How much will it cost to Buy a Home?
Monday Nov 30th, 2020
How Much will it Cost to Buy a Home?
There are many costs attached to buying a home that goes above and beyond the purchase price. Being informed and prepared is the best way for you to ensure a smooth and easy transition to purchase a home. Here is a list of costs that will arise when you are buying that home:
- Down Payment: This is the initial portion that you will be paying for your home. For Canadian residents, the minimum down payment for homes $500,000 or less is 5%. For homes over $500,000, it is a 5% down payment on the first $500,000 and a 10 % down payment on the remaining amount. It should be noted that if you are putting less than 20% down on your mortgage amount, you will be considered as a high-ratio mortgage and will require mortgage loan insurance from companies such as CMHC. It is encouraged that you put down 20% to avoid these extra fees. Click here for a CMHC insurance calculator.
- Deposit: A deposit is an amount paid as assurance to the seller that usually will be held in a brokerage’s trust account. This amount will be used towards a portion of your down payment. There is no standard amount for a deposit given to solidify a real estate purchase agreement. Your realtor can advise you on what is suitable for the purchase price and current market conditions.
- Land Transfer Tax: When Buying a home, it is very important to factor in land transfer tax that you will pay upon closing. The land transfer tax is a provincial tax that is charged to all buyers. If you are purchasing in Toronto, don’t forget to add the municipal tax as well. Ensure that you have enough saved and that it is readily available. If you are a first-time home buyer, you are in luck as you do receive a rebate. For a helpful land transfer tax calculator, click here!
- Appraisal Fee: A property appraisal fee may be required to be conducted by your mortgage lender. It is a cost that is passed onto the buyer. An appraisal fee is roughly $400, but can vary.
- Home Inspection: The home inspection will inform you of any items that may need repair and that can't always be seen during a showing. It is important to have all the facts about the home prior to finalizing your purchase so you can avoid any surprises that may arises in the near future. Knowledge is key when buying. A home inspection can cost anywhere from $500 plus depending on the location and size of the home.
- Property Insurance: A must have when buying a home. Your assets need to be protected. The types of coverage and costs will vary. You will want to compare different rates and coverages and see what best suites your needs.
- Life and/or Mortgage Insurance: Ensuring you prepare for the future is a large part in purchasing a home. Protecting you and your loved ones in case of possible scenarios will be beneficial in the long run. Comparing different life or mortgage insurance options will help provide peace of mind in the event that you are unable to pay your mortgage payments. Costs and coverages will vary.
- Lawyer Fees: The fee for your lawyer to help you with closing the deal for your home will vary depending on the representative. Your realtor will be a good person to consult with on this. They can help refer you to a lawyer and provide you with some input on what to look for.
- Title Insurance: Title Insurance protects owners and their lenders against losses related to the property's title or ownership. Costs are roughly $200 plus.
- Property Taxes: Property taxes are annual taxes based on a dollar rate for every $1,000 of your estimated property value. It is important to factor this amount in when looking at homes. Mortgage lenders also want to know what this cost is, as they will make note of this for their lending calculations and your debt ratio. Some lenders do allow you to tack this amount onto your mortgage payments each month.
- Moving Costs: Consider the expenses of hiring movers and all your initial hook up fees for internet, cable, etc. Will you be renting a truck and moving items yourself? Will you be placing items in storage? Thinking ahead will help you budget correctly.
- Home Maintenance: There are ongoing maintenance costs associated with owing a home, along with keeping the lights on. Before purchasing a home, sit down and create a budget of what these costs may look.
Now that you are all informed about the costs associated with purchasing a home, it’s time to start budgeting and begin looking for the perfect dream home. You can search listings in your desired area here! Looking for more information about buying a home? Contact Us!