Toronto is one of the most beautiful cities to live in. It is filled with great luxuries that are sure to entertain tourists from all over the world. However, when you decide to live in Toronto, there are many factors to consider. You will discover that Toronto is a large city that might overwhelm you if you do not know how to find your way around it. As you look for real estate in Toronto, you need to know what your priorities are so that you can find the perfect place to live. The following factors should be considered very seriously.

The first consideration is the distance of the piece of Toronto real estate you are considering to important establishments and institutions like hospitals, schools, entertainment spots, shopping malls, and the like. These facilities are important and when buying a home, you need to make this your number one consideration. Many condos in Toronto are located in places where there are good social amenities. Therefore, this will make your search easier. Investors know only too well the importance of these services and real estate in Toronto in most cases is developed with this in mind.

The other important factor to consider when you are buying real estate in Toronto is the distance of the property to your place of work. Toronto has a large population of foreign workers, and many of these hard working people prefer having condos or houses that are near their place of work. This is because they want to reduce costs and make sure they are efficient at work. This does not just apply to foreigners as finding a house or condo close to where you work is suitable to everyone. It helps in leading a stress-free life with regard to transportation hassles. Another factor to consider is the amount of cash you have to invest. If you only want luxury, you can look for suitable Toronto real estate that will meet your requirements.

However, if you are working on a strict budget as you look for real estate in Toronto, use realtors who will guide you to the house that will meet your needs and is affordable. With the global economic downturn, there are many foreclosed properties that are being sold for mere pennies on the dollar, offering investors a prime opportunity to purchase multiple properties and allowing others to purchase homes that were previously not affordable to them.

Finally, you need to consider the kind of policies and rules that are in place to guide you. All locals and foreigners will be required to make their Toronto real estate deals and transactions legally. Therefore, it is important for you to know all the legalities so that you can acquire your new home in Toronto in accordance with the law of the land. Basically, use a licensed real estate agent and you will not be a victim of real estate fraud.  The policies are clear and you will acquire your property pretty easily when everything is in order. Once you have considered the above, you are good to go and you can be sure that the property you acquire will serve the purpose intended.

When looking at Toronto homes for sale there are several factors you must keep in mind.  Buying a home is not just about putting some money together for a down payment and purchasing a home that looks good to you, it’s about finding the best place for your family to live.  Here are several factors that you must consider.

To begin with, you need to decide how long you would like to live at the said address.  If you sell the house within a short period of time, its value may not have appreciated enough to earn you any profits or even cover the costs of acquiring it.  In this regard various economic factors may come into play to affect its value.  Experts suggest in Toronto, given the 2%-4% annual housing market increase, you should plan to live at the same address for a minimum of five years before deciding to sell.  This will help ensure that your costs are covered barring a housing market downturn.

It is recommended to determine how much it costs to run the property on a monthly and yearly basis.  The calculation for this should include the cost of the mortgage payments, insurance, home improvements and maintenance as well as property taxes.  There may be a homeowner’s levy fee that you will have to pay if you have bought a townhouse, flat or live in a certain community.  This is a monthly fee that must be taken into consideration when purchasing the property.  If you find that adding these costs to your calculations makes the property too expensive to run, you should try to negotiate and have them lowered or look for a different property.

Most Toronto homes for sale have all the utilities you need in place.  However, you should not just assume that what you are looking for will be available.  You may find that in some places the services you need may not be readily available at a reasonable cost.  Water is a utility that is often overlooked when buying a house.  For instance, you will want to know if the water heater works well, if the tap water is drinkable, and whether or not there is adequate pressure.

When you own your own home you are completely responsible for the regular maintenance, the emergency maintenance, the yard work and virtually everything that has anything to do with your house.  This is sometimes shocking to those who are buying for the first time, sometimes renting doesn’t seem so bad after all!  So, be sure you can afford and budget for all the hidden expenses that are an inevitable part of home ownership.

When looking at Toronto homes for sale, be sure to assess how long the home will serve and meet the needs of your family.  You need to know what you need now and in the next five years to feel satisfied with the home you are looking at.  If you are planning on starting a family, a two bedroom house may quickly become too small for you. Take this into consideration and get a house with room to grow and expand your family.  However, if the property has a large yard you may consider adding to it by making alterations.  Thinking ahead will make it much easier to choose the best home and will ensure satisfaction in the purchase you make.

The turbulent past few weeks in the global economy has been playing havoc with interest rates as the Bank of Canada was among several global central banks to drop their prime lending rates to try and slow down the economic downturn. The typical reaction from the Big Banks is to follow the Bank of Canada’s lead and decrease their Prime Rates – by a similar amount, although that didn’t happen last week. Royal Bank, TD and Scotiabank, along with the rest only dropped their Prime rate by 0.25% versus the 0.50% decrease by the Federal government. This resulted in Canadian mortgage rates actually increasing which again goes against normal market behaviour. This results in a very interesting question – what actually affects Canadian mortgage rates?

There are numerous factors that influence Canada’s economy including unemployment, gas prices, inflation, exports and imports, the government budget deficit or surplus and the list goes on, and it can be difficult to keep track of all these things and how they impact our daily lives and the mortgage rates we have to pay. Many people believe that the Bank of Canada’s monthly interest rate decisions directly affects all mortgage rates, but that’s not the case. Variable (ARM or adjustable mortgage rates) and fixed mortgage rates in Canada are actually influenced by different factors.

Fixed mortgage rates

Canadian fixed mortgage rates are affected by the price of government bonds and the bond yield. Bonds are typically considered safer investments than stocks, and when there is economic turmoil, investors usually will dump equities in favour of bonds, especially Government bonds, and when the stock market is booming, investors most likely would make a higher return on investment in equities.

This means there is a lower demand for bonds, so they decline in value and increase their yield. On the other hand, when the Canadian economy becomes less stable and stocks do not look as enticing, the demand for bonds increases and their yields decrease.

When the Canadian government’s longer term bond prices, such as the 5 year increase, this results in a decreased yield (return), typically reducing the five year borrowing costs for mortgage lenders who can then pass these savings onto customers in the form of lower 5 year fixed mortgage rates.

However, during these very unusual times, due to the lack of liquidity in the markets, banks around the world are hesitant to lend to each other and are hoarding cash, resulting in higher borrowing costs and lenders have to pass on these increased on to customers in the form of higher fixed mortgage rates.

Variable mortgage rates

The Bank of Canada plays a big part in determining variable mortgage rates as they set the target overnight target rate which they describe as:

“the average interest rate that the Bank wants to see in the marketplace for one-day (or “overnight”) loans between financial institutions.”

This is what the Big Banks based their Prime Rates on and the Bank of Canada doesn’t have any say in setting lender’s Prime Rates, they are determined by each financial institution independently and are based on the cost of short-term funds.

This is important as variable mortgage rates are advertised as Prime – 0.60% or similar, which means that the interest rate you’ll pay is directly related to the Prime rate, and will fluctuate whenever this changes. So, if the Bank of Canada drops rates by 0.50% or 50 basis points as they did last week, lenders usually decrease their Prime rate as well, as their cost of borrowing drops, meaning that your payments on a variable rate mortgage will decrease, a great option if interest rates are falling.

The problem with this scenario during this dreaded ‘credit crunch’ is that banks have stopped lending to each other in the short term as they’re scared they may not get their money back due to the instability in the system. As a result, interbank lending rates have increased and this higher cost is being passed onto customers in the form of higher interest rates.

Are fixed or variable rates the better option?

This is a very common question and really depends on each person’s situation and whether they can handle the changing mortgage rate payments, both financially and mentally, because the last thing you want to do is lose sleep because interest rates may increase, or if you’d feel more comfortable knowing the constant fixed rate you’d be paying over a few years.

There have been many studies and debates on which is better for borrowers and the analysis shows that historically Canadian homeowners would be better off by choosing variable rates. There was a recent report released by Dr. Milevsky, associate professor of finance, Schulich School of Business, York University, and he said that based on data from 1950 to 2007, the average Canadian could expect to save interest 90.1% of the time by choosing a variable-rate mortgage instead of a fixed. The average savings was $20,630 over 15 years per $100,000 borrowed, and he stated “over the long run, homeowners really do pay extra for fixed-rate mortgages.”

This may be something to keep in mind over the next few months as the Bank of Canada is forecasted to decrease mortgage rates, but keep in mind these are very unusual times and the best thing may be to expect the unexpected.