Once you have figured out the home price range you can afford and the type of mortgage you qualify for, you will need to calculate all of the associated costs of the transaction to make sure you are financially ready. Typically these costs are between 1%-2% of the purchase price.
You will need to plan ahead to cover the many up-front costs of buying a home. Timing is important to help make sure things go smoothly.
• Deposit. This is part of your down payment and must be paid when you make an offer, or when an offer is accepted. The cost of the deposit varies, however in Peterborough and surrounding area the standard amount is $1,000.
• Down Payment. With mortgage loan insurance from CMHC you can own your home with a minimum down payment of 5%
• Appraisal Fee. Your mortgage lender may require that the property be appraised at your expense. An appraisal is an estimate of the value of the home. The cost is usually between $250 and $350 and must be paid when you contract for those services.
• Estoppel Certificate Fee. This applies if you are buying a condominium or strata unit and could cost up to $100.
• Home Inspection Fee. It is recommended that you have a home inspection as a condition of your Offer to Purchase. A home inspection is a report on the condition of the home and generally costs between $300-$400, depending on the complexities of the inspection. The inspection is usually done once an offer has been accepted, and is the Buyers resposibilit to pay the fee at the time the inspection takes place.
• Land Registration Fees (sometimes called a Land Transfer Tax, Deed Registration Fee, Tariff or Property Purchases Tax). The cost is a percentage of the property’s purchase price and may vary. Check with your lawyer to see what the current rates are.
• Prepaid Property Taxes and/or Utility Bills. To reimburse the seller for prepaid costs such as property taxes, filling the oil tank and so on. This is often taken care of by your mortgage lender and tied into your payments.
• Property Insurance. The mortgage lender requires this because the home is security for the mortgage. This insurance covers the cost of replacing your home and its contents. Property insurance must be in place on closing day.
• Legal Fees and Disbursements. Must be paid upon closing and cost a minimum of $500 (plus GST/HST). Your lawyer will also bill you direct costs to check on the legal status of your property. Each solicitor is different, as is each real estate transaction so prices do vary.
• Title Insurance. Your lender or lawyer/notary may suggest title insurance to cover loss caused by defects of title to the property.
• Service connection fees- telephone, gas, electricity, cable TV, satellite TV, Internet and so on. You may be asked to pay a deposit for some utilities.
- Moving Cost - You may require a rental truck for moving your personal belongings, some temporary storage units... or a case of beer for those friends lending a helping hand!
If you feel you cannot cover all of the up-front costs, you can ask your lender for a loan. Remember that payment for this loan amount, based on a 12-month repayment period, will have to be included in your Total Debt Service ratio calculation.
Information supplied from Canada Mortgage and Housing Corporation