a proposed $700,000 purchase. If the selected condo has high monthly common expenses, the appraisal comes in below the purchase price, or the lender requires updated employment documents, the final borrowing amount can differ from the pre-approval.
Do not make an offer before checking the property and its documents
A viewing is not a substitute for a proper inspection, document review or legal review. Before making an offer, investigate the home’s visible condition, renovations and permits where relevant, rental equipment, water and drainage issues, and insurance concerns.
Major inspection red flags can include signs of structural movement, recurring water intrusion, poor drainage, unsafe electrical work, substantial roof deterioration and foundation concerns. No inspection can guarantee that a home has no defects, but an inspector can help a buyer understand visible conditions, maintenance priorities and when a further assessment is appropriate.
An appraisal is different from an inspection. An appraisal is commonly obtained for lending purposes and addresses value for the lender; it does not provide the buyer with a full condition assessment.
Buyers should also ask whether the water heater, furnace, air conditioner, alarm system, solar equipment or other items are rented or financed, and confirm what the Agreement of Purchase and Sale includes. This list of things to consider before buying a home can help organize the pre-offer review.
Do not skip conditions that you need in an Ontario offer
Ontario buyers do not generally use a separate “contingency period”; protections are usually created by conditions written into the Agreement of Purchase and Sale. Depending on the property and the buyer’s circumstances, a condition may address financing, home inspection, condominium document review, sale of the buyer’s existing property, or another identified need.
The wording matters. It should state what must happen, who must be satisfied, the deadline, how notice is delivered and what happens if the condition is not fulfilled or waived. A condition can provide important protection, but it may make an offer less attractive to a seller, particularly where competing offers are expected.
A buyer who needs financing should not remove a financing condition simply because they have a pre-approval. Similarly, an inspection condition is often valuable where visible issues, an older home, additions or renovation work create unanswered questions.
Do not overlook condo-specific costs and restrictions
Condominium buyers need to assess the unit and the condominium corporation’s financial and governance documents. Monthly common expenses are only part of the cost; the status certificate, budget, reserve fund information, rules, insurance information and disclosed legal matters can affect use, future expenses and financing.
Review whether the corporation has disclosed a special assessment, a major repair project, budget pressure, litigation or restrictions that matter to you, such as rules about pets, short-term rentals, parking or renovations. A status certificate is a key document, but it should be read with the attachments and in the context of the buyer’s intended use.
For example, a buyer considering a $620,000 downtown Toronto condo may find that the unit price fits the budget, but the monthly common expenses, parking costs and a disclosed building repair project make the ongoing cost unsuitable. Where the offer permits it, document review before becoming firm gives the buyer time to assess those issues.
Do not rely on a viewing or an agent to uncover legal risks
A real estate agent and a viewing can provide valuable information, but neither replaces the legal work required to close an Ontario purchase. Your lawyer reviews title and registered interests, deals with mortgage instructions, prepares closing documents, reviews tax and utility matters where applicable, and calculates adjustments.
A title search can identify registered matters such as easements, restrictive covenants, mortgages and liens that require attention. Title insurance may protect against certain covered title risks and can be an important closing tool, but it does not replace an inspection, a survey review where one is available, condominium due diligence or verification of the property’s physical condition.
The Municipal Property Assessment Corporation (MPAC) assesses properties for property-tax purposes, but its assessment is not a home inspection or a guarantee of market value. If you are wondering do you need a lawyer when buying a home in Toronto?, Ontario purchases require a lawyer to complete the legal transfer and electronic registration.
Buyers arranging a purchase mortgage or refinancing should ensure the lender, broker and mortgage lawyer have consistent closing instructions and enough time to satisfy lender requirements. Buyers purchasing in Scarborough can also work with a real estate lawyer scarborough to review the closing requirements for their transaction.
Do not leave closing funds and moving arrangements to the last minute
Closing day goes more smoothly when the buyer has arranged insurance, satisfied mortgage conditions, delivered cleared funds as requested, and planned the move before the deadline. Your lawyer prepares a statement of adjustments that reconciles the purchase price with items such as prepaid property taxes, condominium expenses where applicable and other agreed adjustments.
On closing day, the lawyers exchange funds and documents, and the buyer’s lawyer electronically registers the transfer and mortgage when the transaction is ready to close. Once closing is completed, the buyer receives confirmation and keys are released according to the arrangements made for the transaction.
For example, if a buyer closes on a detached Toronto home on a Friday, the buyer should have insurance effective on closing, provide closing funds in the form and time requested by the lawyer, and arrange movers without assuming keys will be available at the start of the business day. Registration and funds must be completed first.
Home features and red flags to avoid
The top home features to avoid when buying a home are not simply cosmetic flaws; they are features that can create repair, financing, insurance, use or resale problems. A low price does not necessarily offset an issue that requires significant work or limits how the property can be used.
- Unpermitted additions, basement conversions or structural changes that cannot be readily verified.
- Recurring moisture, mould indicators, drainage problems or evidence of repeated flooding.
- Significant foundation movement, roof failure or unsafe or obsolete electrical systems.
- Rental or financed equipment with unclear assumptions or costs.
- A condominium corporation with concerning financial disclosures or an anticipated special assessment.
- Functional drawbacks that may affect your own use or future buyer interest, such as inadequate access, impractical layouts or no suitable parking where parking is important to you.
These concerns do not automatically mean a buyer should walk away. They mean the buyer should understand the repair scope, cost, documentation and contractual consequences before becoming committed.
FAQ: risks and things to be aware of when buying a house
What are the risks of buying a house?
The main risks of buying a house are paying more than you can sustain, discovering expensive property defects, losing a deposit after failing to close, and taking title subject to issues that were not properly investigated. The practical response is a realistic budget, appropriate conditions, property due diligence and early legal preparation.
Is buying a house in Toronto worth it?
Whether buying a house in Toronto is worthwhile depends on your finances, expected length of ownership, housing needs and tolerance for repairs and carrying costs. It is not a decision that can be answered reliably by a market prediction; compare the full cost of ownership with your alternatives and leave room for changes in income, interest rates and household needs.
What devalues a house the most?
Serious unresolved physical problems, poor drainage or water damage, structural concerns, unpermitted work and major functional limitations can reduce buyer interest and increase the cost of selling or repairing. In a condominium, financial strain or major building issues can also affect a buyer’s assessment of value.
How can I afford a house in Ontario?
Start with a lender’s assessment of your income, debts, down payment and projected housing costs, then set a purchase limit below the maximum if that better protects your monthly budget. Consider whether an FHSA or HBP withdrawal is available, and reserve cash for taxes, closing costs and repairs rather than using every dollar for the down payment.
What should I do once an offer is accepted?
Send the signed Agreement of Purchase and Sale to your lawyer and lender promptly, diarize all condition and closing dates, arrange insurance, and complete required financing or inspection steps on time. First-time buyers may find these tips buying a house useful, and buyers working with an agent can review what to look for in a good Toronto real estate agent before relying on that relationship.
Speak with a Toronto real estate lawyer
Early legal advice can help you understand an offer’s conditions, closing costs and title-related requirements before deadlines become urgent. Our real estate lawyers can review the legal steps involved in your Ontario purchase.
Call 416-747-9900 or book a consultation to discuss your matter with LD Law.