Tips On Buying a House in Toronto Ontario

A strong financial foundation is important if you want to become a successful homeowner. Sometimes this means playing the long game so that when you do finally move in you can enjoy years of stress free home making. First and foremost, pay off any debt. It is also a good idea to build up between three and six months’ worth of savings that can be used to cover emergency expenses. As a house owner you only have yourself to rely on, you can’t call on a landlord to fix the boiler that isn’t working or repair the leaking roof and that’s where the emergency fund comes in!

How much should you save?

Saving takes time but it is time well spent. You will need enough money banked to cover the following:

Minimum Down payment:

• Property value $500,000/-  or less You need 5% minimum Down Payment. For Example if the property you are buying in Toronto costs $490,000/-, then your 5% down payment will $24,500/-

• If the property value more than $500,000 but less than $1,000,000/- then you need 10% minimum Down Payment. For Example if the property you are buying in Toronto costs $900,000/-, then your 10% down payment will $90,000/-

• If the property value more than $1,000,000 then you need 20% minimum Down Payment. For Example if the property you are buying in Toronto costs $1,500,000/-, then your 20% down payment will $300,000/-

Important note: Your down Payment will affect if you get a conventional mortgage or a high ratio mortgage with default insurance.  For example your down payment is less than 20% then you will be classified as eligible for high ratio mortgage, which means you will be expected to pay the cost of default insurance as well.  Your default insurance cost depends upon the amount of down payment. The Premiums for default insurance range between 0.6% to 4.5% of the mortgage. The Good news is that this cost can be added to your mortgage amount but the bad news is that your cost of borrowing increases. Default Insurance or CMCH is an additional cost that does nothing to your actual mortgage balance so best to avoid paying it where possible. Market Trends suggest that many new home buyers in Toronto aim for at least 10% on their new home.

Closing costs and prepaids: On Average total Closing Costs range between 2% to 5%. Closing costs are the Legal fees & Costs incurred to transfer the title from vendor to the buyer’s name. Your Closing Costs include the following

1. Real Estate Lawyer Toronto Fees $900 +Tax (For Cash ) or $999 +Tax (Purchase with Mortgage);
2. Land Transfer Tax for Ontario on average between 1% to 2.5% on purchase price;
3. City of Toronto Municipal Land Transfer Tax on average between 1% to 2.5% on purchase price;
4. Registration of Transfer $76 & Mortgage $76;
5. Title Insurance $1 to $1000. Example. House Cost $750,000 then Title Insurance $750 Approximately.

Moving and other expenses: Factor in what it will cost you to move. Ring around removal companies and ask for quotes. Also consider what work you might want to do in your new home – new furniture, decorating etc. 

Saving isn’t complicated. Sit down, make a budget and set yourself some realistic goals.