Buying a home can be a very exciting
experience. However, it is important to keep in mind that there are certain
real estate closing costs that you need to be aware of – and prepared for! Not
knowing what other costs are associated with buying a house can be a major
hassle – and may negatively impact your ability to close! Here is a list of the
real estate closing costs you should be prepared for when buying a house in
Toronto.
The first real estate closing cost you need
is a down payment. Although there are “no down payment” mortgages available,
these are often obtained at a higher interest rate, and therefore trying to
save a down payment is a good idea. If you do not opt for, or cannot qualify
for, a “no down payment” mortgage, you will be required to have at least 5% of
the total cost of your home in the bank, and usually for 3 months, in order to
secure a mortgage and buy a house.
A second real estate closing cost that comes
with buying a house in Toronto is the fee for a home inspection. Buying a house
without a home inspection is a bad idea. Hiring a home inspector means that you
are aware of any repairs that need to be done to the house and their expected
costs. Be sure to account for the
inspection fees prior to buying a house in Toronto.
A third real estate closing cost that comes
with buying a house is the legal fees charged by your real estate lawyer. A
real estate lawyer is responsible for ensuring that all legal documentation is
prepared and that you are protected in all contracts that you sign. They also make sure that there are no issues,
such as outstanding liens on the house, which can inhibit your ability to
close. Being prepared for the costs of their services is essential!
Land transfer tax is a fourth real estate closing cost that you should be aware of. In Ontario, the cost of land transfer tax is:
- Land/property
under $55 000 = 0.5% of value
- Land/property
$55 000 - $250 000 = 1% of value
- Land/property
over $250 000 = 1.5% of value
- Land/property
over $400 000 = 2% of value
In Toronto, there is an additional land
transfer tax, so be prepared for this as well.
However, new home buyers do get a substantial rebate on land transfer
tax.
A fifth real estate closing cost is
homeowners insurance. This insurance protects your home and property in the
case of unforeseen incidents, such as fire or theft. It is usually paid on a
monthly basis, but just be aware that acquiring homeowners insurance at the
time of closing is a good idea, as it protects you the minute you take
possession of your home! Be sure to shop around to find the best policy to suit
your needs.
Being financially prepared for the costs
associated with a real estate closing is very important. In order to make the
home buying process a smooth and simple one, knowing your real estate closing
costs is essential. Make sure you know
the costs associated with the home buying process when buying a house in Toronto
and you will be able to find, buy, and close without any hassle or financial
restraints!
For more information about buying a home in
Toronto and the real estate closing costs you will need to be aware of, please
contact Paul Mangion by calling The Mortgage Centre at 416-204-0156 or visit www.themortgagecentretoronto.com
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