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    How Much Money is Needed to Buy a home in Toronto?

    Hidden Costs of Houses Exposed by a real estate agent! Many people struggle to find a detailed price breakdown of houses in Toronto. Here we explain in detail all the hidden costs of buying a house in Toronto's real estate market 2021. Including the down payment, lawyer's fees, all the different agents that you will need to get in touch with, costs related to the inspection, maintenance, and finally your move-in. Also, we break down the detailed expenses of what an $800K house and how much it would really cost.


    Hi, My name is Adnan Feroz and I am an award-winning Toronto Real Estate agent helping people find their dream home for over a decade.


    Today, I am going to talk about how much money you need to budget to buy a home in Toronto.  


    We shall be discussing


    What is a deposit and How much can you expect it to be?

    What is a down payment and how much of it do you need?

    What are closing costs?

    & if there are any additional hidden costs?


    If you are thinking of buying a home then you already know the benefits of home ownership. The Toronto market has been spectacular for over 3 decades now. Most of these properties grew by 10% consistently year over year even after being adjusted for corrections. However, home comes with some ongoing expenses. 


    Being a realtor myself, I can tell you how many people are surprised with some of these expenses, especially for the first time home owners. Well, here I am telling you exactly how much money you will need to buy in Toronto?


    Let’s get started! The first payment in your list is the deposit.


    Deposit

    Deposit is the amount that you put down with an offer to provide assurance to the seller that you are serious about buying this house and that they should not sell it to anyone else. This amount adds up to the down payment, if you purchase the house. 


    The typical deposit could range from $5,000 to the complete purchase price of the property.

    If your offer is a conditional with a clause in it for reimbursement of deposit, you can typically get the entire deposit back if the deal doesn't firm up.


    Down payment

    The deposit on a property depends on many factors such as intended use of the property, market conditions, location of the property, your income, debts & credit history.Typically in Toronto you can expect to pay between 5-25% of purchase price as down payment. 


    Closing Costs

    Closing costs are additional costs that you will incur to register and transfer the property in your name. Typical closing costs could range between 2-4%.


    Land transfer tax

    There is a Provincial land transfer tax which ranges from 0.5 -2.5%. However if you are purchasing a property in the City of Toronto, it would cost you an additional Toronto Land Transfer tax of 0.5-2.5%. This tax is most commonly forgotten while budgeting. Make sure you account for this.


    Mortgage Brokers Fees: 

    Some lenders and mortgage brokers charge fees for processing your mortgage and this could range from 1-3% of your loan amount. A lot of buyers forget to budget for this as well.


    Realtor Commissions: 

    Typically buyers commissions are paid for by sellers but in some rare cases, sellers don't offer commissions to buyers agents and at this point you are liable to pay for the services offered by your buyer agent and could be in the ballpark of 3%. Please be sure to mention to your agent to avoid these properties if you don't want to pay for these out of pocket.


    Legal fees: 

    In Canada only a lawyer can register a property on your name at the land registry office. A lawyer will charge you in the ballpark of $1200-1600 to do your closing. You can expect to see typical costs such as Disbursements, Courier Charges, Printing etc on your invoice.


    Prepaid Property Tax and Utility Bills: 

    Annual Property Taxes are sometimes paid for the entire year by the seller and you may be required to reimburse the seller for the amount that they might have paid in advance. This is something that you may not find out until much later on in the transaction so be mindful of this and take this into account. Typical Property Taxes in Toronto are .6% of the assessed value of the property not the market value.


    Title Insurance: 

    The word “title” is a legal term that means you have legal ownership of property. You obtain title to property when the owner signs the deed over to you. 

    Title insurance is an insurance policy that protects residential or commercial property owners and their lenders against losses related to the property’s title or ownership. It protects against:

    • Unknown title defects 

    • Existing liens against the property’s title 

    • Encroachment issues 

    • Title fraud

    • Errors in surveys and public records and

    • Other title ­related issues that can affect your ability to sell, mortgage, or lease your property in the future.


    Default Insurance: 

    Mortgage default insurance, also referred to as CMHC insurance, is mandatory in Canada for down payments of less than 20% of the purchase price. Mortgage default insurance protects lenders in the event a borrower stops making payments and defaults on their mortgage loan. This is typically added to your mortgage loan amount and not required to be paid upfront. This ranges from 0.6%-4% of the loan amount, depending on the purchase price.

    Property Insurance: This insurance covers the property and its content. On average, the cost of home insurance in Ontario is $1250 per year, or just over a hundred bucks a month. 


    Additional Costs

    Home inspection: typical inspection varies in cost from $300 to $500. With older or larger homes, they will have more potential issues and require more time to inspect.


    Appraisal: typical appraisal could cost you $300-500 and are sometimes not cover by the bank.


    Maintenance: There are typical maintenance costs required for the upkeep of a home and you should usually account for 3-5000 dollars.


    Moving Costs: Moving can cost you 1-2000 dollars depending on the move and the amount of furniture.


    Other costs: Some of other expenses to consider are


    Survey which can costs from $1000 to $2000

    Water test can costs you somewhere around $500 to $700

    Septic tank testing is about $500 to a thousand dollars.


    Then there are costs related to: 

    Appliances

    Gardening equipment 

    Snow removal equipment

    Window coverings

    Home decor

    Tools

    Service connection fees (telephone, gas , electricity, cable TV, internet, etc.)

    Condominium fees, if applicable.


    These are little things but considering these while making a budget is going to help you plan better.

    Summary


    So if you are purchasing a $800,000 house in Toronto, Here is a break up of how much Money you will typically need if you were making a 10% down payment.


    Down Payment (10%): $80,000

    Mortgage insurance $22,320 (Added to your mortgage, not required to pay upfront)

    Mortgage Broker (1%) $7200

    Provincial Land Transfer Tax $12,475

    Municipal Land Transfer Tax $12,475

    Lawyer fees $1,600

    Title insurance $800

    Home inspection fees $500

    Appraisal fees $300

    Status certificate fee $150 - $300

    Moving $1,000


    So the total Money Required to purchase an 800k house in Toronto $ 109,150 (13.64% of purchase Price)


    That’s it for today! I hope you liked the video. Please do like and subscribe down below for amazing tips on Toronto and neighbouring communities.


    If you have any questions or are looking at buying or selling your home, please give my office a call at 6472831515 or email us at the email listed below.


    Thank you for reading. If you are looking at buying or selling your home, please give my office a call at 647 283 1515 or email us at adnan.feroz@century21.ca



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    Adnan Feroz

    Sales Representative

    The 90/90 Investment Strategist | Award-Winning Realtor | Speaker | Author | Development Consultant |

    The Source to Your Dream Home to Investing to Retirement Planning

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