When BUYING a House in Toronto many people struggle to find a detailed price breakdown of houses in Toronto. So what is the Cost of BUYING a house in Toronto? Here, we explain in detail all the hidden costs of buying a house in Toronto’s real estate market in 2022.
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 is and how much it would really cost.
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 conditional with a clause in it for reimbursement of the 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 the purchase price as a 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 buyer’s 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 which 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 in 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 the 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 is 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 appraisals could cost you $300-500 and are sometimes not covered 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 other expenses to consider are
Survey which can cost from $1000 to $2000
A water test can cost you somewhere around $500 to $700
Septic tank testing is about $500 to 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 an $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 of $1,600
Title insurance $800
Home inspection fees are $500
Appraisal fees of $300
Status certificate fee $150 – $300
Moving $1,000
So the total Money Required to purchase an 800k house in Toronto is $ 109,150 (13.64% of the purchase Price)
