What Are the Costs of Buying a Home in Greater Toronto?
Sep 7, 2022 / Buying
Building a complete and comprehensive budget is an important step in buying a home. In addition to the final sale price, initial deposit, and your mortgage, buying a home comes with some extra costs that you will need to be aware of.
Here’s a brief overview of some of the basic costs you’ll need to budget for when buying a home in Vaughan or the Greater Toronto Area.
Looking for information on how much it costs to sell your home? Visit our blog post on the topic here.
Common Misconception: Agent Commissions
Before we look at some of the costs that come with buying a home, let’s quickly discuss agent commissions. Many first-time buyers assume that they’ll be responsible for paying a commission if they choose to work with a buying agent. In some cases, first-time buyers might even avoid working with an agent altogether thinking it will save them money. This is an all-too-common misconception.
In Canada, the seller is responsible for paying real estate agent commissions. These fees are usually 3% to 7% of the home’s final sale price and are then split between the buying and selling agents. If you’re buying a home, working with a real estate agent is essential. They’ll help you find a great place, navigate the legalities and protect you from potential risks or pitfalls.
Buying a home for the first time? Explore these blog posts to learn what you can expect from the process.
- Essential Tips for First-Time Home Buyers
- How to Write a Winning Offer Letter
- 5 Mistakes First-Time Home Buyers Make
Land Transfer Tax
In Ontario, home buyers are responsible for paying a provincial land transfer tax (LTT), and in certain areas like Toronto proper, buyers will also be on the hook for additional municipal fees. Similar to annual property taxes, LTTs are calculated based on location and property costs.
If you’re buying a home for the first time, you may be eligible for a cost-reducing LTT rebate. Whether you’re a rookie or a repeat buyer, your real estate agent can help you take advantage of any other rebates or tax benefits that your home purchase may make you eligible for.
Lawyer Fees
During the buying process, you’ll want to work with a lawyer who specializes in facilitating real estate transactions. Like your agent, a lawyer can help protect you from any potential pitfalls, challenges or disputes that may arise during the buying and transfer processes. These costs can vary by location, lawyer, and even by property. However, we typically recommend setting aside a budget of $500 – $1500 for legal fees.
Mortgage Insurance
If you plan on placing a down payment of less than 20% on your home, you’ll need to budget for CMHC mortgage insurance. Mortgage insurance is purchased by lenders as protection in the case you as the homeowner can’t make your payments, they then pass this cost onto you.
You’ll have the ability to pay for mortgage insurance upfront as a lump sum or divide the cost amongst your monthly payments. Keep in mind you will be required to pay PST on this cost too. If you plan on making a sizable down payment, mortgage insurance may not apply to you. However, as interest rates in Canada rise, some lenders have proposed making it a requirement on all mortgage agreements.
Looking for helpful information about budgeting for your home purchase? Check out our blog posts.
Title Insurance
Title insurance is a basic, one-time cost that protects you from any damages or issues that may arise from a fraudulent or defective title. Though not mandatory, title insurance keeps you protected during your entire ownership of the property and is not typically a large cost. In the Greater Toronto Area, $250 is often a sufficient budget for title insurance.
Eliminating Risk
As a buyer, your new home will likely be one of if not the largest investments of your lifetime. In addition to the additional costs that come with buying a home, what about the risk of buying a home only to discover that you’re unhappy with your purchase?
While buying a home is a big decision, some buyers may not have adequate opportunities to think carefully about a home before making an offer. In certain market conditions, buyers may feel pressured or hurried, leading to future buyer’s remorse.
If you choose to buy with the Lino Arci Team, our Buy Back guarantee will eliminate this risk altogether. This promise is also known as our Love It Or Leave It guarantee. If you are unhappy with your new home, we’ll buy it back from you up to one year after the date of purchase. Or, our team will help you re-sell your home on the market, free of charge.
Looking for an experienced agent who can help you find the perfect home at a great price? We would be happy to help. Explore our approach to buying here.
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