When you’re all doe eyed and excited that you’ve finally decided to take the leap and buy your first home it helps to do your research first. It is important to be informed of what to expect fee wise during the purchase process so that you don’t over extend yourself and are prepared financially to pay the additional costs.
You may not know this but if you are not planning on putting a 20% down payment on the house then you will be required to pay for mortgage insurance as per the rules and regulations of the Canadian government. Your insurance provider options are CMHC (Canada Mortgage and Housing Corp. or Genworth (Genworth Financial Canada). You can find a number of helpful calculators available at the CMHC website to help you determine what your mortgage insurance will cost along with a house hold budget calculator, a mortgage payment calculator and mortgage affordability calculator.
You may or may not be required by your lender to have an appraisal done on the property to ensure that the property value is appropriate for the loan amount. In this case it is possible that the fee for the appraisal will be covered by the lender.
You can’t buy a home without a lawyer’s assistance. Your lawyer has your best interest in mind and has the knowledge of real estate law to keep you safe legally. Their fees can vary from lawyer to lawyer from around $800 to $1,200 depending on the complexity of the transaction. Please choose your lawyer carefully because you may need them to be vigilant should a problem arise during or after the transaction.
Land transfer tax is levied on each purchase and added to your disbursements by your lawyer who then pays it to the provincial government on your behalf. This is how you calculate your LTT: $5.00 per $1,000 on the first $55,000 of the purchase price and $10 per $1000 on the rest up to $250,000. Add another $5.00 per $1,000 on the excess over $250,000. Or you can just type in your purchase price at this helpful website.
Now here’s where we get into the technical jargon. A conventional loan with no insurance fees requires a down payment of 20% of the purchase price. As little as 5% down will get you a high ratio loan through CMHC which will be collected by your lawyer and payed to the seller’s lawyer.
There are a few other moving costs such as movers, should you use them, and some of your utilities and services may charge a minor fee for transferring your services to a new location.
Just to be clear you do not, I repeat do not pay your real estate agent. They will get a cut of the commission paid by the seller based on the agreed upon commission stated on the Agreement of Purchase and Sale.
By now you should have a good idea of what expenses to expect and be able to calculate approximately what those fees will be for you based on your target purchase price. Happy house hunting!