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IMPORTANT INFORMATION for BUYERS


You are interested in a particular property, have just started looking online for your dream home or are driving around an area you like. Here some items and expenses to keep in mind before venturing out to view the property in person. I hope this summary helps when considering the purchase of a residential or condominium property!



1. MORTGAGE DOWN PAYMENT


All residential properties require a minimum down payment of at least 5% of the purchase price or higher depending on the purchase price of the home. Vacant land requires a a downpayment of at least 35% and most banks require 50%.


The minimum down payment for a home purchased for under $500,000 is 5% of the purchase price.


The minimum down payment for a home purchased for $500,000 to $999,999 is 5% for the first $500,000 of the purchase price and 10% for the portion of the purchase price above $500,000.


The minimum down payment for a home purchased for
$1,000,000 or more is 20% of the purchase price.


2. MORTGAGE INSURANCE


To avoid paying any mortgage insurance premiums, you need a minimum 20% down payment.

For more information on mortgage insurance for down payments that are less than 20%, please refer to the Buying section or Mortgage Insurance Calculator on the Canada Mortgage and Housing Corporation (CMHC) website. This insurance can be added to your mortgage.


https://www.cmhc-schl.gc.ca/en/consumers/home-buying


3. LAND TRANSFER TAX


This could potentially be a large expense which can not be added to your mortgage. 

This payment is due to the government upon closing for the property you have purchased.

Land transfer tax is almost double in Toronto.


Example:

You purchase a home in Orangeville for $750,000 and the land transfer tax would be $11,475. 

If you purchased the same home in Toronto for $750,000, the land transfer tax would be $22,200.


First time homebuyers are eligible for a land transfer tax rebate of up to $2,000 per single person or $4,000 per couple.

To avoid paying any land transfer tax as a couple, you would need to purchase a property for $368,333 or less (nearly impossible in today's market!). Still, the land transfer tax rebate is helpful in reducing that cost burden for first time home buyers.


Example: The land transfer tax for a $650,000 purchase price for first time home buyers would be $9,475 - $4,000 = $5,475


4. LAWYER'S CLOSING COST FEES


The cost for lawyer's fees typically ranges between $1,500 - $2,000 depending on the property purchased and the lawyer used.


5. PRE-PAID MUNICIPAL TAXES


You may need to reimburse the Seller upon closing for any pre-paid municipal taxes.


6. MOVING COMPANY COSTS


If hiring a mover to aid with your relocation, costs will vary. A typical local move may cost anywhere from $500 - $2,000. A long distance move may be in the range of $2,500 to $5,000 depending on the size of move and the distance.


7. HEATING COSTS


You may also need to reimburse a Seller for the filling of a propane or oil tank (just prior to closing) if purchasing a rural property.