When purchasing a home, there are a few cost involved that are good to be aware of. Here is a breakdown:
Down Payment on mortgage
This varies from 5%-50% depending on the type of property you purchase and what your financial situation is. Your mortgage broker is best to establish this amount with you.
HGTV is NOT accurate.
We cannot spilt closing cost like you may see on TV. When purchasing, you don’t pay commission to your Realtor®, the seller pays all the commission. Of course there are situations where sellers are not paying any commission (Private Sale) and you can choose to pay your realtor some sort of agent fee.
$950-1,400.00 depending on lawyer/notary you choose.
These can be super confusing, but basically you pay back the seller the amount taxes they paid for the months they lived at the property. If they haven’t paid taxes for that year, then you’ll receive a credit for the months they has possession.
Property Transfer Tax
1% on $200,000, 2% on balance up to $2,000,000 and 3% over
First Time Home Buyers Exemption
- First time home buyers pay no PTT on homes with a purchase price of $475,000 or less, but they pay full PTT on homes with a purchase price above $500,000.
- If two people buy a home together and one is eligible for the First Time Home Buyers’ Exemption and one is not, then PTT will be charged proportionately to their ownership shares.
- Purchasers claiming the First Time Home Buyers’ Exemption must live in the home for at least the first year after purchasing the home.
Newly Built Home Exemption
- The Newly Built Home Exemption reduces or eliminates the amount of PTT a purchaser pays when purchasing a newly built home, including houses, apartments and townhomes.
- The purchaser is not required to be a first time home buyer to qualify for the Newly Built Home Exemption.
- Purchasers buying a newly built home pay no PTT on homes with a purchase price of $750,000 or less, but they pay full PTT on homes with a purchase price above $800,000.
- Purchasers claiming the Newly Built Home Exemption must live in the home for at least at least the first year after purchasing the home.
All the fees noted about are to be paid at lawyer at the time of closing.
Fees during “offer” process
- Inspection $300-450
- Deposit: This amount depends on purchase price amount and comes off your down payment at the end of the transaction through lawyers.
I want to by a house, where do I start???
This is one of the most common questions. First thing to do is understand your financial situation with either a mortgage broker or bank. They will let you know the amount of downpayment required and how much you should budget.
When is the best time to start looking?
Now, why not?? Even if you’re not planing for 6 months, it is always a good idea to watch the market, see what sells and what doesn’t. Learn the areas you are considering. Knowledge is power! Even if it’s just through PCS (Private Client Service) which is a service provided by Realtor, which sends your listings that match your criteria.
Closing costs, what are they exactly??
This is the most important part to me. There are so many costs included when purchasing that most buyers are not aware of. In this process it is important to be as transparent as possible. Here’s a breakdown (these are to be done by the notary/lawyer when you go and sign papers):
- Downpayment (min 5%) but talk to your mortgage broker/bank.
- Property Transfer Tax 1% on the first $200,000 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000, and 3% on the portion of the fair market value greater than $2,000,000.**there are exemptions and should consult a lawyer** Not required on purchase of brand new home.
- Property taxes (different than property transfer tax) depending on when you take possession of your home, the amount of prepaid taxes paid by homeowner will need to be reimbursed for the months you own the home.If you purchase the home before taxes are to be paid, then you will get reimbursed for the months the previous owner had possession of the property.
- Lawyer Fees $1,000-$2,000 depending on the situation.
- GST – if you purchase new construction or a brand new home, you have to pay GST on top of the purchase of the home. This is 5% of selling price.
Fees at time of offer:
- Deposit – an amount made with accepted offer. This amount goes towards your down payment and will be reimbursed if conditions aren’t met on contract. Ranges from $2,000-$50,000.
- Home Inspection: $350 minimum (you should inquire with an inspector for costs.)
- Other inspections: if there are big concerns with property, I recommend also having professional the industry come to have a look, i.e.: pool inspections, plumber, roofer, electrician, etc. Sometimes they can charge a small fee for a inspection.
*Every situation is depending on house. There could be other costs, but this list covers the majority*
How do I pay my mortgage broker or Realtor?
Banks or mortgage brokers make a fee off of the morgtage you get, so no out to pocket expense to you. Sellers pay the commission to the Realtor, so it shouldn’t cost you a thing. Unless you purchase a private list (not through a realtor) then no commission is given to the realtor, so you can communicate with your realtor and work something out.
Deposit when I make an offer? Is that a hidden fee?
Nope, not hidden at all. This amount actually goes towards your down payment. The average deposit ranges from $2,000-$50,000 depending on the situation.
Found the home, time to make an offer!
Now we get the contract signed and send over the listing agent to begin negotiations, my favourite part. Once it’s accepted, you’ll have about two weeks to do inspection, financing, get house insurance quote, approve the property disclosure statement, look over the title and other details on the property. It is extremely important at this point to have a detailed Realtor, who will understand and explain title issues, BIR (Building Inspection Report). Please, PLEASE ensure you understand what you are signing…
Conditions on the contract are there to protect you – if something happens with financing, the inspections is too scary, then these are reason of you to get out of the contract and get your deposit back. If everything is good, then we remove conditions on the contract and you’re then a homeowner.. possession is determined at time of the offer.
It’s Possession Day. How do I get my keys?
Your Realtor will usually meet you at the home or somewhere to hand you keys. I always like to meet at the house, do a walkthrough to ensure you don’t have any questions. Sometimes theres little things, how to work furnace, turn something on, and even make sure all things stipulated in the contract are left at the house.
I’m sure you’ll always have a lot of questions than this during the process, but this is my job, to be there for you and answer everything I can. When choosing your realtor, it is important to know this is someone you must trust, can communicate with and has your back, no matter what. Interview a couple, ask around and be confident in your choice.