Downsizing: The Advantages and Disadvantages of Moving to a Smaller Home



There are many ‘downsizing’ and related topics that we will be addressing in this blog post, some topics in greater detail than the others. We will endeavor to provide a balanced article for your reading pleasure.

Where Are You Today?

The thought of moving to a smaller home has been top of mind for many homeowners who are approaching retirement. Perhaps your retirement is on the immediate horizon, or not for many years. That being said, your children may have all moved out and the house has become just a bit too much for you to maintain and possibly afford.

There could be other reasons for wanting a smaller home. You may have financial or marital issues. Other reasons may include health issues, accessibility and safety, and the risk of falling down a flight of stairs may be another reason, if you live in a two-storey home.

Home Downsizing. Image of a cozy room and fireplace, overlooking a backyard forest with autumn leaves and trees. Autumn also a intimating time for change.

Your reasons may also be related to just wanting a smaller home, with less clutter, or just a change of lifestyle, scenery or a fresh start in a new neighborhood or location.

Article Insights

This post will provide some insights about why people want to downsize and will also include the advantages and disadvantages of downsizing, along with the benefits of moving to a smaller home.

Initially, the thought of downsizing your home may feel both exciting and overwhelming all at once. However, with careful preparation and planning, the move to a smaller home and a more minimalist lifestyle can have a very positive impact on both your lifestyle and your finances.

Planning and Research

One of the most critical factors of downsizing is to start your downsizing planning and research as early as possible, do your ‘homework’. This ‘early start’ includes, your future home and lifestyle research, desired geographical location (real estate values), along with decluttering, and taking an inventory of your belongings. Ask yourself ‘What do you really need? What will you have room for in the future? What can you give away or sell? Although there are many more elements to downsizing, these points are essential and should be included in your initial downsizing change of mindset.

Although downsizing may be a fit for many, downsizing is not for everyone, we’ll try to explore many of the factors related to downsizing throughout this article.

Why Do People Downsize?

What Exactly Is Downsizing?

Typically, downsizing is the act and process selling of a larger home in exchange for a much smaller home, along with the advantages and benefits that decision provides.

Lifestyle Change

The needs and lifestyle you have now are likely much different than your needs and lifestyle 25, 30 or 35 plus years ago.  In addition to not needing a large home and property, you may want a different lifestyle than the lifestyle you had years ago or at earlier stage in your life.

Your downsizing needs should reflect this change in lifestyle. At this stage in your life, you hopefully have a tidy sum tied up in the equity in your home, which can be very beneficial with your upcoming downsizing plans and lifestyle change.

Living Space Reduction

The motivation for downsizing varies. In most cases, the primary reason is the preference for a reduction of space and the cost benefits that accompany such reduction.

Home Downsizing. Inside of a small newer home. Kitchen and small dining room.

Other Downsizing Motivations

Other reasons may include:

  • Your home is just too big, not using the rooms. Upkeep of unused rooms etc. The home just doesn’t fit your lifestyle anymore
  • You want to pay off debts and stay out of debt
  • You can now manage your career remotely, with no need to have a home so close to work. This may provide the motivation of home downsizing
  • Your children have grown up and moved away, so there is no need for so much space
  • Access to additional capital (usually tax free). Using your home’s equity for retirement income or pay off debt when moving to smaller home
  • Not living in the home year-round, e.g., ‘snowbirds’
  • Travel aspirations funded by additional equity
  • Increasing energy costs and reduction in monthly bills. Heating and cooling of large home when rooms are not being used. If your monthly household expenses are continually increasing and your income is fixed, this may be a cause for concern
  • You may be falling behind in your home upkeep or maintenance and cannot afford those expenses. You may want to avoid future home projects or keeping up with major repairs, repairs which will need to be completed which may affect the home’s value
  • Moving closer to children and grandkids
  • Urban living and a lifestyle change
  • You may not be happy in your current neighborhood (changes over time), and you prefer to move to a more like-minded or age relevant neighbourhood or community
  • Reduced housework, including cleaning, maintenance, yard work, such as lawn care, snow shoveling etc.
  • Bungalow Selection and Availability. There may be a growing shortage of accessible single floor homes as you get older
  • You may have become a minimalist and have purged most of your belongings, or have decided to reduce your footprint on the planet and want to move to a much smaller home
  • Marital issues may be forcing you to downsize your home, along with the reduced costs and other potential options
  • Minimalist living

Financial Constraints at Retirement

As we will detail in the ‘Carrying a Mortgage While in Retirement’ section in this post, a growing number of Canadians will still have a mortgage at retirement age. A 2021 report (Statistics Canada) showed that people aged 65 years and older account for 13% of Canada’s mortgages.

Downsizing Alternatives

If your downsizing initiative is primarily due to financial constraints or financial issues at retirement age and you would prefer to remain in your home and have access to some of your equity, without increasing payments, there may be another alternative. This alternative isn’t a fit for everyone, and we will touch base on that alternative in the ‘Reverse Mortgages’ for Retirees section of this article.

Is a Reverse Mortgage a Fit for You?

We do not advocate for or provide Reverse Mortgages; however, we can help you decide if it’s a fit for you, and provide downsizing alternatives, if possible. If we are not your ‘closing’ lawyer, we can provide the mandatory preliminary legal counsel to you which is required by the lender and complete the initial forms.  We are not suggesting, recommending, or promoting this alternative, we are just offering some insights for those who may have a financial burden and want to downsize but are unable to and need other alternatives.

The Benefits and Advantages for Downsizing

In addition to cost benefits, there are other downsizing benefits, including safety reasons and accessibility, reduced expenses, and maintenance to name a few.

Small Home Benefits

Home Downsizing. An image of a pair of glasses, magnifying glass and a pen on top of a notebook. The notebook having an diagram on it about downsizing and belongings… Declutter, Donate/Sell and Move and Settle.

If you are considering downsizing, the primary reason may be related to the ‘literal’ definition of the term. You want a smaller home and the many benefits of a smaller home.

  • Smaller homes are usually much less expensive to buy, which may provide access to available home equity. This benefit is especially appealing if you move to an area with much lower real estate home prices, which provides more buying power for that unlocked equity in your home
  • Potentially lower municipal taxes
  • In addition to possibly being more unique, smaller homes are usually much less expensive to maintain, saving you money on monthly bills, therefore less stress about bills and upkeep. Smaller homes are often much more energy efficient; they use less energy and therefore may cost less to heat and cool
  • Smaller homes may reside in older communities with an older and larger tree canopy. This canopy may be appealing and offer energy efficiencies during the summer and the winter
  • Reduced risk of injury, e.g., stairs, large home, large yard etc. Your small home may be more accessible as you grow older
  • Less maintenance and cleaning. You have a lower or reduced burden of keeping your home maintained, and less costs
  • Smaller homes may offer a benefit of being more cozy and personally comfortable
  • Reduction on the number of decisions related to such a large home. Less clutter and less stuff

Lifestyle Opportunities

With the additional equity acquired from a downsized and cost-effective smaller home purchase, these additional funds can provide lifestyle opportunities and benefits, including:

  • Living in an area or geography with high retirement lifestyle appeal
  • Outdoor living activities
  • Entertaining friends in a cozy environment
  • World travel
  • Starting a new chapter in your life (e.g., widower/widow, empty nester, divorced)

How Downsizing Helps Empty Nesters

During your lifetime, you and your spouse may have upgraded your homes for career, geography/location, status, or for additional space reasons when you started your family. You may have upgraded even further as your family expanded and your space needs changed.

Future Planning

Fast forward twenty or so years, with the children starting lives of their own, you now have a large home with empty or unused rooms. This unused space wastes energy and adds maintenance costs.

Home Downsizing. Older parents seeing their daughter off to college. Helping her with boxes, leaving home.

Even though you or your spouse have many years before retirement, you’re considering the downsizing of your larger home to one much smaller. What’s the point of maintaining, heating, and cooling your larger home if no one lives in most of it? In addition, although your major appliances (e.g., air conditioner, furnace, etc.) and home structure (e.g., roof, windows, etc.) are in good and working condition now, major repairs and replacement will creep up over time.

Maintenance and Work Effort

Although home upkeep and housework, like house cleaning, yard work or shoveling snow are not issues at this point in your life, you either do the work yourself or pay someone else to do it for you, so that’s not a driving factor to downsizing currently, however this may not always be the case. In the future you may not have budget or the energy or health for these maintenance actives.

Downsizing will help you to continue to build your retirement nest egg, by decreasing your monthly expenses and potential larger home expenses or projects.


If you’re both still working, you may be continuing to contribute to your RRSP’s and build savings. In addition to having access to available capital from downsizing to a smaller and lesser valued home, using that available equity can build your savings, or top up both your RRSPs, if you have the room to top it up.

Time for a Change?

In addition to the financial benefits, downsizing may offer the option of moving to a smaller home and lifestyle that is more specific to your current needs. Perhaps the neighbors you have known for years have moved away as their children moved away on their own, and the new neighbors moving in are starting families of their own? You may want to move to a smaller home in a neighborhood or community that fits your current lifestyle.

Financial Downsizing

There are numerous reasons why you want to downsize your home when you have a choice. However, there may be compelling reasons why you may be forced to downsize. The reasons may include:

  • Marital issues, such as separation, divorce
  • Death of a spouse
  • Debt issues
  • Loss of income
  • Home expenses (and municipal taxes) far exceed available income
  • Credit issues, cannot renew mortgage

Equity as an Asset – Bucket List

Aside from financial burdens, there may be those who have no further use for a home and want to use their home equity (while they are still healthy and energetic) to fund their bucket list. Essentially allowing them to use their home equity for travel, learning, working by choice not necessity, hobbies, or a different lifestyle at home or abroad.

Home Downsizing. Beautiful bungalow small brick home, large grassed and cut front yard.

Discretionary Income

The smaller home you are moving to usually is much less expensive in value than your current home, which means there will likely be significant equity that you will have access to. The smaller home may also cost less to maintain, so in addition to

The smaller home may also cost less to maintain, so in addition to having the equity funds from your larger home sale in your account, you may also have more discretionary income available every month.

Financial Flexibility

You have financial options if you want to pay down debt. If your home has increased in value over the years, you can pay down debt or invest the equity. Or, you may have additional financial goals you want to achieve. In addition, you may have a bucket list you want to check off, such as:

  • Renovations to the smaller home, to customize it somewhat to your needs
  • Smaller home projects, if required and if necessary. Update the smaller home’s roof, air conditioning and furnace, while you are active and healthy
  • Continued learning. Go back to school
  • Travel or live abroad
  • If you are healthy and active, activity-based experiences may be an option. ‘Once in a lifetime’ experience that you’ve always dreamed of and now have the financial means to do (specialized climbing trips, cycling tours, wine tours, around the world boat cruises etc.)

Being A Minimalist. Some Just Want a Smaller Home – Less Stuff and Less Space

Smaller Footprint

There are those, who over time, have decided to reduce their footprint on the planet, and liberate themselves from consumerism and owning unnecessary stuff and clutter in their lives.

Some may go to the extreme and divest themselves of most of their belongings and live in a modest lifestyle and home. There are others who wouldn’t consider themselves minimalists, however they welcome life in a smaller home free of the stuff and clutter they had with their larger homes.

Simplistic Lifestyle

A smaller home can offer a more simplistic lifestyle to those who can be happy with less, including:

  • More time and energy to spend on things you enjoy doing. Smaller homes are easier to clean and maintain, and allow more time and energy for other things you enjoy
  • Less clutter. Smaller homes have less space for storage, so there is less time spent on decluttering your living area
  • Financial freedom. More money at the end of the month. Reduced property taxes, and less or no debt and worries about unmanageable payments
  • Less space to want to fill things with, therefore less spending
  • Less things, less stress. A home is more visually appealing with less clutter
  • The less you consume for your smaller home, the better for the environment

Downsizing Isn’t for Everyone

There are numerous advantages to downsizing your home, however downsizing may not be a fit for your lifestyle or may not be an alternative that is available to you.

Research, Planning and Work Effort

As mentioned previously, prior to downsizing your home, you will need to do your ‘homework’. Proactive ‘downsizing’ research preparation is required and essential.

Downsizing Decisions and Work Effort

You will need to liberate yourself from much of your physical belongings, which won’t fit in your smaller home. Preparation is required for your current home’s sale and all the work effort and costs required for that transaction (required fixes/maintenance to the home, moving costs, closing costs, legal fees, realtor fees, etc.). Your remaining belongings will need to move to your downsized home and prepare your future home.

Home Downsizing. Condominium building looking up to the blue sky and all the units.

These activities are worth the time and effort for those that want to downsize, however for those without the resources required to prepare and act on these downsizing activities, downsizing may prove to be difficult.

Downsizing; Reflect and Reconsider

When you downsize your home, you will need to reduce the amount of stuff you have, such as furniture, clothes, equipment, tools, unused items, collections etc. This is a selected list of reasons for not downsizing:

  • You’re happy with the size of your home and neighborhood you live in and don’t want to move
  • Property values in the geographic areas you were interested in have increased proportionally with your current home’s value, therefore reducing the surplus home equity appeal
  • Financial goals. If you are considering downsizing for financial reasons, does the act of downsizing achieve these goals? Will it lead to a better overall financial picture for you?
  • Boomerang children. Your children have moved away, however there may be life events that may compel them to return home to live with their parents. Having that additional, currently unused space, means your children have a place to stay if their circumstances warrant it.
  • Home office(s). More and more people are working from home these days. A smaller home may have an impact if you and your spouse both work from home. If you both have your own home offices in your current larger home, a smaller home may mean that neither of you will have a home office and you both may be working in an open concept.
  • Home workouts. Same goes for working out, you may not have a workout room in a smaller home
  • If you enjoy having guests or family over to entertain, especially overnight, you may want or need additional space for additional guests staying the night
  • Personal space. Some people just need more personal space, larger homes offer options for those who need more personal space
  • Will your furniture fit in a smaller home? If you have larger furniture, workout equipment, office equipment, home entertainment devices (large screen TV you don’t want to part with), a piano for example, they may not fit in a smaller home
  • You may be concerned with the change in social status that a larger home may provide
  • You may not want to move away from friends or family, including your grandchildren
  • Difficulty finding a smaller home that meets your needs, including accessibility, in the neighborhood you prefer to live in
  • The added burden of travel to see your family if the smaller home is farther away
  • You enjoy the conveniences of your current home location
  • If you are not able to purge your stuff, you may not have the space in a smaller home
  • You have the financial means to keep up with monthly upkeep of your home
  • You’re healthy and active and don’t mind the house maintenance and are confident you will be for the foreseeable future
  • You may also have the financial means to have someone else perform the maintenance and upcoming costly projects such as a new roof, furnace, air conditioner etc.
  • You do not have equity in your home, which may make it difficult to benefit from the downsizing equity exercise
  • Downsizing will require a purge of your household items; a smaller home won’t have the room for your stuff. Perhaps you’re not ready for this undertaking?
  • Lastly, this smaller home may be your last. Do you see yourself growing older, safely, and comfortably in this home?
  • Proximity to your medical specialists, doctors, dentists etc. or community resources

Disadvantages of a Bungalow Vs. a Two-Storey Home

Although a bungalow or single-story home may be an appealing choice for your downsizing destination home, there are factors that should be considered.

Many bungalows were built many years ago, which means they may have the advantage of a larger property size which can offer more privacy, they may also need more outside maintenance.

Home Size Needs and Considerations

In some cases, the internal size of the bungalow can be much smaller than a two-storey home, therefore upkeep, maintenance and cleaning of the home requires less effort. Larger bungalows that offer similar square footage to a two-storey home will have a much larger footprint on the property lot size, and more work effort is required. 

Bungalow Availability

Many newer homes have two storeys and are being built on smaller lots. This also means that bungalows may be in high demand as people want to downsize in an area. Bungalow availability may be limited and may also be selling at premium prices.

A single storey home generally has limited number of stairs, which is safer and beneficial as the homeowner ages, and an added safety benefit when your grandchildren visit. A single floor also makes it much easier when babysitting your grandchildren. That being said, a bungalow may be a bit noisier. A single storey home has all the rooms on one floor, which means the noise from the living area, dining room and kitchen may disturb those who are sleeping in the bedrooms which are located on the same floor.

Home Downsizing. An image of a living room being completely renovated. Bare floors, walls and ceiling being renovated. Ladders, worktables and construction equipment on the dusty and cluttered floor.

Bungalow Renovation

If you do decide to downsize to a bungalow, be aware that bungalows may be owned by older people who have dated preferences and tastes, and different lifestyles.  You may want to make changes and renovations. Having said that, bungalow renovation is much more flexible, as you have less load-bearing wall restrictions.

Bungalow Security

If you are security conscious, a bungalow may not be a fit for you, especially if you prefer to have open windows or sleep with windows open, compared to a two or three storey home. Most if not all windows on a bungalow or single storey home will be accessible or near accessible from ground level.

Bungalows have merits for the right homeowner who understands its advantages and disadvantages of the style of home.

Carrying a Mortgage While in Retirement

Mortgages and Retirement

Although not ideal for those retiring, there are many individuals and couples who will be carrying a mortgage into retirement. A recent Globe and Mail article (‘More Canadians Are Carrying Their Mortgages Into Old Age, and It’s Complicating Retirement Plans’) detailed that many retirees will still be paying off their mortgage into retirement, and that number is increasing year over year.

Statistics Canada Report

In 2021, a Statistics Canada report showed that 1.5m people older than 65 years still had an outstanding mortgage on their property. CMHC data reported that people in this age group account for 13% of Canada’s mortgages, compared to 7% in 2017.

Many retirees who are considering downsizing, have considerable equity in their home. They may have timed their mortgage renewal with their retirement and downsizing plans and are planning on paying their current mortgage off with the eventual home sale and then using that equity to purchase a downsized home outright. This could be a possible strategy, depending on your home sale funds and the amount of the new downsized home. Mind you, the home sale equity may use all the equity of previous home sale, which would negate any other retirement plans you had for that equity.

Mortgage Approvals at Retirement

Carrying a reduced mortgage (access to some of your previous home’s equity) on the downsized home would be demonstrating to a mortgage lender that you have the financial resources and means (home sale equity and retirement income) at retirement to service your downsized mortgage debt (after downsizing). This option may be more appealing to a lender if you are essentially debt free, and the mortgage value is reasonable and it’s a short mortgage term. Depending on the amount of your equity, this approach could be a viable option for some, however, depending on the value of your equity, your financial resources and retirement income, it may be best to adjust and align your expectations with your lifestyle and financial means.

There is another mortgage financing option for retirees, that option is a ‘Reverse Mortgage’, which we will touch base in the next section.

Reverse Mortgages for Retirees

Reverse Mortgages Pros and Cons

Most of us have watched the commercials on TV about Reverse Mortgages. Some of you may even currently be pursuing a Reverse Mortgage. However, prior to your finalizing a Reverse Mortgage, it may be beneficial to consider the many benefits of downsizing outlined in this article.

Downsizing Challenges

Home Downsizing. A rectangular image with two wooden cubes, one on the top left a check mark green tick and the lower right cube a red cross mark ‘x’. The pros and cons of a Reverse Mortgage.

For those who need to downsize for lifestyle, financial or marital issues, and those efforts have been met with challenges, such as low post sale funds equity after purchase (e.g., downsized home has a higher price than expected), there may be another option if you have financial burdens yet can’t make the downsizing alternative happen.

A Reverse Mortgage isn’t for everyone. We do not advocate for or recommend Reverse Mortgages. We are just providing an alternative to the few that may be in a financial bind and cannot downsize.

Equity Access

A Reverse Mortgage doesn’t get you out of your home, but it’s does give you access to your some of your equity with the benefit of making no payments on the Reverse Mortgage (there are terms and conditions).

Although Reverse Mortgages and Downsizing are two separate approaches, they both have their merits as a remedy for the right issues or challenges, or lifestyle. Everyone’s circumstances differ, a Reverse Mortgage may be the answer for some individuals, however an effective downsizing strategy could help cut costs with minimal risks, compared to a Reverse Mortgage strategy.

Property Value Increases

For those people who are making plans to downsize and reap the rewards of high current home resale with the potential high equity as a result, they are often surprised or shocked when they find-out that the geographic areas they were planning to move to have also increased significantly in property values, possibly negating a significant home equity nest egg.

Misalignment of Expectations

These increases in property values may make the downsizing strategy much less appealing for some. For those who are still servicing a mortgage and still have many years left on their mortgage, the downsizing approach (and access to funds from the equity) was part of their retirement, financial and lifestyle change strategies.

If a downsizing plan doesn’t come to fruition because of a misalignment of expectations and property values, there may be an option for some that allows them to stay in their current home, get access to their current home’s equity, and not worry about mortgage payments.

A Reverse Mortgage approach wouldn’t be a thorough downsizing exercise. It may however provide an alternative for those who want to downsize but are not able to or are delayed in their plans to downsize when property values in the desired rural or geographic areas potentially decrease in value.

What is a Reverse Mortgage?

A reverse mortgage is similar to any other typical loan that is secured by way of a mortgage against a piece of real estate you own. The unique quality to a reverse mortgage is that there are no mandatory payments required to be made against the principal balance of the loan amount or the interest that accrues. Instead, interest will accrue on the loan amount, both of which will become due when the borrower(s) moves, sells the home they are living in, or passes away.

Reverse Mortgage Criteria

A ‘Reverse Mortgage’ isn’t for everyone. In fact, you must be living in your home, be 55 years or older to qualify and own a home with $250,00 minimum value.

A Reverse Mortgage may appeal to those who have limited savings, yet have significant equity in their current home, and own their home outright, or have little to no balance on their current mortgage. A Reverse Mortgage can provide up to 55% of a home’s equity, for example: if you own a home that is worth $2,000,000, you may qualify for a loan equal to up to 55% of the equity, being $1,100,000.00. In this scenario, the lender would advance you the loan amount, and no regular payments would be required to be made until the home is sold or the owner passes away.

Home Downsizing. Condominium building with unique architectural units. Balconies and windows tastefully protruding from the sides of the condominium building.

 Reverse Mortgage Details

  • Homeowners must be 55 years or older, the older you are the more you can borrow
  • Primary residence. Must live in the home six months out of each year
  • For detached, semi-detached, townhouse or condo’s
  • Property title holders are joint borrowers
  • Interest accumulates
  • Current mortgage will need to be paid out first

 Reverse Mortgage Benefits

  • Access to home equity (tax free), up to 55%
  • An option if you have major expenses, limited retirement funds or income
  • No monthly mortgage payments
  • Stay in the home you have now (with all your stuff)
  • Use the funds for the list you were planning on with the downsizing approach

  Reverse Mortgage Disadvantages

  • Higher interest rates, which can vary. Reverse Mortgages will have higher costs than a conventional mortgage
  • Possible forfeit of future home equity. This means that if you do eventually sell your home, you will have less equity available
  • Compounded interest. Interest can accrue quite quickly under a reverse mortgage, eroding the equity in your home
  • If you have a balance on your current mortgage, the Reverse Mortgage funds would need to pay out the current mortgage balance first. Would there be any funds leftover? If not, other than the ‘no mortgage payments’ benefit, is it worthwhile or worth the risk?
  • Pre-payment penalties. If you pay off the reverse mortgage before the end of the term, there are likely to be pre-payment penalties that will need to be paid as well.
  • Reduces home equity
  • Possible issues if home values fluctuate. Specifically, the potential loss in home equity.
  • Legal fees. The fees are a disadvantage, however the purpose of the fee is an advantage, if you are considering a Reverse Mortgage. An independent lawyer (ILA, Independent Legal Advice), separate from the lender’s lawyer is required to ensure the person(s) signing a reverse mortgage loan is of ‘sound mind’, aware of all the terms and condition and registration and processing fees
  • Retirement income from the start of the Reverse Mortgage would need to be sufficient to cover all home utilities bills, property taxes, expenses, etc.
  • Set up, Closing/Administrative fees


While downsizing may initially appear to be a daunting task and there are many tasks that will need to be attended to, with thorough and thoughtful planning your downsizing exercise can be both financially beneficial and rewarding as a new lifestyle opportunity.

We trust that this guide will provide some direction and value while performing this important next step.

We’ve included one of our previous blog posts which may also be of interest to you.

Six Critical Factors To Consider Before Buying Your Next Home

If you would like additional information about Nichols Law, please visit our website.


Sources and Additional Information


Sources and links are provided for source credit and attribution, and for additional information purposes only. Nichols Law is not affiliated, associated, authorized, endorsed by, or in any way officially connected with any of the sources or links provided.


10 Tips on How To Downsize Your Home, Rocket Mortgage

How To Downsize Your Home in 6 Simple Steps, LifeStorageBlog

Why Downsizing Your Home in Retirement May Not Be As Simple as You Think, The Globe and Mail

Should You Stage Your Home When Selling?, The Globe and Mail

Is It Time To Downsize Your Home?, Sun Life

4 Mistakes People Make When Downsizing in Retirement, Investopedia

Some Young Canadians Are Downsizing Their Homes To Cut Back on Their Expenses, Toronto Star

Downsizing Your Home in Canada: What You Need To Know, Pine

Downsizing After Retirement: A Complete Guide, HomeEquity Bank

The Top 5 Downsizing Mistakes, Good Times

Home Downsizing Pros and Cons, the balance

What’s the Perfect Age To Downsize?, webbuyanyhouse.uk

How To Downsize Your Home: 13 Tips To Declutter and Get Moving (to Your New Home), LendingTree

A Comprehensive Guide to Downsizing Your Home, This Old House

When To Downsize Your Home: 10 Signs It’s Time To Sell, HomeLight Inc.

Renting vs. Buying a House: Which Is Better for Retirement?, Sun Life

How To Downsize Your Home Before a Move, Budget Dumpster

11 Things To Do Before You Downsize Your Home, According to an Expert Who Gets Hired by Seniors To Help Them Declutter, Business Insider

How To Choose a Reputable Moving Company, LifeStorageBlog

Must-Know Downsizing Tips for Your Move to a Smaller Home, Better Homes & Gardens

Downsizing Your Home; How To Downsize, What To Consider, Comfort Life Retirement Living

When to Downsize Your Home: 7 Signs It’s Time to Put That Big Old House on the Market, Homelight

Risks and Process of Retirement: Housing in Retirement, Society of Actuaries 

Seven signs that it’s time to downsize your home, LowestRate.ca

Should You Downsize Your Home Once Your Children Move Out?, Millionacres

Downsizing your home in retirement, BNN Bloomberg

How to Decide If Downsizing Your Home When You’re in Debt Is Worth It,  Credit Counselling Society

Downsizing after Retirement: A Complete Guide to Downsizing Costs in Canada, Home Equity Bank

Downsizing Your Home in Canada Can Offer Many Benefits for Snowbirds, SnowbirdAdvisor

The pros and cons of downsizing your home, ReallyMoving

The Challenge of Moving to a Smaller Home, The Simple Dollar

10 Things to Consider When Downsizing to a Smaller Home, Moving dot com

Could You Survive in 150 Square Feet? The Lowdown on Tiny Homes, US News

12 Reasons Why You’ll Be Happier in a Smaller Home, Becoming Minimalist 

Tip Tips to Help You Downsize When Moving to a Smaller Home, Meyer Household Moving

Benefits of Minimalism: 21 Benefits of Owning Less, Becoming Minimalist




Six Critical Factors to Consider Before Buying Your Next Home


New home buyer researching on laptop keyboard, question marks rising from keyboard

Over the years we’ve been asked many questions relating to real estate, mortgages and home purchases. This blog post focuses on six of the most frequently asked questions we receive about our client’s home purchase journeys.

Real Estate Processes Change Over Time

There may be many reasons why you are considering your next home purchase.

Perhaps your family is growing, you want to change your neighbourhood environment or home style, or perhaps you want to upsize or downsize your current home.

Regardless of your reason, unless you are purchasing real estate on a frequent basis, you may not be up to date on the recent changes to processes with buying and selling real estate.

Who Is This Blog Post For?

This blog post is written for both those who have purchased a home previously, first time home buyers, or those who are also selling their home.

Purchasing your next home can be as much of an undertaking as buying your first, especially if it’s been a while since you purchased your current home.

We trust that this post will assist you with your next home purchase endeavour.

There will be many acronyms and terminology used during your home buying or home selling process, many of them may have the same meaning, so we’ll try and highlight as many of them as possible.

Our Blog Post Objective

The objective of this post is to provide you with insights, suggestions, and recommendations, based upon a collective of actual experiences with our own clients.

We’ve gathered these experiences into the ‘Six Critical Factors to Consider Before Buying Your Next Home’.

Next home purchase. Black compass with house buildings on the black background. 3d illustration.

Whether you’ve purchased previously, or this is your first time, you may be surprised by the amount of work involved throughout the entire home purchase process.

From the very beginning when you first thought of buying a new home, to the very end, when you finally moved in and began settling into your new home.

Our clients often ask us similar questions, including:

1. Once we have signed the Agreement of Purchase and Sale (APS), what do we have to do next?

2. Why does the mortgage approval and home closing processes take so long and seem so complex? What actions lead to disappointments?

3. Why does the whole home ownership process appear to leave everything until the last two weeks?

4. What can we expect after Closing, what should we expect next?

5. How do I make sure the appliances we agreed upon in the offer are included? And in working order when we move in?

6. When can the deal be cancelled, if we decide not to buy the home after we have signed the legal paperwork? What happens to our deposit?

We’ve included experiences and insights within this post which will try to answer those six questions.

The information in this post may also serve as a reminder or as additional reference material for you if you are already familiar with these questions and experiences.

This post will focus on the real estate home purchase steps that attract the most attention and questions, especially in the last two or three weeks of that home buying journey.

Some of the most common issues we have experienced with our clients when real estate is being purchased:

For the experienced Home Buyer. Home For Sale Sign in Front of Beautiful New Home

✓ Home inspection issues

✓ Property Title issues

✓ Seller ownership title issues (seller does not have legal ownership)

✓ Appliance inclusion or appliance condition, and workability issues

✓ Fixture inclusion or fixture condition and workability issues

✓ Fixture removal home damage

✓ Legal survey issues

We’ll provide additional background about these issues throughout this post. We will also be referencing many real estate terms. We’ve highlighted the primary terms, which you may want to re-familiarize yourself with below.

Terms and Key Documents To Know Before You Get Started

Although very rare and unlikely, your agent or broker, may still be entitled to their commission even though the property sale didn’t close.

There is a clause in the listing agreement you should be aware of which entitles the broker, realtor, or agent to claim their commission, in the event an offer to purchase the property is received, at the listing price. Even though it’s rare, talk to your lawyer prior to signing any agreements. We’ve provided two relevant articles in our Sources and Links at the end of this post.

1. The Realtor ‘Buyer Representation Agreement’ and the ‘Listing Agreement’ (if you are selling).

2. Mortgage Lender Pre-Qualification and Pre-Approval process documents, including application, credit check and Commitment Agreement.

3. Agreement of Purchase and Sale.

Buyer Representation Agreement and Listing Agreement

One of the first resources you will need to work with is a real estate agent. Professional real estate agents and realtors want to provide you with the best service that they can and work in your best interests.

In order provide these services, and avoid any misunderstandings, they will want to outline the services they will be providing to you, and what they also expect from you.

Buyer Representation Agreement (BRA)

If you’re buying a home, the outline of services provided will be in the form of a representation agreement called the Buyer Representation Agreement. This contract will define the business relationship with your real estate agent.

This agreement will enable your real estate agent to work on your behalf throughout the home buying process, including home buying selection, negotiating, some level of informal inspection assistance, and the paperwork involved.

Legally, you will need to sign this contract if you want to engage the real estate agent with your home buying process.

Listing Agreement

Essentially, if you’re selling a home, the outline will be in the form a representation agreement called the ‘Listing Agreement’. This document is a formal contract between the home seller and the real estate brokerage who represents the homeowner after this agreement has been signed.

Your realtor can expand on the importance and details of these documents.

First time home buyers. Side view of optimistic couple sitting at table in bright room and smiling while confident young salesman of colour handing over document to sign

Most importantly and depending on if you are selling or buying (or both), if you are uncomfortable with the document(s) or do not understand either of them, do not sign them until you do understand their contents and are comfortable with them.

You can always ask your lawyer for direction prior.

Although this blog post doesn’t cover every real estate and home purchase component and issue, we’ve highlighted other critical components within this document based upon our own client-based experiences.

A few additional terms to be clarified:

  • Closing Date, also known as Completion Date, are terms related to when the transaction closes.

If you are purchasing, this is the date on which you get keys and possession of your new home.

This is the date that the homeowner usually takes possession of the home. This is the step when the buyer receives the keys to the home and is legally allowed to move in, usually no later than 6:00 p.m. on closing day. Which allows the sellers and buyers lawyers to settle the last paperwork and process requirements, and the previous owner to vacate the premises.

  • If you are selling, this is the date on which funds are delivered to your lawyer and the date by which you have to relinquish possession.

The timing on when you as the seller will receive funds depends on how quickly your lawyer receives funds from the buyer.

If funds are received early to mid-day, it is likely that you will receive funds the same day. However, our experience is that funds are generally not receiving until the afternoon, pushing the actual receipt of funds by the seller to the following business day.

Please continue reading for details related to ‘‘Six Critical Factors to Consider Before Buying Your Next Home’.


Six Critical Factors

to Consider

Before Buying Your Next Home


1. We’ve Signed the Agreement of Purchase and Sale. Now What? 

The Closing Date

Once you have signed the APS, you will soon be in your new home, as outlined by Closing day in the agreement in the APS.

Once you have signed the APS. Real estate agent offer hand for customer sign agreement contract signature for buy or sell house.

The Seller and Buyer will agree on the Closing Date, on average once the APS has been signed you usually have approximately 30 to 90 days, more or less, to start your preparation to move into your home.

Activities After the APS Has Been Signed

When the Agreement of Purchase and Sale has been signed and all terms and conditions have been satisfied by both parties, the contract is a legally binding agreement. This leaves a period between the APS being signed and the Closing Date.

It is this period of time that you will use to finalize your financing, insurance, moving arrangements, setting up utilities and work with your lawyer to satisfy any other conditions required for closing.

Timing Varies

The amount of time you have prior to closing varies and will be detailed in both the Offer to Purchase and the Agreement of Purchase and Sale.

This duration of time for closing is agreed upon by the Seller and the Buyer, although this period is usually depending on the seller’s needs and is usually disclosed when the property is listed.

Here are the most important tasks you need to do once the APS is signed:

1. The Deposit

Once you have signed the APS, you usually need to get the deposit to the Seller’s real estate agent promptly, usually by the next business day. So, a visit to your bank or financial institution is essential to get the deposit.

2. Financials – Mortgage Lender/Banking

Be Proactive and Be Patient

In most cases you will have limited time to get your financing organized, this allotted time will be outlined and agreed upon in the APS.

As soon as you sign the APS, you need to visit or contact your mortgage lender and provide the details of your offer to purchase, so they can get your funds approval process started.

Mortgage Lenders Can Get Very Busy

Be patient with the process. Mortgage Approved Loan Document With House Keys

Mortgage lenders can be very busy, they may need day(s) to process your mortgage financing.

They may also need to schedule an appraiser to validate the value of the home. Scheduling an appraisal may take some time, if so, the three to five days agreed to in the APS could be exhausted quickly.

Finance Conditions and Clauses

You and your real estate agent most likely requested ‘conditions or clauses’ in the APS, one of them is often a ‘financing condition’ and the other is an ‘inspection’ condition.

Having a finance condition protects you if you cannot get financing and it also ensures your deposit is returned.

You will need to get the mortgage financing in order as soon as possible to have the finance condition waived on the APS. Having the ‘finance condition waived ‘is important, it demonstrates that you have the required funding and that the deal is likely to be successful.

Finance Arrangement Timing

Most sellers will agree to three to five days for the buyer to arrange financing which will usually be specified and detailed in the APS as a ‘finance condition’.

Sellers usually don’t want to go much longer than 5 days, that is a long time to have their home off the market if a buyer’s financing falls through.

3. Inspection

If a home inspection (as per the APS, you probably included a condition/clause for home inspection) hasn’t been completed prior, now is the time to schedule the inspection, which is usually scheduled 2-3 days after the signing of the APS.

You don’t have an inspector? Your real estate agent will probably have a

few inspection references for you.

Complete This Task ASAP

The inspection condition is another task you want to complete as soon as possible.

Home inspection. A close up and high angle view of a professional male wearing blue t-shirt, writing out forms during a home inspection, standing on stairs.

You will want to have the inspection, get the inspection report, and discuss the findings with your real estate agent.

In addition to the core inspection criteria, ensure that appliances that are included are inspected and are in working order.

Inspection Is Not a Negotiation Tool

Keep in mind that unless the inspection discovers and identifies a severe issue with the home, or other serious issues, like missing or broken appliance(s), the inspection is for identifying future maintenance or updates for buyer and the new homeowner.

The inspection is not usually a negotiation tool, although if the issue discovered is severe, it could be a deal breaker.

Buyer Visits or Walkthroughs

Testing On Closing Day

Be aware that you will usually be allowed a couple of ‘buyer visits’ or ‘walk throughs’, these visits are not inspections or a time to test appliances.

If the appliance works today, there is no guarantee that it will work when you take possession, so leave the Closing Date to test everything in the house.

In addition, if you were to test an appliance, like a washer or a dishwasher and there was a flood or damages (it’s happened) during a walkthrough, you could be liable for damages.

Other Purposes for Inspection

Buyer visits or walkthroughs help you plan for decorating and design, purchasing fixtures, paint colors, fabric choices, fitting your current furniture and buying new, among other planning ideas.

Keep your visit brief, you are usually only provided with about an hour per visit.

4. Waiving of Conditions and Clauses

Once you have secured your mortgage financing and have your inspection issues or other condition actions satisfied, you will want to inform your real estate agent to have your conditions waived.

With the conditions waived, your home purchase can proceed towards closing day.

5. Home Insurance

Home Insurance. Business Concept on Clipboard. Composition with Office Supplies on Desk.

Now is the time to re-connect with your home insurance provider.

You will need to provide home insurance details and coverage to your lawyer.

Your mortgage lender should have provided you with the details of insurance required. Contacting your home insurance provider well in advance of closing day is highly recommended.

6. Utility Accounts

If you haven’t already, create a checklist of all your utility accounts and provide notice of terminating your current address particulars and if applicable transfer to your new address.

7. Keys and Alarm

You will receive your keys shortly; however, you will want to change the locks on all the doors, change security alarm codes (make sure your lawyer gets them during the transfer).

During your home inspections and walk-throughs, take note of the doors with locks and how many door locks you will require.

8. Mover/Moving

Prepare a project plan and check list of your moving activities.

9. Current Occupants Haven’t Left the Home

Although it’s very rare, prepare a back-up plan in case the previous owners haven’t vacated the home when they were supposed to, it can happen (see in our Sources and Links at the end).

An additional condition or clause in the APS, outlining the clear expectations and an understanding of when the previous owner will be totally vacated from the buyer’s new property may be of interest.

10. Furnace Filter

It may be a good idea to prepare to change the filter when you arrive at your new home. Perhaps get the filter part# in advance, during a walkthrough so you can have a new filter the day you take possession.


Next home purchase. Serious young couple sit on sofa by laptop home purchase planning. Surf the internet together searching for new house to buy.

2. Be Patient, Mortgages Can Take Some Time 

Many of our clients have asked us why the purchase process takes so long. Especially the mortgage lending process.

We’ve provided some insights that may help you with these questions.

 Also included are a few critical insights that you should be aware of, insights which could not only delay the mortgage process, but could terminate the home purchase altogether.

Once you have decided to start looking for a new home and have been in contact with your real estate agent and your lawyer about your next home purchase plans, there are many processes and steps which are about to be set in motion.

Over the course of your next home purchase journey, you will be contacting, working with, and communicating with many stakeholders, including your:

  • Lawyer
  • Mortgage lender
  • Real Estate agent
  • Insurance agent
  • Home Inspector
  • Others

Being Prepared Is Key

To limit and reduce last minute items which can delay or even terminate the home purchase process altogether, your preparation is crucial with each of these stakeholders.

The work effort of these stakeholders will significantly increase as the Closing Date nears, especially the last two weeks, so as a buyer (or seller) ensuring that you are not a bottleneck or obstacle in these important and time sensitive milestones.

Being Proactive

Be proactive and ensure that they have all the documents, your attention and your response when needed. Ask them how you can ensure the process is flowing smoothly from your end.

Home purchase preparation. Mortgage, moving and real estate planning. Serious couple of colour with blueprint and calculator counting estimating repair costs to next home

Get Started Early

The involvement of key stakeholders as early as possible in the process, including your mortgage lender, lawyer and real estate agent is critical. Re-familiarizing yourself with the mortgage lending process is very helpful, if you haven’t purchased or sold your home in a while.

This particular has become incredibly important, as the rules for mortgages have changed drastically over the past several years, in what is a relatively short time span.

Your home purchase stakeholders will often use different names for the same terms. For example, a ‘Pre-Qualified’ and ‘Pre-Approved’ mortgage are the same.

There are ways that the home buyer can assist with the process. Being prepared with up-to-date documents for your mortgage lender. These documents include:

  • T4 slip from previous year
  • Notice of Assessments for the previous 2-3 years
  • Current pay stubs
  • All Credit and debt details
  • Details about your employment history
  • Identification
  • Proof of Citizenship and Residency status

Credit Checks and Purchases During the Mortgage Approval Process

Having credit issues or applying for credit during the mortgage process can have a severe effect on your mortgage application and approval process.

During this period, take a break or pause any debt applications and any credit application activities, including credit checks, which may affect your credit.

Mortgage lender using mortgage calculator and showing mortgage loan contracts.

It may be a good idea to defer these activities until you have moved into your home and the mortgage has been closed.

Pre-Qualified and Pre-Approved Mortgages

Pre-Qualified and Pre-Approved Mortgages – Similar Terms

Essentially, these two terms are similar, mortgage lenders and real estate stakeholders can often use these terms interchangeably. However, being ‘pre-qualified’ doesn’t not mean you have been ‘pre-approved’ for a mortgage.

Being pre-qualified by your mortgage lender is usually an initial step towards mortgage approval, however your mortgage has yet to be approved.

Pre-Qualification Process

Pre-qualification discussions with your mortgage lender usually focus on affordability, your debts, your income, and debt serviceability (and other items), it may even include a mortgage ‘stress test’ to ensure you can make your mortgage payments.

Many Steps in the Mortgage Financial Approval Process

There are many steps prior to having a mortgage approved, pre-qualification is only the first step.

Your mortgage lender may need an appraisal performed on your home, which may or may not be the same as the purchase value. If the appraisal is lower, that could be a big problem, and may require a larger down payment.

It is possible that the appraisal may only be performed once you have signed the ‘Agreement of Purchase and Sale (APS) and have requested a mortgage approval, which may affect closing timelines.

Be Proactive

Being proactive with your mortgage lender, early in the home buying journey is essential. Discuss these potential issues with your mortgage lender and ask for advice to limit any last-minute frustrations or surprises.

Your mortgage lender can help you navigate proactively throughout the process to limit approval issues.

Work with your mortgage lender, proactively and be thorough. Printed document with rubber stamp and the word pre-approved. Concept of mortgage or loan pre-approval. 3D illustration.

Be Thorough With Your Mortgage Lender

Discuss and understand the entire mortgage approval process with your mortgage lender.  Review the value of the homes you are considering along with your affordability and being able to service the mortgage payments.

Ensure that you understand the mortgage lender’s appraisal process and it’s timing, and how that may affect your home purchase.

Mortgage Calculators Are Not Commitments

During your mortgage application meeting or discussion, most mortgage lenders provide you with simple mortgage payment calculators that will show you how much your payments will be based on varying down payments.

These calculators are not commitments.

A verbal approval or email may not be an official commitment to provide you with funds you will need, although it might be with some lenders. It is critical to understand the mortgage lending process specific to your lender.

Your mortgage specialist will need to outline their mortgage lending approval process with you and when your funds would be available.

Contact a Lawyer Early in the Process

Contact a real estate lawyer early in the process. Golden scale and wooden cubes with contact icons on the table. 3d illustration.

At this early phase in your home purchase, it may be a good time to contact a lawyer. If you still have your lawyer from your last home purchase, great. If not, contacting a good lawyer (e.g., referral) early in your home purchase journey is vital, and who you should speak with

prior to signing important documents.

Mortgage Lender Communications

Most mortgage lenders have a formal communication process that includes notification of your mortgage approval, based upon current home appraisal, debt, credit history and income details.

This communication is often an email referencing your mortgage approval details, and perhaps an email attachment with an approval letter. Ask your mortgage specialist how they will communicate that official approval to you.

Mortgage Commitment Letter

Not be confused with ‘Pre-Qualified’ or ‘Pre-Approved’ mortgage terms, this term is usually used for the formal communication from your mortgage lender directly to your lawyer, indicating that mortgage funds have been allocated or available for transfer, usually the day of closing.

Obtaining a mortgage commitment letter indicates that the bank is satisfied that you are able to afford a certain loan, at a qualified interest rate. However, the mortgage commitment letter will contain various conditions requiring approval, prior to funding taking place.

Mortgage Approval Process Awareness – Selling Price vs. Appraisal Value

Appraisal Details

Another critical component that can affect the duration of a mortgage approval duration and process is the appraisal value of the home you want to purchase. Especially if the appraisal is performed during the mortgage approval process and the home appraisal value is now lower than the selling price.

Property Appraisal Process and Timing

There is a bit of a disconnect in the mortgage application process, in this regard.

It is uncommon for a lender to conduct an appraisal on a property until and unless you have signed and accepted an Agreement of Purchase and Sale. However, the appraisal of the property will directly impact the amount your lender is willing to lend you.

Actual home appraisal value. Property Value - female hand with real estate puzzle

The reason being lenders have very strict rules on debt-to-equity ratios. That is, the lender will not loan more than a certain percentage of the value of the property (a value that is confirmed by their appraiser). It is a very much a chicken and egg scenario, as you won’t know what your lender will agree to lend, until your appraisal is completed.

But you won’t get an appraisal completed, until you have signed and accepted an Agreement of Purchase and Sale. This is why it is important to be very diligent when it comes to submitting an offer close to your “spending-limit”.

If the selling price of your home is higher than mortgage lender’s appraisal, this can cause stress, disappointment, and frustration, along with delaying, or even terminating the home purchase, and possible loss of a down payment.

Mortgage Approval Example

As an example, if the home you want to purchase is selling for $1,500,000, you will need 20% down for the mortgage (mortgage lender/bank lending maximum for your home is 80%).

The maximum mortgage amount (80%) would be $1,200,000 and your down payment would be $300,000.

However, if home values in your area have been declining, and the mortgage lender or bank’s appraiser now values the home for $1,350,000 instead and the house sale value is $1,500,000, the down payment will need to be increased to make up the difference. Which would be $420,000, a possible gap of $120,000.

This could be a deal breaker, if the home buyers are unable to increase the down payment.

Finance Conditions or Clauses

Be Careful Removing Conditions and Clauses

Competing for the purchase of a home is not uncommon. To be successful with the purchase of a home, agents and buyers often remove conditions or clauses that the seller may find obstructive compared to other buyers offers (e.g., finance or home inspection conditions).

Tread carefully with the removal of conditions which are included to protect your interests.

Risk Reward of Conditions and Clauses

You and your real estate agent will need to balance the risk/reward of adding or removing conditions and clauses.

As stated in the Mortgage Approval Process Awareness – Selling Price vs. Appraisal Value previously, if the ‘financing condition’ had been removed, the buyer would need to increase their down payment, and if not, they may lose their deposit or may be liable for other costs incurred by the buyer for the terminated deal.

Two of the most helpful suggestions based upon our experience, for prospective home buyers are as follows:

1. Ensure that you read and re-read documents, and thoroughly understand the entire process, and what you are signing

Read and re-read documents, understand them. Desk with a notebook, report graph chart, pen and tablet on wooden table

If you are unsure or uncomfortable, ask your lawyer, mortgage lender, or real estate representative for clarification or advice.

Start your planning early.

For example, ensure you understand the mortgage lenders approvals processes, sometimes ‘Pre-Qualified’ or ‘Pre-Approved’ doesn’t mean your lending institution has funds ready for you. Confirm the process with you mortgage lender, and              when the funds would be available for you to make an ‘offer’.

2. Set your expectations accordingly

The mortgage process takes time, there are many ‘moving parts’ and stakeholders. Some of these processes can work at the same time, others, need to wait for the previous step or process to be completed. Sometimes steps can get      delayed, which can impact the next step in the process.

Agreement of Purchase and Sale (APS)

One of the most important documents you will be signing will be the Agreement of Purchase and Sale (APS). You should become very comfortable in understanding the contents and the importance of this document.

The Agreement of Purchase and Sale is the written contract between the seller and the buyer. The specific details of the APS are the offer to purchase real estate property, land, and the purchase of a home.

The APS is referenced by the Ontario Real Estate Board (OREA). The APS includes the agreed upon price and the terms and conditions. This form contains page detail requirements and numerous number clauses and requirements.

To familiarize you with the APS, we have provided many of the items on the APS, detailed below:

The Agreement of Purchase and Sale includes:

    • Buyers and Seller names
    • Address and precise specifics of the property and it’s exact location
    • The purchase price
    • Deposit details
    • Home value balance funds payment details
    • Irrevocability date
    • Completion Date
    • Notices: Who is appointed and responsible for providing and receiving notices
    • Chattels: What is ‘included’ with the property
    • Fixtures which are excluded
    • Rentals items and rental contracts. Equipment that is being rented, e.g., water heater
    • HST obligations
    • Title Search and Requisition Date
    • Future use details, e.g., warranty
    • Title, details including registered restrictions, charges, liens, encumbrances etc.
    • Closing Arrangements, including lawyer APS completion details, location, funds exchange details etc.
    • Documents and Discharge, title deed details
    • Inspection, buyer inspection process and details
    • Insurance, insurance responsibilities of the seller and the buyer
    • Planning Act details
    • Document Preparation, Transfer/Deed details
    • Residency, residency/non-residency declarations
    • Adjustments, any outstanding items, such as rents, mortgage interest, realty taxes details etc.
    • Property Assessment details
    • Time Limits details
    • Tender, funds details, including dates and acceptable transfer types
    • Family Law Act, includes spousal consent details
    • UFFI, Urea Formaldehyde Foam Insulation declaration details
    • Legal, Accounting and Environmental Advice, advice disclosure
    • Consumer Reports, Buyer credit check
    • Agreement in Writing. Buyer and Seller agreement fundamentals
    • Time and date
    • Successors and Assigns. Stakeholder signatures
    • Spousal Consent, signatures
    • Confirmation and Acceptance, signatures
    • Information on Brokerage(s), Listing and Buyer
    • Acknowledgement, signatures

3. Timeline Expectations – What to Expect in the Last Two Weeks Before Closing 

Closing Day Timelines Vary and Fluctuate

A typical home purchase to closing process can take 30 – 45 days, more or less. Each situation is different and can be affected by the many different circumstances. There are many stakeholders involved with diverse responsibilities.

The Last Two Weeks Are the Most Active

There are many variables which can affect the entire timeline and duration. The last one to two weeks of that process are the most active and can require a great deal of your time and attention.

Real Estate Agent – APS Handoff to Your Lawyer

Once the Agreement of Purchase and Sale has been signed off and all conditions waived, and completed, and prior to closing, your real estate agent will send the copy of the signed APS to your lawyer who will begin the processes to complete the purchase.

Although the lawyer has received a copy, many home buyers have their lawyer read the APS in advance of its signing, which may help avoid disputes.

Real estate closing, the last two weeks. Real estate agent and customer sign contract papers with house keys and small model home in front.

Understand Key Stakeholder Roles, Including Your Real Estate Agent and Your Lawyer’s Roles

When buying a property, you will want to meet with your lawyer to discuss their role, fees and how they can be of assistance to you.

During these discussions it would be worthwhile to discuss the services and searches available which of the lawyer’s services are appropriate for your purchase transaction.

Search of the Title of the Property

One of the primary functions of your lawyer’s responsibilities to you will be the ‘Search of the Title of the Property’ and ensure there are no prior claims.

The APS specifies that you will receive title to the property ‘free and clear’ of any claims, builder’s liens, easements, leases, judgments, previous mortgage declarations etc.

 Your lawyer will review many documents, including:

  • Mortgage details, any outstanding mortgages on the property by the seller
  • Home/property insurance coverage
  • If a condominium, documents related disclosure statements, financial statements, bylaws
  • If applicable, the property survey certificate
  • Appliances, fixtures, and chattels included with the home purchase (APS)
  • Mortgage financials. Ensuring that adequate financing is available on the day of closing
  • Seller’s lawyer documents
  • Zoning bylaws compliance
  • If a new home, any warranties
  • Property taxes are up to date
  • No outstanding utility accounts balances
  • If applicable, the property survey certificate
  • Documents related to the condo, for example applicable bylaws, financial statements, disclosure statements, etc.

Be Patient

Some processes are aligned and are processed along the same timelines; however, many processes are sequential, or happen one after the other, which can take time as one stakeholder will be waiting for previous stakeholder work effort.

Be patient with your stakeholders. Your home purchase stakeholders are actively representing your interests.

Be Organized and Thorough

Be Organized and thorough. Man Organizing Appointment Calendar Schedule Using Cellphone

There are many factors which may help reduce timeframe prior to a home closing.

One of the factors is having a home buyer that is properly organized and prepared in advance of important milestones.

The home ‘closing’ can be a complex process, which includes:

  • Negotiation
  • Escrow Deposit
  • Title Search and Title Insurance
  • Home Inspection
  • Home walk throughs
  • Offer to Purchase preparation and submission (with your realtor)
  • Purchase agreement preparation and finalizing
  • Mortgage application completion
  • Mortgage lending institution home appraisal
  • Final mortgage loan approval
  • Offer to Purchase, including:
    • purchase price
    • deposit amount and particulars
    • The Closing Date (the day you also take possession)
    • Request for Land Survey of the property
    • Conditions of offer, including financing approval, home inspection etc.
    • extra items to be included such as appliances, windows coverings, fixtures etc.)
  • Agreement of Purchase and Sale acceptance signatures

Prepare for Closing Day Home Inspection

The Purpose of the Inspection

Closing day inspections are not an opportunity for additional negotiations.

Inspections are intended to ensure the home and its contents (fixtures and appliances) are aligned with the conditions of the sales agreement and that everything in the home is in working order.

Home Inspection. Building Inspector completing an inspection form on clipboard inside living room

Despite what the Agreement of Purchase and Sale may state regarding the number of visits you as the Buyer may be entitled to, the common-law provides for Buyers to conduct a final inspection of the property.

Our recommendation is to take advantage of such final inspection to ensure the condition of the property has remained unchanged.

In addition to a home inspector inspecting your home, you will need to thoroughly check the entire house and its contents the day of closing.

You should be preparing a checklist of every item and appliance which needs testing, including electrical, plumbing, gas, mechanical (e.g., garage door opener)

The day of closing is your only opportunity to ensure that everything in your home meets your APS expectations. After this day, any defects are the responsibility of the new homeowner.

Inspection Checklist

Having a pre-prepared checklist will help you stay focused and will help keep you from missing or overlooking something. A testing and verification checklist could include:

  • Light fixtures and switches
  • Faucets and taps. Running water, check under sinks for leaks. Check walls, ceilings, all floors for leaks or damage
  • Turning all appliances on and testing
  • Open and close all doors and closets, make sure they are working
  • Check and test all plumbing fixtures (toilets, showers, tubs, laundry room area etc.)
  • Open and close all windows and doors, including the garage door itself.
  • Check the attic
  • Check the entire outside of the property, any debris, garbage, or previous owner property

Additional Items to Consider

Contacting your utility accounts in advance of Closing Day is important. Contact them early in the process, to understand how much notice they need for transfer of the utility accounts. Do not leave this until the last minute.

Utilities to contact, include:

    • Electric
    • Gas (is the hot water heater rented or owned?)
    • Cable and internet
    • Phone
    • Alarm
    • Insurance
    • Moving company
    • Others

4. It’s Closing Day, What Can We Expect?

Closing day, or completion day, is one of the final steps in the home purchase journey. You haven’t received the keys to your new home; however, you are very close to it.

Closing day activities. Moving out and into your next home. Movers carrying sofa from moving van to house.

Your lawyer will have some work left to do, however you should have the keys to your new home no later than 6:00 p.m. on the day of closing.

Here are some practical steps to prepare you for your home on your Closing Date:

  • Moving out, what appliances, fixtures, furniture etc. will you moving with you and what will you need?
  • Unlocking your new home… but first things first. Before moving anything into your property on Closing Day, you will need to do a thorough final walk-through and inspection
  • Check for damage or missing items. If appliances, fixtures, or other items were included, are they there? Do they work? Check all the electrical outlets, open and close all the windows, check the plumbing, look for any leaks, especially in the basement and on ceilings. Is everything operational and as they should be based upon the Agreement of Purchase and Sale.
  • Once you have your walkthrough and inspection, prior to moving in, you may want to consider having the home completely, cleaned, carpets shampooed, windows cleaned, fireplace checked and cleaned etc.
  • Prior to moving in, this may be a good time to do any painting or home improvements, while the house is empty. Having your home professionally cleaned, prior to moving in and after any renovations, should be scheduled in advance of moving your valuables into the home,
  • Although a pool check should have been performed during inspection, check around the home and on the outside, for any damage or issues. If there is a pool, ensure that it is in running order, especially the pump, chlorinators, filters, heaters, skimmers etc. Check for leaks.

This is what to expect on closing day.

    • Provided that you have signed the necessary paperwork and documentation with your lending institution; on closing day your mortgage lending institution and your lawyer will be coordinating the transfer of funds to the buyer’s lawyer, and other home title and deed transfer duties. Your real estate agent may be contacted, if necessary
    • Once the funds have been transferred, your lawyer will register the home purchase at the Land Title Office, and you will be listed as the new owner of the property
    • This usually requires the whole closing day, your home keys (don’t forget to prepare to change all the locks) are usually released sometime in the afternoon, by no later than 6:00 pm. Lately, practices have involved leaving keys at the property in a lockbox, to reduce the travel time for buyers, so that they may head directly to the property once the transaction closes;
    • Your lawyer will also ensure that there are no last-minute claims on the property, release funds that have been held in their ‘trust account’, pay out adjustments as outlined in the APS ‘statement of adjustments’, including commissions, sales tax, and land transfer tax
    • Once the property is closed, and in addition to ensuring that the Sellers obligations are satisfied, your lawyer will provide appropriate documentation including a ‘Reporting Letter’, and an account of their applicable activities and fees related to the transaction

5. ‘Are Appliances Included? Not So Fast. Don’t Make Assumptions.’

The most common of issues which come up with home purchases are misaligned expectations, misunderstandings and disappointments related to appliances.

Work With Your Real Estate Agent About Your Appliance Expectations

Appliance expectations. Modern, bright, clean, kitchen interior with stainless steel appliances.

There are limited opportunities to ensure that your expectations are satisfied when it comes to appliances. Your real estate agent can ensure that your expectations are included and clearly outlined in the Agreement of Purchase and Sale.

Appliance Inspection

Unless agreed upon between the seller and buyer, appliance inspection (and testing) is not usually performed during ‘walk-throughs’.

Appliance inspection could be included on home inspection. Ensure that they are the same appliances models and match your previous expectations and are in working order on the day of closing.

Appliance Functionality

Appliance inclusion is one thing; however, the condition and functionality of the appliances should be detailed.

Your home inspector can include the appliances when they inspect the property. With your instruction and direction, they can test the appliances to ensure they are working the day of the inspection, however you as the homeowner will need to immediately validate all the appliances themselves and test them yourself again on Closing Day.

Closing Day Testing

On Closing Day, walk through your entire home, test everything.

Turn all the lights on and off, flush all the toilets, turn on faucets, etc., put the dishwasher on, the clothes washer, the dryer, the air conditioner, and other appliances.

If your new home has a pool, check the filter, pump, heater etc.

Unless otherwise provided for in the Agreement, the appliances are only required to be in working order up to the end of the Closing Day. As of 12:01 am the day after Closing, if an issue occurs with the appliances, then as the buyer, such issue will be yours to deal with.

Home inspection checklist. Close up of checklist with house inspection - to do list

Appliances – Set Your Expectations Accordingly

Appliances breaking down on or before the Closing Date is an unfortunately common issue.

It also happens to be an issue that is difficult to resolve after closing. Once you as the buyer spend your money and purchase your new property, trying to get a seller to reimburse you for a minor repair/fix of an appliance is very difficult.

Notwithstanding that your agreement may provide for the appliances to be working as of closing, unless an issue is identified before closing, the seller may not feel “compelled” to compensate the buyer for the cost of the repair.

Reading and understanding documents is critical. Being clear about the home inclusion details is important and should be shared with your realtor representative.

The buyer’s real estate representative is a critical part of these details, ensure that the APS details meet with your expectations.

There also may be appliances you don’t want (unwanted lighting, electrical boxes, receptacles etc., which when removed, may cause damage upon removal, these damages should be fixed prior to possession and part of the inspection.

It is important for the home buyer to ensure that their real estate agent understands the buyer’s expectations regarding appliances included with the home purchase and the condition of the appliances and fixtures

Appliances and fixtures can include:

  • Refrigerator
  • Range/stove
  • Dishwasher
  • Washer and Dryer
  • Water Heater
  • Furnace
  • Air Conditioner
  • Water softener
  • Air cleaners and purifiers
  • Alarm system
  • Pool appliances, including heaters, filters, chlorinators, and other pool accessories

These items need to be clearly detailed in the offer. What are the appliance and fixture expectations from the home seller, has it been defined prior?

 6. The Deal Fell Through. What Happens to the Deposit?

As mentioned in our section ‘Terms and Key Documents To Know Before You Get Started’ in our ‘Introduction’, a broker, realtor, or agent may claim their commission, even though the sale didn’t close. This could also be applied to any deposits currently held by your realtor’s brokerage. As we mentioned in the previous section, this would be very rare and uncommon. We’ve provided two relevant articles in our Sources and Links at the end of this post. As with most legal agreements, it may be a good idea to have a lawyer review legal documents with you prior to signing.

The home purchase transaction required a deposit. The deal was defaulted, reneged, or terminated some way by the buyer, so what happens to the deposit?

Seller and Buyer Rights

Home purchase deal fell through. Property law concept. Key from real estate and gavel.

Is the seller entitled to the deposit outright? Does the home seller need to sue the buyer to recover the deposit? Does the home seller attempt to negotiate with the buyer who terminated or reneged on the deal over releasing all or part of the deposit? We’ll provide some possible answers to those questions.

Deposit Location

When a seller has signed a listing agreement with a Real Estate Broker, the buyer’s deposit will be paid into the seller’s Real Estate Broker’s Trust Account. Following which, the deposit can only be transferred out of the Real Estate Broker’s Trust Account, in one of the following situations:

1. The purchase/sale is completed.

2. The buyer and seller both provide unanimous direction to the Real Estate Broker specifying as to whom the deposit is to be paid; or

3. A Court orders that the deposit be paid to one or both of the parties.

The same principles apply in situations of a private purchase where the deposit has been paid to the seller’s lawyer, in Trust.


Nearly all real estate agreements are completed on an OREA (Ontario Real Estate Association) form of agreement of purchase and sale, so we will begin there.

Every OREA form has the following section pertaining to the buyer’s deposit:

“[The] buyer submits ($xx,xxx.xx), upon acceptance by negotiable cheque payable to [the] “deposit Holder” to be held in trust pending completion or other termination of this Agreement and to be credited towards the Purchase Price on Completion.”

None of the other provisions in the standard OREA form address the situation of what happens to a buyer’s deposit if he or she is unable or unwilling to complete the purchase.

If the two parties wish, they may insert an additional provision into a schedule to the agreement, setting out the terms confirming to whom the deposit is to be paid upon the buyer defaulting on the purchase.

Such provisions are typically rejected by buyers, as they do not want to risk suffering an immediate loss of their deposit, when the reason for their failure to complete the transaction, may be in dispute.

Deposit Outcomes

However, the law supports the seller being entitled to the deposit, in the event of a buyer defaulting under the agreement of purchase and sale and being unable to complete the purchase, (save and except what the contract may state or some rare exceptions).

Despite this deceptively simple answer, how and when a seller can get possession of the deposit, is a separate question altogether.

Unless both the seller and buyer can agree to what is to happen with the deposit in the event of the buyer defaulting, the Real Estate Broker/lawyer is typically restricted from releasing the deposit to the seller.

Court Orders

Where the parties are unable to come to an agreement with respect to what is to happen with the deposit, a Court Action must be started, and a Court order obtained, to determine who is entitled to the deposit.

At this point, each party will be burdened with proving why the deposit should be released to them, as opposed to the other party. However, unless the buyer can show that the failure to release the deposit to them would result in an unconscionable loss to the buyer, the seller will most often, be awarded the deposit.

Take-away points

You as the reader should take away the following points from this specific part of this post:

  1. The starting position as it relates to entitlement to the deposit is: if a buyer breaches the agreement of purchase and sale, the seller is entitled to the deposit.
  2. Where a buyer is unable to complete a purchase, and the parties cannot agree on what is to happen with deposit, then the deposit shall remain in the Real Estate Broker’s/lawyer’s Trust Account, pending a settlement agreement between the parties or a Court Order.
  3. Where a buyer is unable to complete the transaction, the seller is required to mitigate his or her damages by attempting to resell the property.
  4. Where the seller resells his or her property for less than the originally agreed to purchase price, the seller likely has a claim for the deposit, plus the loss suffered because of reselling the property at a less amount and any additional carrying costs.


Congratulations! You’ve made it to the end of this article.

Whether you have recently purchased or sold a home and are embarking on another home sale or purchase, or perhaps you haven’t purchased a home in a while, or if this is your first home purchase, we hope this article was of interest to you and that we have provided some level of value.

We’ve included a couple of our previous posts which may also be of interest to you.

You’ve Decided To Buy: 9 Insights To Help the First Time Home Buyer

Your First Home: Is Buying a Home the Right Decision for You?

If you would like additional information about Nichols Law, please visit our website.



Sources and links are provided for source credit and attribution, and for additional information purposes only. Nichols Law is not affiliated, associated, authorized, endorsing/endorsed by, or in any way officially connected with any of the sources or links provided.

Sources and Additional Information:

The Globe and Mail; Seller beware: Even if the deal dies, the agent may still want their commission

CBC; Real estate agencies can collect their fee even if a buyer defaults on a sale, B.C. man learns

Toronto Star: When you’ve got the keys to your new home but the sellers haven’t left

Global News: Home inspections aren’t always an option. Here’s how buyers can protect themselves

ZOLO: Every Task a First-Time Homeowner Needs on Their Possession Day Checklist

Canadian Real Estate Wealth: How long does it take to buy a home in Canada?

REMAX: Ontario Real Estate Association (OREA) Form 100, The Agreement of Purchase and Sale (example)

The Brel Team, The Real Estate Lawyer’s Job: After the Contract Is Signed

WOWA: What Is An Agreement of Purchase and Sale?

Ottawa Sun: Agreement of Purchase and Sale explained

Sun Life: Buying a house: What happens after your offer is accepted?

CMHC: Buying Your First Home in Canada; What Newcomers Need to Know

Ontario Council of Agencies Serving Immigrants (OCASI): Should I sign a Buyer Representation Agreement with a real estate agent?

CMHC: Finance your home.Mortgage basics, pre-approval, loan insurance and tips for meeting with your lender or broker

OREA Listing Agreement: Form 200 Fully Explained

The Brel Team, The Financing Condition: What You Need To Know

CMHC: Home buying step by step

The Real Estate Council of Ontario (RECO): If I buy a house, how do I know if the appliances are included?

Bridgewell Real Estate Group: What Happens on Closing Day When Buying a House?

Paradise Developments: What Happens on a Closing Day in Ontario? (2021)

CIBC: How to avoid closing day problems

Mortgage InGenuity Inc.: First Time Home Buyers Guide: What about Pre-Qualification, Pre-Approval, and Mortgage Commitment Letters?

The BRELteam: Selling the House You Bought Last Year

Mortgage InGenuity Inc.: Your House-Closing Timeline: A Step-By-Step Guide

Remax: 10-Step Guide to Selling Your Home

Canadian Real Estate Wealth: How soon can you sell a house after buying it in Ontario?

The Real Estate Council of Ontario (RECO): Buyer Representation Agreements: Understanding the Fine-Print

CIBC, How To Avoid Closing Day Problems

The Balance, Tips for Doing the Final Walkthrough Before Closing on a Home

Nested Sage Real Estate, Why You Should Take Advantage of Your Buyer Visits



You’ve Decided To Buy: 9 Insights To Help the First Time Home Buyer

You’ve Decided To Buy: 9 Insights To Help the First Time Home Buyer




As detailed in our previous post “Your First Home: Is Buying a Home the Right Decision for You?”  the affordability aspect of purchasing your home may be the first step for your first-time home purchase journey.

It goes without saying that everyone’s first home buying experience and situation is different.  However, there are additional first-time home buying exercises beyond affordability that are worth exploring and researching. These additional exercises and thought processes can be related to your own specific knowledge, comfort level, lifestyle fit, geography and neighbourhood preferences, just to name a few.

In addition to having a thorough understanding of your own motivations, mindset, and objectives, you may need to depend on and trust external resources.

Trusting External Resources – First Time Home Purchase

External resources and professionals such as financial and lending institutions, realtors, real estate lawyers, your insurance broker, home inspectors will need to be part of your process. You may want to start asking friends,
colleagues, and family now for referrals for these resources, if possible.

Home Ownership - Home owner and external real estate resources all topping each other hands in one pile

When you have eventually selected your external resources, it may also be beneficial to share your first-home purchase vision, plans, requirements, lifestyle etc. (including the outcome of this post insights) with these external resources.  Let them know about other relevant, important, and pertinent background information and any other insights that are specific and important to you.

Over the next few pages, we will try to highlight the possible steps and processes that you may encounter once you have decided that a ‘first-time’ home purchase is affordable and the right fit for you.

Let’s get started.


Home Selection Process

Once you understand the affordability part, one of the next steps is the type of home you may want to live in.

The home selection process essentially comes down to personal tastes, needs and requirements, geographical and environmental preferences to name a few. However, there are a few insights we can share to help you get started with the type of home you may want to consider.

First Time Home Purchase – Home Selection Insights

A simple first home purchase research exercise of driving or walking around different neighborhoods, may be beneficial.

Look at different styles of homes, floor plans, locations, for example:

  • Condo
  • Single Family (Detached)
  • Two Storey (accessibility concerns, stairs, more privacy)
  • Bungalow (accessibility friendly, limited or no stairs)
  • Townhouse
  • Cape Cod
  • Farmhouse
  • Colonial
  • Contemporary
  • Cottage
  • French Country
  • Mediterranean
  • Ranch
  • Split-Level
  • Tudor
  • Victorian
First Home - At the end of a residential road, a circular court with beautiful homes, with clean yards and lawns, at dusk

What size of home do you need or want? Square footage, # of bedrooms, bathrooms, guest quarters, extended family needs, garage etc.?

  • The size of the lot the home is situated on (how much land do you need?).
  • Give some consideration to the location of the home and the lot:
  • Big lot or small lot (lots of room to play and entertain, space for a new pool, lots of maintenance, lawn mowing, leaves in the fall),
  • Busy street (accessible, noisy, traffic)
  • Street corner (people cutting across your lawn?)
  • Ravine (airy, spacious, wildlife)
  • Lots of trees and tree canopy (shade, green factor, cool in summer, lots of leaves to rake)
  • The type of neighborhoods. Research the neighborhood, is the neighborhood community oriented, looking out for one another or do they keep to themselves and keep neighbor engagement and communication to a minimum
  • Would you prefer your neighbour’s home be within a couple meters or do you prefer homes be much further away, or a ‘gated community’ perhaps?
  • Proximity to schools, malls, grocery stores and other amenities
  • Location on a street, crescent, or court

Home Style Selection Next Steps

It may be beneficial to collect all the relevant data specific to your situation into an expanded ‘first draft’ list of your needs and wants.  Once you have that initial list, you may want to prioritize, refine, and shorten the list based upon what your primary needs and preferences are.

Home Ownership - Color choice palette, on top of white blueprints and architectural plans

Having this list of insights, detailed primary needs and preferences will be helpful with your own decision process about the purchase price, type of home, location, style etc. This exercise will also help you by setting ‘budget and personal fit’ boundaries to work with regarding what you are looking for in a new home.

These preliminary effort, proactive analysis and initial needs process will benefit your first-home purchase process by having many of the answers prepared in advance to the many questions that your external resources will be asking.

Sharing this type of information with your real estate professional can help them improve their sort and search results for the home (and location) that will appeal the most to you.


External Resources – Professionals, Experts and Specialists

For the most part you will be on this first time home purchase journey on your own. Most of the preference and decision making will all be ‘internal’ to you and you alone. However, there will be ‘external resources’ that you will need to assist you, those who you will need to depend on and trust throughout your entire first home purchase journey and process.

First Home - Rectangular grid with 8 square images, 4 people on top and four people on bottom of various multicultural ethnicities. Male and Female

You need to contact experts and specialists to help you along your first home purchase journey.

These experts and specialists include:

  • Mortgage Specialist
  • Realtor/Real Estate Agent/Broker
  • Real Estate Lawyer
  • Home Inspector
  • Home Property Insurance Agent
  • Life Insurance Agent


Ask Your Personal and Work Network

One of the best sources for these external resources is from asking your network for referrals.

Your colleagues, family, neighbors, people you know well, and friends are a valuable resource for these referrals. In addition to getting these referrals contact information, ask your source why they like this ‘expert or specialist’ and prefer them to others.

Once you have collected numerous names for the resources shared with you will need to do some background research on them to ensure they are a fit for you.

If a referral is from someone you know, like and trust, it’s likely that they may be a fit for you and your needs, however you should still do your homework, visit their website, call (or video call) the on the phone and if possible, meet with them before making (or signing) and commitments.

Your first home purchase will include legal contracts and related complexities. You should be contacting a lawyer as early as possible, and before signing any documents, which we will detail in the Real Estate Lawyer section.


You and Your Mortgage Specialist

 Your mortgage specialist should be one of the first resources you talk to once you have decided to purchase a new home. They will most likely be a part of your ‘affordability’ process and discussions.

Your mortgage specialist should be able to lay out different mortgage options and alternatives.

If you’re not familiar with mortgages, you should be knowledgeable in advance of meeting with your mortgage specialist. We’ve included a list of terms which you may want to research. Your Mortgage Specialist should also be educating you on the different mortgage processes and terminology, such as:

  • Credit score. Information to income and debt requirements, along with formal proof and documentation
  • Mortgage Application process
  • Mortgage Pre-Approval (certificate)
  • Home value and appraisals
  • Home inspection
  • Mortgage (default) insurance
  • Borrower qualification and financial Stress Tests
  • Home property and contents insurance requirements
  • Mortgage financing specific terminology, including:
    • down payment
    • amortization
    • mortgage term
    • interest rate
    • fixed rate vs. variable rate mortgages
    • appraised value
    • Gross Debt Service Ratio (GDSR) and Debt to service ratio
    • High ratio and low ratio mortgages
    • Lump sum payment
    • Interest adjustment
    • Closed mortgage
    • Open mortgage
    • Conventional mortgage
    • Convertible mortgage
    • Equity
    • Default
    • Mortgage Life Insurance (vs. the benefits of separate life insurance)
    • Penalties
    • Mortgage renewal
  • Land transfer tax
  • Property survey
  • Closing costs
Home Ownership - Female asian mortgage specialist shaking hands with future first time home buyer


You and Your Realtor/Real Estate Agent/Broker

Now that you have an idea about the size of your home and the type of home you want, you may want to do some research about the home’s location. An experienced and knowledgeable real estate professional can be of assistance with this exercise as well.

First Home Purchase - Female real estate agent speaking with a young family of 5 on a lawn in front of a beautiful home

Before contacting a realtor, brokerage or real estate agent, research your preferences on a search engine, Google for example. Visit Realtor websites and look at various homes, locations and maybe drive or walk around different locations and neighborhoods.

Become an expert in your own needs and wants and share that information and those insights with your agent.

Understand the difference between a Realtor, Real Estate Broker, and a Real Estate agent

A Realtor belongs to the Canadian Real Estate Association (CREA). A Realtor may have more professionalism, ethics, training, and experience. Realtors must continuously abide by CREA training, membership, ethics, and code of conduct.

Real Estate Brokers have additional training and licensing which allows them to hire other real estate agents to work for them. They must be a licensed Real Estate agent for two years before beginning the additional licensing, training, and courses.

Real Estate Agent is licensed (courses and pass exams) to help people buy, rent, and sell real estate, but doesn’t belong to CREA (unless they are a CREA member, then they would be a Realtor). A Real Estate agent must work for a real estate broker (all deals must go through a brokerage that operates a trust account).

Being knowledgeable about your own needs and wants will help your real estate resource help you.  They will gather necessary market and neighborhoods intelligence to help you on your first-time home buying journey. Your real estate professional should be proactively reviewing the types of homes and neighborhoods you want to visit and eventually, and if appropriate, home viewings and walk-throughs.

Do your homework, it would be helpful to know (and share) your preferences for:

  • Affordability and budget
  • Geography and location (What city, suburb etc.)
  • Home style, floor plan etc. preferences. Lots size, maintenance comfort level
  • Neighbor type preferences (how close do you want your neighbors? What type of neighbors?
  • Lifestyle (single, couple planning a family or not)
  • Type of amenities or access you want to be close to (boutiques, shopping malls, transit, highways)
  • Accessibility requirements
  • Other ?

When you share this type of information and insights with your real estate representative, they can use that information through their own real estate ‘lens’ which will help them help you with your selection process.

Be patient with all your external resources, especially your real estate resource. After sharing your preferences with them, they may also show you homes outside of the parameters you requested. They may just be trying to offer you information or alternatives that you may not be aware of, and they may also be trying to understand your boundaries, decision making process and preference levels.

Sometimes the dream homes people eventually end up buying were outside of the information, preferences or details provided to the real estate agent. Be transparent and let them know if this approach is helpful or not. 


You and Your Real Estate Lawyer

Once you have decided and confirmed that you can afford a new home, have discussed mortgage details and alternatives with a mortgage specialist, and have initiated the home purchase market activities with your real estate representative, you should be contacting a real estate lawyer that you are comfortable working with, this includes their staff as well.

Home Ownership - Real estate lawyer discussing final house closing details and presenting keys to a first time home buyer.

Your real estate lawyer will be fulfilling a critical role with your first-home purchase, so your real estate lawyer should be involved as early as possible.

It’s imperative that your lawyer be a knowledgeable and competent legal specialist when it comes to helping you with your first-home purchase transaction. You will need a friendly, thorough, and detail-oriented lawyer and office staff who are client service oriented who will help you navigate through the entire process.

Agreement of Purchase

An Agreement of Purchase and Sale can deal with numerous issues and can be complex. Being proactive and transparent with your real estate lawyer is very important, in advance of signing any home purchase documents. You may wish to share the Agreement of Purchase and Sale with your lawyer, before signing. This can help avoid any disputes and lower your costs, if there are any disputes.

The role of your real estate lawyer will include:

  • Initial introductions, including understanding your needs
  • Working with your mortgage lender or specialist to make sure your financing is received
  • Review of mortgage related agreements and documents, ensure you are aware of your legal rights and any obligations
  • Taking all the necessary steps to ensure your first home purchase is successfully completed
  • Advising you about including any conditions on the home purchase that can give you flexibility if you wish to withdraw from the deal. These conditions could include that the sale is subject to a home inspection, financing or review and approval from your lawyer. These conditions could be helpful if there is something wrong with the property and you want to withdraw from the deal
  • Review of the builder’s purchase agreement if you are buying a newly built home. Ensure that the builder’s purchase agreement is fair to both parties
  • Review of the lot survey and deed to ensure there are no encroachment issues
  • Reviewing the Agreement of Purchase and Sale from your real estate representative, ensuring the document is clear, complete, concise, and effective
  • If buying a condo, review of condo status certificates, and ensure that the condominium corporation is financially sound and stable. Examine any condo rules, regulations or provisions which would not be in your favor
  • Complete property title searches. Your lawyer must ensure that your home and its title are free from any liens or other burdens or impediments
  • Ensuring that that property taxes, utilities, are up to date. If any utility bills or taxes have been pre-paid by the previous owner, you will need to re-imburse these funds to the seller as part of closing, your lawyer will oversee this reimbursement as part of the overall transaction
  • Arranging title insurance
  • Home purchase ‘searches’ availability and discussion
  • Building and zoning searches
  • New home warranty or resale home warranty awareness and review
  • Ensuring that any mortgages or lines of credit registered against the home’s property title are discharged and paid-out
  • Property fees collections, down payments, taxes, and disbursements paid out related to the property purchase or sale
  • Mortgage modifications (if required)
  • If a private sale, provide transaction advice, negotiation of terms, preparing a sale or purchase agreement
  • Preparation of closing documents
  • Your lawyer will:
    • Let you know about your closing costs in advance
    • Also process the mortgage funds from your lender
    • Deposit those funds in a trust while the deal closes
    • Discuss any other closing costs with you, including their fees and disbursements, and applicable title insurance


You and Your Home Inspector

Hiring a home inspector can help save you a lot of headaches and potentially save you a great deal of money.

How else would you know if the home you about to purchase has a leaking roof or basement, or the windows and home are in poor shape in need of an upgrade?

If the previous owner hasn’t been properly maintaining the structural integrity of the home and the home has serious structural issues, then you may have many costly issues with the home going forward. This would not be a good experience for the ‘first-time’ homeowner.

Renting vs. Buying - Male home inspector looking up towards ceiling with a clipboard writing inspection notes and observations.

A home inspection prior to buying a home can identify significant issues with the property you are thinking about buying. These issues would need to be repaired to your satisfaction or you may want to back out of the home purchase deal altogether. Having a home inspection can help you avoid these types of issues.

Home Inspectors Are Not Regulated

The home inspection sector is not government regulated, so anyone who wants to can call themselves a ‘home inspector’. Perhaps asking your friends and family, a Realtor, broker, or real estate professional for a referral may provide the best inspector for your needs.

Most credible home inspectors will have extensive background in home construction, along with expertise related to environmental or chemical sector. They often have civil engineering experience with diplomas or degrees, along with home inspection certification and training from inspection associations and colleges.

You should keep in mind that a home inspection will identify only observable issues with the property. That is, issues which can be discovered by walking around and looking at the interior and exterior of the property. Issues that are hidden behind walls or buried in the ground, are likely to be missed by even the most experienced inspectors. This is why it is important to include warranties into the Agreement of Purchase and Sale, that protect you as the buyer, from any hidden defects that an inspection may miss.


You and Your Home Property Insurance Agent

The primary objective of home property insurance is to protect your home, its structure and most of its contents in the event of loss or damages such as a burglary, fire, or a storm.

Home property insurance ‘may’ also protect you when you are away from your home as well. It’s best to check with your home insurance provider, about coverage specific to your needs.

Home property insurance can also cover your personal belongings, including your furniture, appliances and living expenses should a loss or damage event arise.

If you have expensive items, you may need additional coverage also known as ‘endorsements or riders’.

The Importance of Maintaining Your Home

Home property insurance will not cover neglect, so keep your home’s infrastructure up to date, including:

First Time Home Buyer - Young family of three. Mom and Dad with daughter holding a bent and peaked piece of cardboard like a roof over all of their heads.

  • Roof
  • Windows and doors
  • Heating and air conditioning
  • Basement (leaks)
  • Pool
  • Other ?

Another component of home property insurance is personal liability. Home property insurance usually covers people who may be injured on your property or in your home, liability limits vary.

Different types of homes and dwellings need different types of home insurance coverage:

  • House
  • Condo
  • Rental

At some point in your first-home purchase process you will be asked for some type of proof of insurance. Home property insurance is a critical component of a home purchase and is required for one or more of your external resource’s stakeholders, especially your financial institution who is lending you the funds for the home. In fact, most financial institutions and lenders will not release mortgage funds until you have provided proof of proper and adequate insurance for your new home, to your lawyer.

Be Thorough With Your Property Insurance Research and Selection

Selecting property insurance is not a detail you want to leave for the last minute. Property insurance should also be included in your affordability and budgeting process.

Researching and selecting property insurance should be near the top of your list once you have decided to make your first-home purchase.

Much of the planning and organization details we are discussing in this document will be helpful to have when speaking with a property insurance agent, they may ask many questions, including:

  • Type of insurance needed. Home, condo, or rental (tenant)
  • Home address and homeowner(s). Whose name is on the deed.
  • You may be asked your age, gender, marital status, dependent children, and ages of people living at the home
  • Occupation
  • Type of dwelling and square footage
  • Garage
  • Plumping type
  • Wiring type
  • Exterior materials (brick, stone, siding etc.)
  • Coverage start date
  • When was the home built?
  • Finished basement
  • Operate a business from home
  • Rent any part of the home or property
  • Provide a list of expensive items, such as bikes, watercraft, artwork, jewelry, wine, or spirits, other
  • Home alarm, covering water, fire, or theft
  • Claims history
  • Contact details, such as phone number, email, and addresses
  • Alumni (preferred rates)
Home Ownership - Man with magnifying glass scrutinizing a contract with his index finger

When to Buy Home Property Insurance

If you are in the process of bidding or making an offer on a home, if you haven’t already, be proactive and contact your preferred home property insurance company about your first-home purchase plans and activities.

Once you have a bid on a home and have a ‘close and move-in’ date, you will need insurance when you assume ownership.


Life Insurance Agent – Mortgage Protection Insurance

At some point during your mortgage discussions, you will be asked about ‘optional’ life insurance for your mortgage also known as mortgage protection insurance. You can purchase this type of insurance through your financial institution, or you can purchase it separately.

Ultimately, the decision is yours to make regarding the type of insurance you need, we will try to outline a selection of pros and cons, and alternatives.

Renting vs. Buying - Young family of four sitting on a floor together next to a caricature drawing ion the wall of a house with a yard and trees and the sun shining on the house.

Not to be confused with mortgage default insurance (less than 20% down payment), like the type we detailed in “Your First Home: Is Buying a Home the Right Decision for You?” that is available from CMHC.

Mortgage protection insurance covers you if you die or become disabled. Some financial institutions offer a ‘death only’ component. The premiums are added to your mortgage payment.

Advantages and Disadvantages

There are advantages (convenience) and disadvantages (cost and eligibility when you need it) of purchasing from your financial institution.

You have a few options and questions to think about:

  1. Do I need life insurance for the new home’s value? What liabilities do I have should I die or become disabled?
  2. Do I already have life insurance separately that already covers the house value? Can I increase that coverage with my current life insurance broker?
  3. Is the cost of adding insurance coverage from the financial institution greater than purchasing life insurance separately from an agent? Mortgage insurance purchased from a financial institution shrinks as your mortgage decreases, yet the premium often stays the same, is this good value?
  4. Can I purchase life insurance from an agent or be refused insurance? Is the life insurance being offered only available from the financial institution?
  5. Will the financial institution honor the coverage? Insurance from financial institutions is often provided without a medical examination requirement, yet when a claim is made the coverage may find an issue or violation of the insurance and leave you exposed with no insurance when you need it.
  6. When you purchase life insurance through your financial institution and you renew your mortgage, the premiums could go up.
  7. If a claim is made from a financial institution’s life insurance, the bank or financial institution usually receives the insurance funds directly, those insurance funds do not go to the homeowner. From a financial planning perspective, this may or may not be the best option at the time for your beneficiaries.

If you need additional life insurance coverage for your home value, speak to a financial planner. Or speak to a qualified and knowledgeable life insurance agent and provide your situation and particulars. There may be some longer-term advantages and benefits to purchasing your own life insurance on your own.


Decision Making – Making an Offer and Closing Date Activities

Home Ownership - The outreached had of a female real estate agent handing over a house key with a fob with 'home' written on it along with a red ribbon.

At this point in your first-home purchase journey, you have decided you can afford a home, have performed all the activities leading to the selection of the home you desire, and now you and your real estate representative are ready to make an offer to buyer or their real estate representative.

This is your first home purchase, so you’re going to be exposed to many new terms, complexities, acronyms, processes, and information that will be foreign to you.

Talk to a Lawyer Sooner Than Later

When it comes to signing any contracts, agreements, or documentation, it would be prudent and best advised to talk to your lawyer prior to engaging in any signing of documents. At least initially, and even for the more harmless looking documents that your real estate representative will ask you to sign before you begin your first home purchase journey.

Inform your lawyer or legal representative that this is your first home purchase. They should guide you through the process, and let you know which documents you will need their help with and when. There may be documents that appear harmless to sign, however having a discussion with your real estate lawyer beforehand will give you some peace of mind for your first-time home purchase transactions.

There is only one legal expert who is qualified from a legal perspective, that is your lawyer. That doesn’t mean that real estate representatives are not familiar or have knowledge about the Agreement of Purchase and Sale, however they are not experts on the legal conditions, clauses, or their ramifications, to name a few reasons.

When you hire a lawyer to assist you with the purchase of real estate, the lawyer should perform a number of searches to ensure that the possibility of problems with the real estate is minimized. You, as a buyer, should discuss with your lawyer what searches are available to you and which are appropriate for your purchase transaction.

Get Comfortable With Paperwork and Contracts

There are many documents and paperwork involved with buying or selling a home in Ontario.

The Ontario Real Estate Association (OREA) has developed a set of standardized forms that are most commonly use for the resale of residential or commercial property. These forms are generally very good and complete, but they deal with a lot of issues and can be complex.

Most agreements to buy and sell real estate are created on pre-printed forms which have been created by the real estate industry or by lawyers.

Renting vs. Buying - Close up image of two hands. A man's hand with a pen about to sign a contract and a woman's hand pointing where to sign, next to house keys on the contract.

Understanding your obligations and entitlements of your Agreement of Purchase and Sale before you sign it can avoid disputes and lower your costs. Having your lawyer review the Agreement of Purchase and Sale with you before you sign it can ensure that understanding.

These documents may include:

  • Agreement of Purchase and Sale
  • Agreement of Purchase and Sale Condominium
  • Buyer Representation Agreement
  • Buyer Customer Service Agreement
  • Confirmation of Cooperation and Representation
  • Listing Agreement – Authority To Offer for Sale
  • Seller Customer Service Agreement


Some properties are bought as new homes, and some are bought as resale homes. New home

purchases are covered by Ontario’s Tarion Warranty. Resale homes are not covered by any warranty other than what is given by the seller and agreed to in the Agreement of Purchase and Sale.

It is therefore imperative that buyers negotiate for warranties to be given by Sellers to protect themselves from any issues which arise after closing.

The Sales Agreement Process

Not sure how the home purchase process work? The primary document at this point would be the Agreement of Purchase and Sale (Agreement). Every home purchase is different; however, this is a typical home purchase sale process:

  1. The first-home buyer will have their real estate representative assisting them with the finding, locating, and selecting the home they wish to purchase. They will also be involved in negotiating the first-home purchase.
  2. The Buyer’s agent will prepare an offer to purchase and submit it to the Seller or his or her representative.
  3. Once both parties have executed the Agreement, the signed agreement is then sent to a lawyer who is requested to complete the purchase.
  4. Once signed by both parties, an agreement of purchase and sale cannot be amended without the consent of all parties.
  5. Once the Agreement is signed, the final closing processes begin. All legal documents must be signed, and all payments must be paid out. In most cases, once all the closing details and transactions are completed, you will receive the keys to your first home before the end of the closing day. However, there could be factors that impact whether you get your keys at the end of closing day, these factors include mortgage funding, courier delivery of keys, online registrations completed.

Don’t forget to bring your identification when you are signing documents with your lawyer. They usually need to make two copies of your ID. One must be photo ID (not Health card), your passport can be your other ID.

Picking Up the Keys to Your New Home

First Time Home Buyer - Happy Gen X couple accepting the keys to their new home.

Once you have picked up your keys, you can start the process of moving in, or in some cases some first-time home buyers take some time to do some renovations, painting, cleaning, upgrades before they move in, providing they have a place to stay.

 Conclusion – Next Steps

Congratulations! You’ve made it to the end of this article, and perhaps you’ve already started your first-home purchase journey.

In our previous first-home purchase post “Your First Home: Is Buying a Home the Right Decision for You? we provided insightful details about the most important part of your first-home purchase process, Affordability. You will learn about the critical next steps once you have decided that you can afford your first home.

In addition, if you’d like to read more about purchasing your first home, we have linked several articles below discussing similar topics. In addition, please visit our Real Estate Law and Buying A Property sections on the Nichols Law Professional Corporation website.


Sources and Additional Information


Sources and links are provided for source credit and attribution, and for additional information purposes only. Nichols Law is not affiliated, associated, authorized, endorsed by, or in any way officially connected with any of the sources or links provided.


Your First Home: Is Buying a Home the Right Decision for You?

Your First Home: Is Buying a Home the Right Decision for You?



A home purchase is most likely the largest financial decision a person, couple or family will make in their lifetime.

First Home: 'For Sale' sign on a post in front of a house

A home has an important purpose, it provides you with shelter. In addition to shelter, your home can be a place to rest and relax, provide opportunities to entertain your family and friends, and perhaps raise your own family.

There could be numerous reasons why purchasing a new home could compel you to venture into the real estate market. If you’re renting, you may have driven or walked past a ‘dream’ home that was for sale and wondered “what if”?  Perhaps a home of a friend or acquaintance came up for sale, a home you could see yourself living in, which compelled you to look at or visit the home’s ‘open house’.

Can I Really Afford To Purchase a New Home

Regardless of the reason for looking at first time home possibilities, at some point during your ‘thinking about it’ home purchase exercise, you ask yourself “Can I really afford to purchase a new home”

The primary information within this post is intended to guide the first-time home buyer who is thinking about buying their first home and is comparing home ownership with renting.  The first-time homeowner may need answers about whether they can afford to purchase their first home or not.

Although this post is written for first-time home buyers, there may be insights within the post which may help some buyers who have previously purchased a home.

Let’s get started.


Taking Your First Home Buying Steps

Deciding to finally purchase your first home can be somewhat overwhelming. Where exactly do you start?

Before you get started with your ‘First Time Home Purchase’ research on Google and visiting realtor websites, take some time and reflect about whether buying your first home is the right decision for you. The answer to this question is based primarily on an individual or family’s financial resources and whether buying vs. renting is a better investment or decision.


Most prospective homeowners start with affordability, which we will expand upon in the following pages. Do you have the financial means to save enough for a down payment, pay realtor and legal fees, and sustain the ongoing costs of owning a home?

First Home: 'Return' key of keyboard replaced with blue 'Affordability' key.

Most first home buyers start with comparing the costs of owning a home vs. renting. In addition to a mortgage payment, home ownership costs also include many other factors such as on-going municipal taxes, home insurance, maintenance and upkeep, furnishings, day-to-day items, among others. In most cases, renters don’t have to worry about most, if not, all of these ownership related costs.

These home ownership costs and financial responsibilities should be ‘top-of-mind’ when you are deciding whether you should continue to rent or purchase your first home.

Home Ownership Vs. Renting

We’ll be going into a bit more detail in the next section, however it’s critical that you reflect on your own situation and whether home ownership is a fit for you. Perhaps you’re better off renting and continue building a first home down payment nest egg or investing elsewhere?

Home Ownership Investment Advantages

From an investment perspective, home ownership may have an advantage over renting, although your specific situation may differ.

On average, the Toronto real estate market has increased 5% year-over-year, for the last 50 years. This type of growth can fluctuate and vary, meaning there are peaks and valleys and highs and lows. While this growth has

First Home: Desk with stacked coins, miniature house, calculator, contract, house keys, and fancy pen

been the average, there are never any certainties. With the understanding that home ownership will likely cost more than renting, you may wish to compare whether you are able to save/earn on investments, at an equal to or better rate, than the average increase in home prices. You may be surprised by the comparison.

If you are purchasing your first home strictly for investment purposes, perhaps having a discussion with a financial planner may be beneficial. There may be other investment alternatives that may be best suited for you from a strictly investment perspective, depending on whether the investment is short-term or long-term based. 

Home Ownership Responsibilities

Home ownership has many responsibilities, including the on-going repair and upkeep of your home and its structure.

Structural repairs such as plumbing, electrical, heating and air conditioning and the roof for example, are critical home components which need to be kept in working order and functional. These repairs need to be performed by qualified and or licensed professionals.

First Home: Homeowner on ladder making repairs to front of a house

If you’re not sure about a repair, call a qualified professional first. Most maintenance, and minor home repairs like painting or cosmetic changes, or lawn mowing for example don’t necessarily need a qualified or licensed expert. Many homeowners do the simple stuff on their own, with varying levels of quality and success.

If you’re not familiar or comfortable with minor home repairs, your maintenance costs may be higher if you have someone else do it.

In most cases, working on your own home, such as gardening, painting, minor repairs etc., can be very enjoyable and rewarding. Ultimately, the decision is yours to decide whether home ownership is a fit for you or to continue renting without the benefits of home ownership. These are only a few examples of additional costs that you should be considering if home ownership is a serious consideration.


The ‘Pros and Cons’ of Renting vs. Home Ownership

As we mentioned in the previous section, it’s imperative you explore the benefits and risks associated with renting and home ownership specific to your financial affordability and lifestyle, for example.

Home Ownership Research

Home Ownership Research includes (but is not limited to) understanding the following:

  • Realtor contracts and their roles
  • The role of your real estate lawyer
  • Home inspection and other possible stakeholders
  • Understanding how mortgages work, along with the role of financial institutions, including financing and lending options
  • Your credit history and debt
  • Home ownership insurance
  • Home contractors for any renovation needs
  • Moving expenses and closing costs

Home Ownership Benefits and Disadvantages

  • In addition to providing shelter, home ownership is an investment. You are building equity. A home is in a general sense, a forced savings plan
  • Financial loss. Your home value is not a liquid asset. If you need to sell during a low real estate market, you may lose money (lower property value, mortgage penalties, realtor fees, legal fees)
  • Eventually your home will be paid off, with the benefits of increased property growth and equity
  • Your first home can be your entry point into the real estate market and allow you to upgrade your home based upon your family, lifestyle, or geographic needs
  • You can renovate or upgrade your home and its property based upon your personal preferences and tastes, and have the benefit of potential increased property values
  • Rental income. Homes can be a flexible asset. If you want to move on from your current home, but don’t want to sell, you can always rent it
  • Stability, control over your living space and the pride of ownership

Renting Benefits and Disadvantages

If you are currently renting, you are already aware that it usually costs less to rent, here are a few advantages and disadvantages of renting:


  • Lower costs. Aside from your rent, and perhaps a couple utility bills (e.g., electricity, cable), your total monthly costs are much lower than they would be with a mortgage payment. However, your monthly rental payments can increase each year, as is permitted under the Residential Tenancies Act.
  • Less worry about repairs and maintenance. In most rental situations, it is up to the landlord to look after any major repairs to the property
  • A shorter commitment with renting. Which makes it much easier to move to a new premises, home, or geography
  • The difference between what you would be paying for a mortgage and other home ownership costs and your rent, can be saved and is readily accessible, or used for other investment purposes or to save up for a new home
  • If you’re renting, you don’t have to worry about municipal taxes, repair, maintenance, and upkeep of the unit you are renting, those fees and costs are usually the responsibility of the owner
  • If the property value of the rental decreases, it’s of no concern to the renter


  • Renting is not an investment. As the rental unit’s real estate value increases, you do not share in that investment value. Your rent continues to be due every month, without any ownership benefits and your rent may be increased from time to time
  • If the property owner decides to terminate your rental (within the terms of the rental agreement), you will have the burden of finding a new place to live

Home Ownership Affordability

First Home:Desk with small chalkboard, the pluses and minuses of renting vs. buying a new house

If you don’t have the financial means of:

  • Saving for a minimum down payment (usually 5% of the home purchase price)
  • A sustainable income and savings to make your mortgage payments and weather any future income or employments gaps
  • Paying to keep your home maintained and structurally sound

… then perhaps home ownership may not be for you.

If you don’t have the funds for a down payment, however you have the financial means to save for a down payment, then now is the time to start.

Home Purchase Down Payment

In most cases you will need a minimum of (not including closing costs, which we will get to) *:

Home Purchase Value
Minimum amount of the down payment
$500,000 or less
– 5% of the purchase price
$500,000 to $999,999
– 5% of the first $500,000 of the purchase price
– 10% for the portion of the purchase price above $500,000
$1 million or more
– 20% of the purchase price
*Government of Canada


First Home: Desktop with eye glasses, coffee, calculator, and a note pad with "Property Value" words and a house caricature.

According to the Canadian Real Estate Association, the average home value in Canada is $538,831, a 5% down payment for this average home would be $30,826. Obviously, that home value may be much higher in major Canadian cities.

Home values in the suburbs of major cities may offer a lower home value and subsequently a lower threshold for a down payment. The average home value in the Greater Toronto Area in April 2021 was $1,090,992, which would represent a down payment of at least $54,550.

Home values on the border of the GTA may be even lower. Whitby, Ontario for example, may have average home values which are slightly lower than the GTA, which would mean a lower down payment.

Whether you need to save $25,000, $35,000 or $55,000 or more, saving up for a down payment will need focus, discipline, sacrifice and hard work.

There are a variety of ways to start, and grow your first home down payment, including:

  • Focusing on your career. Putting in longer hours, along with promotions and raises in salary
  • Freelance or gig work as an extra income
  • Not upgrading your car, or buying a less expensive one
  • Limiting your discretionary spending. For example, less restaurant meals and take out, and more home cooked meals
  • Reducing your entertainment expenses
  • Perhaps putting those vacations on hold until you have saved for your down payment
  • Finding a rental that costs less
  • Contribute to your RRSP. The Canadian government will allow first-time home buyers to use up to $35,000 (no withholding tax) of their RRSP for a qualifying home purchase, provided they pay it back over 15 years ($35,000/180 months = $195 per month). For those that have used this plan previously, there may be exception, if you haven’t owned a home for a minimum period.

Government Assistance and Programs

Mortgage Loan Insurance

Mortgage loan insurance must be purchased if you are obtaining a mortgage from a regulated bank and your down-payment is less than 20% of the price of your home. Obtaining a mortgage from a private lender does not carry with it the same requirements to obtain mortgage insurance, but does carry with it increased closing costs. You may wish to read our post on private mortgages Six Factors To Consider Before Contacting a Private Lender’.

Mortgage insurance protects the mortgage lender in the event you fail to make your mortgage payments and are in default. The premium can be added to your mortgage; however, you will pay interest on it and in some cases provincial tax will be applicable.

If the home value is $1 million or higher and if the loan doesn’t meet mortgage insurance standards, mortgage loan insurance will not be available.

The fee for mortgage loan insurance ranges from 0.6% to 4.50%, the rate depends on how much your down payment is, the larger the down payment, the less the mortgage insurance rate will be.

Mortgage loan insurance providers:

  • Canada Mortgage and Housing Corporation (CMHC)
  • Sagen
  • Canada Guaranty Mortgage Insurance Company

Closing Costs

First Home: Agent handing keys to first time home buyer, while signing the mortgage

Closing costs are ‘all’ the fees that will need to be paid to finalize the closing and sale of your home. Approximate closing fees range up to 3 to 5% or more of your home’s value.

Closing Cost Fees

These fees may include:

  • Appraisal fees
  • Legal fees, including disbursements, title, mortgage, adjustments, and administrative fees
  • Title Insurance
  • Land Transfer tax
  • Home inspection fees
  • Interest adjustments if there is a gap between the closing date and first payment
  • H.S.T on new homes or commercial properties


As a first-time home buyer, there may be rebates available to help with some of these closing costs, which should be investigated. Of note is the first-time home buyer land transfer tax rebate, which provides a rebate of up-to $4,000.00 on Provincial Land Transfer Tax and a rebate of up to $4,475.00 on Toronto (Municipal) Land Transfer Tax. Qualifications for the rebate are subject to a number of factors, so it is best to speak with your lawyer to determine whether you qualify or not.

Conclusion – Next Steps

Congratulations! You’ve made it to the end of this article, and perhaps you’ve already started your first-home purchase journey.

In our next article “You’ve Decided To Buy: 9 Insights To Help the First Time Home Buyer we provide insightful details about the first-home purchase process. You will learn about the critical next steps once you have decided that you can afford your first home.

In addition, if you’d like to read more about purchasing your first home, we have linked several articles below discussing similar topics. In addition, please visit our Real Estate Law and Buying A Property sections on the Nichols Law Professional Corporation website.


Sources and Additional Information


Sources and links are provided for source credit and attribution, and for additional information purposes only. Nichols Law is not affiliated, associated, authorized, endorsed by, or in any way officially connected with any of the sources or links provided.