Unlocking the 7 Secrets to Home Buying Closing Costs in Toronto
Welcome to the exciting journey of home buying in Toronto! Whether you’re a first-time homebuyer or a seasoned investor, understanding the closing costs associated with purchasing your new home is crucial. Let’s dive into what you need to know to make this process as smooth as possible for purchasing a home in any Toronto neighbourhood.
Preparing for the Purchase: Upfront Costs You Need to Know
Before you pop the champagne and celebrate your new home, there are some expenses you’ll need to cover. A home inspection is a wise choice to ensure you know exactly what you’re buying, typically around $500. Additionally, a deposit is required with your Offer to Purchase, typically 5 percent of the offer price. This shows your commitment and forms part of your down payment.
Mortgage Matters: Costs Financed in Your Mortgage
If your down payment is less than 20 percent, you’ll need mortgage default insurance, also known as CMHC insurance. It’s a safety net for your lender, added to your mortgage amount, without an upfront cash outlay.
Mandatory Home Buying Closing Costs: What’s in the Bag for the Home Buyer?
Once you’re at the finishing line, several closing costs await. In Toronto, you’ll face the Land Transfer Tax (LTT), which is a fee charged on top of your purchase price. On a $1million dollar home, the LTT would be $32,950. If you’re a first-time homebuyer, you are eligible for a rebate up to $8,475. Legal fees and disbursements will also be on your bill, starting at $1,000 plus taxes. Title insurance, ranging from $100 to $300, is now a standard requirement by lenders.
The Extra Mile: Additional Closing Costs for Some Properties
If your dream home has a septic tank or well, testing is essential. These home buying closing costs are negotiable and should be included in your Offer to Purchase. For those eyeing a condo, an Estoppel Certificate Fee may apply, which can cost up to $100.
Lender-Related Costs: Appraisal Fees and More
Often, your mortgage lender covers the appraisal fee, necessary to confirm the home’s value for lending purposes. This typically runs between $250 and $350.
Beyond the Purchase: Other Costs to Keep in Mind
Remember to factor in property insurance, prepaid utilities, and property taxes. In Toronto, property taxes are a percentage of your home’s value, and arrangements can be made with your lender for automatic payments, which helps with budgeting.
Closing Day: The Final Countdown
On closing day, your main task is to ensure your down payment and closing costs are transferred to your lawyer. The lender will handle the mortgage funds, and your lawyer will finalize the payments, register the home in your name, and hand you the keys.
A Smooth Move into Your New Home
Understanding the home buying closing costs in Toronto is not just about being financially prepared; it’s about stepping into the real estate market with confidence. These costs, typically ranging from 1.5 to 4 percent of the purchase price, are a small but significant part of the overall investment in your future home.
As you approach the end of your home-buying journey, keep in mind that these home buyer closing costs cover essential services that protect both you and the lender. From ensuring the legal transfer of the property to safeguarding against potential disputes with title insurance, each fee contributes to a smooth transition into homeownership.
Moreover, while some home buying closing costs like the home inspection fee and the deposit are paid upfront, others such as the PST on mortgage default insurance are settled at closing. It’s important to budget for these expenses as they come at different stages of the home-buying process.
The Toronto real estate market is vibrant and full of opportunities. With the right knowledge and preparation, you can navigate these waters and reach the shore of homeownership with ease. Remember that these home buying closing costs are not meant to be obstacles but stepping stones to securing the keys to your new home.
So, as you finalize your budget and prepare for the big day, take a moment to reflect on the journey. The path to homeownership is a significant milestone, and being well-informed by your realtor about all associated costs is your key to unlocking the door to a successful and stress-free closing day.
