What are all the costs involved in purchasing a property?
If we had a dollar for everyone that said they only knew about the down payment, we would be rich. First-time homebuyers are sometimes not aware of all the moving parts of all the associated costs. Education and coaching will make the process more seamless to prepare for you on this homeownership journey.
Apart from the 5%-20% deposit of the purchase price of the home, the closing cost may include all the following:
You should set aside at least 1.5 to 4% of the property value to cover the costs when buying a home In Ontario . For example, a Toronto condo purchase price $662,900, Harmonized Sales Tax (HST) $24,000, and Development charges including common expenses $20, Meter charges $2500, land taxes $207, transaction levy $75, Tarion $1300, status certificate $115, municipal charges $9700 development charges $2100, discharge fee $800, registration of condo $60, security deposit $500, electronic registration fee $300, and deposit administration fee $300, for a total $41,977.
Note the $24,000 HST is only paid if you do not occupy the property and it will be for rental or investment property. The total closing cost when you choose to live-in, without HST is $17,977.
The Breakdown
Home Inspection
Getting a professional evaluation of its condition before you buy. The primary purpose of a home inspection is to give you the information needed to decide on the purchase. Most home inspectors focus on the major defects that will cost the buyer a lot of money above the purchase price to repair. A Pre-Delivery Inspection is the final inspection you’re allowed to do before closing on a new construction house or condo. Any defects or concerns raised in a home inspection can be prioritized for life expectancy and severity and cost to repair/ replace and in the case of a new construction home or condo, going back to the builder to correct any outstanding concerns.
Appraisal fee
An appraisal is an unbiased professional opinion of the value of a home or property and when a mortgage is involved in the buying, refinancing, selling.
Legal Fees
You will need Real estate lawyers to manage all the legal paperwork that deals with buying, selling, leasing, or mortgaging property. The legal fees for buying a house cost vary, but some companies will offer a fixed rate that may make budgeting simpler for you.
Other Associated Costs to Consider
Land Transfer tax
When you buy a house, condo or land in Ontario, you are subject to land transfer tax which is due upon closing. First – time homebuyers may be eligible for a refund of or a part of the tax payable.
New Home Warranties
The builder pays for the fee for warranty protection for a home—and may pass this along to the buyer.
Mortgage Insurance
The main difference with mortgage insurance is that the payment goes to the lender. The amount you’re covered for declines as your mortgage balance declines. Sourced from https://www.cmhc-schl.gc.ca/
Mortgage Life Insurance
Mortgage life insurance is coverage that you can purchase as a mortgage borrower. It’s designed to pay off or pay down the mortgage in the event of death.
Title Insurance
This is not a requirement in Ontario. However, it is best to weigh your options when discussing with your lawyer, title insurance company or insurance agent/broker, fully understand what type of protection title insurance can provide you, and determine if other options exist. Sourced from //www.fsco.gov.on.ca/en/insurance/
Home Insurance
Homeowners insurance is a form of property insurance covering losses and damages to an individual’s residence, along with furnishings and other assets in the home. Homeowners insurance also provides liability coverage against accidents in the house or on the property.
We hope this post has been helpful in outlining some of the other costs to consider when purchasing a property. Did you know about all the fees that we mentioned? We would love to hear from you comment below
Check out some of our other blogs aimed at providing you with information and tools around real estate investing .
Other Blogs
https://keangroup.ca/how-to-maximize-your-investment-property-rental/
https://keangroup.ca/what-is-an-in-fill-learn-how-candace-harris-creates-value/
