Before you can get your keys to your new home there are many costs associated with the purchase. When you see an ad for a home which shows the asking price, that is not the total amount you will be expected to pay. When thinking of purchasing a home you will have to take these costs into consideration. Here is a breakdown of all the closing costs you will be expected to pay, most are one-time fees.
A property survey basically outlines property boundaries and setbacks. It will show any easements on the property, it will show if there are any shared driveways or any structures that are overhanging on the particular property. Some lenders will require you to provide an up to date survey. You can ask the homeowner if they have a copy of a survey, if they don’t you will have to pay as a buyer to get a survey for the property. Approximate cost for a land survey depends on the size and type of property which can vary. $200-$800
When making an offer to purchase a home its always a good idea to get a reputable home inspector to assess the home. A home inspection will determine if there are any minor or major issues with the home that need to be fixed. If you find problems with the home, you will be able to walk away from the deal. It is not mandatory to get a home inspection; the costs will be subject to the buyer of a home. Approximate cost of a home inspection is $300-$650+depending on the type and size of the home.
In some cases, your lawyer will recommend you acquire title insurance on your property. This insurance is optional and will protect you from any problems in the title of your home in the future. This means if there ever is a dispute over any part of your property such as title fraud, municipal work orders and zoning violations. Approximate cost for title insurance is $250-$400.
All lenders will require you to get fire insurance for the home you wish to purchase. Before they send any funds, they will require proof that the home will be insured on closing day. Approximate insurance rates per month range around $50-$200 per month depending of the value and size of the home.
critical illness, disability or job loss insurance (optional)
When setting up your mortgage you can consider getting insurance if for any reason you are injured somehow and are not able to work and produce an income. This will protect you to cover the costs of your mortgage while you are ill or disabled.
When any property in Ontario is bought and sold, when the title of that property is transferred there is a Land Transfer Tax payable to the government (certain situations don’t require a tax). If you live in Toronto, you will be subject to an extra municipal tax. If you are a first-time home buyer, you can qualify for a rebate from the government after paying this tax. To find out how to apply for the rebate go here. Approximate cost for this tax vary on the purchase price of your home, you can use a land transfer tax calculator here.
GST or HST
Newly constructed and substantially renovated homes may be subject to GST or HST. If you pay GST and HST, you may qualify for a new housing rebate. For more information about the rebate go here.
Mortgage and Housing Corporation Insurance
In Ontario if you have less than a 20% down payment, you will be subject to mortgage insurance. This is to protect the lender in case you default on your mortgage. This premium is added to your monthly mortgage payment. This premium depend son many factors which you can see here.
payments, Property Taxes and Condo Fees
Sometimes the owner that you are buying the house from has prepaid their property taxes or condo fees for the whole year. When you purchase the home, you will have to reimburse the seller for the amount that they had prepaid already.
When buying or selling a home the buyer and the seller must obtain a lawyer to handle the closing process. They handle title searches, utility searches and any problems that may arise through the process of buying or selling a home. The lawyer’s legal fees and disbursements are subject to GST or HST and range from $600-$2000 depending on how complex the transaction may be.
Before starting your home search, it is very important to be aware of all the closing costs involved when buying or selling a home. Contact me for further guidance.
Realtor with Century 21 Heritage Group
Buying a home is usually the biggest financial decision
anyone is going to ever make in their lifetime.
When you buy almost anything from a store or online you would expect
that there will be a warranty that comes with that product. When making a large purchase such as a home,
it only makes sense to have peace of mind that there won’t be any major
problems with it after you move in. Therefore,
it’s extremely important to get a home inspection before deciding to put an
offer for that house you are wanting to purchase (or having your real estate
agent put in a clause on an offer, which would not make the offer binding
unless you are satisfied with the results of the inspection) This will protect you incase there are any
issues with the house, and you do not want to put money into fixing them. As of the day this article was written there
is not much regulation in the industry. And
beware that some problems may not be detected in a home inspection that may
arise in the future.
How To Choose A
Credible Home Inspector?
There are many home inspectors out there to choose
from. They all offer slightly different
services and vary in how thorough they are in their inspections. As a rule you get what you pay for, if a
certain company or individual is charging ½ the price as compared to everyone
else I would be skeptical in the quality of their work. After all this will most likely be your
biggest purchase in your life, major problems that an inspector might miss can possibly
cost you tens of thousands of dollars in the future. Unfortunately, at this time Ontario requires
no licensed for inspectors, however the government is currently working on implementing
regulations. However there is an
organization called the Ontario Association of Home
Inspectors, this organization is dedicated to enhancing professional
practice and technical skills of home inspectors. Members of this organization are held to high
standards of practice and must obey a code of ethics. These members have a designation as a “Registered
Home Inspector” It is recommended to get a building inspector that is a member
of this organization.
What Is Inspected In
A Home Inspection?
Home Inspections include almost all areas in a home or condominium. The inspector will do a thorough walk through
of your home and check for any problems that could be present. The inspection will include:
Plumbing pipes, fixtures, hot water tanks, shutoff valves, drains and vent
HVAC – Air Ducts,
A/C, Furnace, heat exchangers, humidifier, venting, filter and registers
Panels, wiring, outlets, fixtures, electical service, some detectors and
Roofing – Gutters,
downspouts, chimneys, flashings, skylights and leaks
Insulation, ventilation, roof frame, moisture levels, pipes, flashings and
Structure – Exterior receptacles, gas meter/piping, windows, doors, foundation,
exterior wall coverings and columns
Site Grounds and
Grading – Fences and gates, patios, decks, window wells, sidewalks,
driveways, retaining walls, grading, and trees
Stairs, floors, walls, leaks, ceilings, fireplaces, skylights, windows, and doors.
Foundation, floor joists, sub flooring, leaks, sump pumps, moisture/mildew,
mold, ventilation, foundation, columns and insulation
Garage – Flooring,
walls, roof, windows, door opener, door, moisture/mildew and recepticles
– Windows, doors and interior walls and ceilings
Costs for Home Inspections
Cost will vary depending on the company you decide to hire
and the type and size of your home. A
condo apartment will usually have the least cost to inspect as it is usually
the smallest type of home and will only need an indoor inspection. Generally the higher the square footage of
your home the higher cost it is to inspect.
Prices vary $350-$600+ depending on the thoroughness of the inspections.
What an Inspector
Certain issues with your home are hidden and won’t be able
to get detected. The inspector might not
do a thorough inspection and might have lacking detailed information in the
report. Some inspectors won’t go on top
of your roof to inspect the roof as this requires some risk and extra effort to
get on top. Some will not get into very
tight locations such as attics or crawl spaces.
There could be hidden electrical issues, structural issues, failing HVAC
equipment, leaks and partially blocked sewer lines which most likely won’t be
able to get detected. Some inspectors
lack any training whatsoever, so this would mean they are not knowledgeable as
to what problems to look for and to diagnose.
Before hiring a home inspector before buying or selling your home, do
your research to see what type of credentials they have, and look for reviews
online to see what kind of experiences other people had with them.
How an Inspection Can
If a seller gets multiple offers for their home, usually
they would prefer to accept the offer with the least amount of conditions. This means that if you want the property
inspected and the other competing buyer does not, then the seller will most
likely accept the other buyers offer because this will make their life easier
by not having to have you, your real estate agent and inspector come into their
home for a few hours.
Remember before hiring or thinking about hiring a home inspector do your due diligence.
Realtor with Century 21 Heritage Group
If you are in the market to sell your home and want to relocate, you might be thinking if putting your home on the market first or buying a home first will be the right choice. This will depend on everyone’s financial situation and risk tolerance. There are many ways to go about selling and buying your home.
First you will need to be aware of what will happen if you buy a house before you sell your existing one.
Getting approved for a second mortgage
Most people might have a hard time carrying two mortgages at the same time. This would mean applying to a lender for a second mortgage, lenders will take your income, your debts, your assets, any car payments and other factors into consideration before lending you money. Having equity in your existing home will not automatically get you approved for a second mortgage. Getting a second mortgage usually requires you to produce a much higher down payment compared to a first mortgage, this could mean having to come up with a 20% down payment. Your income is usually the largest overall factor mortgage lenders look at. They will determine if you are able to afford the extra monthly payments. If you don’t meet their guidelines for a second mortgage, you will be out of luck.
Making an offer on a home with conditions
Depending on the current market, some sellers might accept an offer for purchase and sale with a condition that your home must be sold before the offer for the second home will be binding. This would mean that there won’t be any risk as the offer for purchase won’t happen unless your existing home gets sold. This is very a common condition that will be accepted in a down market, as there usually won’t be any competing offers for the home you are trying to buy. But keep in mind if the seller gets multiple offers for their home, they will accept the offer with the least conditions because they would have no reason to care for your conditions in the offer.
Selling your home before buying a new one
This is usually the best and most practical choice for most people. The vast majority of people don’t have hundreds of thousands of dollars in the bank or investments to pull out and purchase a new home. However, there are a few things to keep in mind before selling your home first. It is possible that your home will sell before you are able to purchase a new home. This could mean that you could be homeless for a little while, you will need to find a temporary place to stay. If you don’t have a friends or family members house to stay at, hotels can be really expensive to stay in. This could mean having to store all your belongings in a storage facility, which will require you to rent or hire a moving company twice instead of once.
Selling your house before buying a new one will reduce your stress level as you won’t have to think about what if your current home doesn’t sell in time and that you might have to juggle two mortgages. Buying a home first means that time will be on your side, you will be able to find that perfect home in the right location with all the features you want without having to rush through the process and settling for a home that may not be ideal for you. Purchasing a home will be most peoples biggest financial decisions in their lives, its better to not rush going through this process.
I will recommend talking to your real estate agent and mortgage lender before making any decision yourself. As a real estate agent I will be able to advise you on how the current real estate market is doing and how long it would be expected to sell your current home as well with any possible risks you would face in the process.
Realtor with Century 21 Heritage Group
Christmas time is when people are focused on running around buying gifts for friends and family. Planning a getaway, figuring out where they will be staying to celebrate Christmas, or trying to get extra vacation time off work to spend more time with loved ones. Most people aren’t thinking about buying or selling their home around Christmas. There are many advantages and disadvantages to selling or buying a home during this time.
This holiday season can be a great opportunity to find a great deal on the right home. During the holidays the Toronto real estate market slows down. This means that the inventory is usually low, as there are less homes on the market. This means there is less competition in the market. This is a time you can get a bargain on a home which a seller might accept a lowball offer, as they will be pressured to sell as there will be much less interest for their property. This can be a time to negotiate a quick closing time frame as they might want to complete the sale before the new year. Sellers understand that the Christmas holidays aren’t the ideal time to sell their home, so to compensate for that they might put up their home below market value. This could equal to getting a much lower price for the home as opposed to waiting a month or two to purchase.
On the flip side of things as a seller, things can turn out in their favour. At this time there are less houses on the market, less supply may equal to less competition from other sellers in your neighbourhood. During Christmas time there are far more serious buyers looking as they want to move in before the new year and have the transaction completed quickly, and are not just window shopping. Another advantage could be the high amount of travelers coming to Toronto during the Christmas holidays that are looking for homes for sale. They might be planning to move here and could be house hunting during the holidays. Many people will be planning to move before the new year due to change of job location, study placement or change of scenery. There are many different factors in peoples reasoning to buying real estate during Christmas time.
Also take into account many businesses and professionals aren’t working during the Christmas holidays. Lawyers, real estate agents, mortgage brokers and building inspectors might be hard to get ahold of during this time, which can make your house buying or selling efforts a little more difficult. It might be difficult to schedule showings for houses as people will be busy with spending time with friends and family and might not want to be inconvenienced to leave their home. As a buyer this time of year you may not be able to find a home to buy that will meet your needs and wants. Due to the shortage in inventory so your options could be limited. If you are in a rush to buy a home within this period you might have to settle for a less than ideal home for yourself which you might regret later on.
Note the decline in new home listings on the MLS every December
These factors will make the process of buying or selling a home in Toronto and surrounding areas a little more challenging as compared to other times of the year. The Toronto Real Estate Board has statistics updated every month of the year.
As a real estate agent it is my duty to protect my clients best interests and inform them of all the positives and negatives to selling a home during the Christmas holiday season. Ofcourse everybody’s personal situations are different, selling or buying during Christmas time can work out in your favour or it might not. Before making a decision think of the positives and negatives for buying or selling your home during this time of year. Ask me how the market is doing and I will let you know if it is an ideal time to buy or sell your home. The best decision in an informed decision.
Realtor with Century 21 Heritage Group