First, Advice for First Time
Buyers
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Determine how much your
can afford. As a general rule of thumb, monthly home carrying
costs should not exceed 30% to 35% of your monthly income.
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Determine how much you
have as a down payment. CMHC requires at least five per cent
down to insure a mortgage Do you have an RRSP? Can you use it for
your down payment? Do you have any other sources to access for down
payment?
Get pre-approved for
mortgage financing. Please save yourself a lot of aggravation
and do this earlier rather than after you have started
looking.
Now, Have You Saved Enough?
Purchasing and Selling Costs:
Appraisal Fee This is under $200. If you're going
with a new mortgage vendor, you should be able negotiate this fee to zero.
Inspection Fees This is your decision, however not matter
how old the house, an inspection may save you from unexpected expenses
shortly after moving in.
Survey Fees Lenders will require a survey or plan of the property before
giving a mortgage. This is to ensure there are no encroachments on your land, such as
fences or garden shed. A recent (not older than 10 years although there is flexibility)
survey can be used. Ask your lender about title insurance. It
is an inexpensive way around the cost of a survey.
Mortgage Application Fee Most banks will waive this if you're applying
for a new mortgage, however don't assume this, ask. If you're renewing it will be charged.
Insurance Your lender will require that you have proof of insurance for
your new home before allowing you to close.
Legal Fees Most lawyers will quote on this. Call around for quotes and go
for the average price. Be careful of using a bargain basement lawyer. Expect the fee to be
$500 to $800. If the transaction is a difficult one, you will pay more.
Property Tax Your lender will likely collect taxes and pay them directly.
Ask your lender how this will work. Also, some taxes may been prepaid by the current
owner. This amount is owed on the closing date and will be paid by you at that time.
Interest Adjustments This will vary depending on the mortgage. Ask your
lender for details.
Title search This is usually included in the lawyer's fees. (In fact, get
an estimate from your lawyer on what all the additional fees will be. His fee will not be
the total bill. In fact the total bill could be 4 times the fee!)
ONHWP Fees
Mortgage Insurance If you have less than 25% equity in your new home,
CMHC requires that you carry mortgage insurance. The total fee depends on the percentage
of equity you are putting into the purchase. For example. if you are putting just 5% down,
the fee will be 2.5% of the mortgage. This amount is added into your mortgage payment.
Moving Expenses Call at least 3 movers in town for quotes. Expect to pay
an average of $600 for the move. If you can, do not move on the first or last day of the
month. You will get a better rate. Also Summer moves are more expensive than winter moves.
GST For a new home purchase, the entire cost is taxable. However, for a
principle residence costing less than $450,000, you may be eligible for a GST rebate to a
maximum of $8,750. Resale homes are not normally taxable.
If you are selling a home, the real estate fees are also taxable. Of course
nearly everything else mentioned here, with some government fees excepted, is subject to
GST.
Mortgage Payments The first mortgage payment you will have to pay will
occur one month after you close on your new house - usually.
Realtor Fees On selling (not usually on purchasing) your Realtor's commission fee is due and will be
deducted by your lawyer.
Ontario Land Transfer Tax This
amount is paid at the time of closing and is collected by your
lawyer.
Ontario Land Transfer Tax Calculator
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