You've decided that moving is in the cards for you. In addition to the actual cost of your dream home there are several other, not so hidden costs, that you should consider and budget for.
• Mortgage Loan Insurance: If you are putting less than 20 per cent of the house value down, you're going to need mortgage loan insurance. Depending on the lender, the premium can be added to mortgage payments.
• Insurance: The lender will require proof of property insurance for the replacement value of the house and its contents from the day you take ownership.
• Title insurance: Provides coverage in case of problems with the property title among other things. The cost is relatively low, usually a few hundred dollars. Talk to your lawyer and/or lender about title insurance
• Appraisal Fee: Lenders typically loan a percentage of the home's purchase price or the market appraisal of the property. Talk to your financial institution about the cost since it depends on the size and complexity of the assignment.
• Land Survey: The lender may ask for a current survey or certificate of location before signing off on the loan. There can be a substantial cost for having a new survey done on the property. Always make sure that the Agreement of Purchase and Sale has a clause that asks the seller for a copy of any current or up-to-date surveys that they may have in their possession. Always get it in writing.
• Deposit: A deposit normally goes with the formal offer to purchase and is usually payable to the Listing Brokerage where it is held in the brokerages trust account until closing.
• Application Fee: Some lenders will pass on the cost to process your application. These fees vary and some lenders will waive entirely if you have other accounts with them.
• Mortgage Broker's Fee: If you use a mortgage broker, a fee may be charged to arrange a mortgage on your behalf.
• Home Inspection Fee: An inspection protects the buyer by revealing any problems in the property that you'd want to know before you move in. Depending on the inspector, an inspection of a typical 3-4 bedroom, 2 storey, detached home can cost you somewhere in the range of $350.00 to $450.00.
• Legal Fees: You can save some of the legal fees usually charged by the lender if your lawyer draws up the mortgage. You'll also pay for disbursements which are the costs involved in drawing up the title deed, conducting a title search, and preparing and registering the mortgage.
• Land Transfer Tax: The LTT calculation is as follows for Ontario (Ciy of Toronto LTT is not included): The tax rates on the value of the consideration are:
0.5% amounts up to and including $55,000
1.0% amounts exceeding $55,000 up to and including $250,000
1.5% amounts exceeding $250,000
2.0% amounts exceeding $400,000 where the land contains one or two single family residences
First time home buyers qualify for a maximum $2,000 (LTT on a $227,500 home) provincial rebate and a maximum $3,725 (LTT on a $400,000 home) City of Toronto rebate.
• Goods and Services Tax: The purchase price of resale homes is exempt from the HST. The purchase price of newly constructed homes is subject to HST. New home buyers can apply for a 36% rebate of the federal portion of HST applicable to the purchase price to a maximum of $6,300 for homes costing $350,000 or less. For new homes priced between $350,000 and $450,000, the rebate on the federal portion of the HST rebate would be reduced proportionately. New homes priced $450,000 or higher would not receive a rebate of the federal portion of the HST. New home buyers can apply for a 75% rebate of the provincial portion of the HST applicable to the purchase price to a maximum of $24,000.
• Other Costs: These include moving costs, fees charged by utilities for service hook-ups, property tax and other adjustments (an adjustment takes place when the seller has already paid for something in advance and wants to be credited for the unused portion on the date the house becomes yours), and ongoing maintenance (condo fees etc) and utility costs.
I welcome your questions and comments. Call or email me today for a FREE market evaluation of your home.
I look forward to hearing from you soon.