Costs to consider when looking to buy your next home
The Upfront Costs
The upfront costs are items you can expect to pay for
- Deposit: Although this is not exactly a cost since your deposit gets credited towards your purchase, it is important to note that you will be required to submit a deposit upon successfully negotiating an offer to purchase with a Home Seller. In Ontario, this must be submitted within 24 hours of acceptance, unless otherwise agreed to. The deposit amount can vary depending on the local market but can range from $5,000 – 5% of the purchase price, or more. (Strategic note: the larger the deposit, the stronger the offer in the eyes of the Seller).
- Home Inspection: Depending on the services being offered by the Inspection company, an inspection can cost as low as $300+HST to as high as $1500+HST.
- Septic System Inspection: Inspecting a Septic System should be considered for properties not connecting to municipal sewers to ensure the system appears to be operating properly. To do this, you will need to have the tank pumped out. The cost of septic pump out is dependant on the size of the tank and can cost as little as $300 and as much as $750. Most pumpers will be able to give you a visual report on the system just by looking in the tank.
- Status Certificate for Condo: Purchasing a Condominium typically involves a condition to have a lawyer review the financial health of the condominium corporation, which is outlined in a ‘Status Certificate’. The cost of the status certificate can fell on either the Buyer or Seller’s lap and typically costs $100+HST.
Closing Costs
To take ownership of a new property, you will most certainly come across closing costs. These are the typical expenses you can expect to cover prior to the title being transfer into your name.
Legal Fees: Legal fees will vary greatly from lawyer to lawyer and depending on the complexity of the deal, could be as low as $800 before any ‘disbursements’ (extra fees based services specific for the transaction). It is important to note that disbursements could range from an extra $100-$2000 or more in extra fees if there is substantially more work for your legal representative.
Land Transfer Tax (LTT): LTT is a provincial tax that is paid by the BUYER on every real estate transaction in Ontario. If the property is within the City of Toronto, there is a second Municipal Land Transfer Tax (MLTT) in addition to the provincial tax. These taxes are based on the sale price of the home and the tax is due on closing (which you will pay to your lawyer, who will make the payment on your behalf). View the Land Transfer Tax Calculator for more details.
In Municipalities in Ontario, outside of the city of Toronto, the LTT is calculated as follows:
- 0.5% up to and including $55,000.
- 1% above $55,000 up to and including $250,000.
- 1.5% above $250,000.
- 2% above $400,000 where the land contains one or two single-family residences.
Adjustments: If the previous owner has prepaid any items, such as Property Tax, Heating Fuel, or other service contracts, there will be a requirement for the Buyer to reimburse the Seller for those amounts in the adjustments.
The Ongoing Costs of Home Ownership
Being a homeowner means several other things must be also considered.
These include, but are not limited to:
- Monthly Utility Costs (Gas, Heat, Water, Electricity, TV, internet, etc.).
- Home Insurance.
- Property Tax (estimate around 1% of the value for residential properties).
- Maintenance Costs.
- on Going Improvements.
