The following article is a guest post by Brennan Valenzuela, a writer for Ratehub.ca, a website that allows people to compare Canadian mortgage rates. It also features a comprehensive education centre to help address common first-time home buyer questions. Ratehub is a great source for all the latest Canadian mortgage news.
New home purchase costs in Ontario
The housing market in Ontario ended 2011 on a strong note, finishing the year with one of the highest level of home sales on record. The CMHC believes Ontario will return to a balanced market this year. Toronto, Ontario’s biggest city, is leading the nation in condo development. Condo starts in Hogtown experienced a 48% jump from 2010 to 2011.
Using a Toronto property search from BuzzBuzzHome, we find that there are 283 condo projects currently under construction or still in pre-construction. So, if you want to buy in Toronto, I hope for your sake you’re not afraid of heights because the city is expanding — vertically.
Ontario mortgage rates
Mortgage rates in Ontario are borrower-friendly right now as they are sitting at near historic lows. If you’re looking to get into the housing market, now may be a good time to take advantage of the low financing costs.
The down payment will be the largest one-time purchase cost for your house; however, you still need to prepare for the additional closing costs that will also require an immediate cash outlay. So, whether you’re buying a condo in the clouds in Toronto or a bungalow near Niagara Falls, you should get familiar with the following purchase costs.
Ontario land transfer tax
If you purchase property in Ontario, you must pay a tax to the provincial government. The tax system is tiered, so use an Ontario land transfer tax calculator to help determine your tax amount. As an example, the tax on the average Ontario home price of $370,026 is $4,025.
Additionally, Toronto is the only city in Canada that charges a municipal land transfer tax. However, the tax may be eliminated by 2015 if Toronto Mayor Rob Ford keeps his word.
You will need a real estate lawyer to help you with the mountain of paperwork that awaits you once you purchase a home. Your lawyer will also handle some of your closing costs to ensure they are submitted to the proper recipient on time. Your legal bill could fall anywhere from $500 to $1000 depending on disbursements.
As a home owner, you may want to invest in title insurance which will protect you against ownership challenges on your title. Property insurance, although not mandatory, should be acquired to protect against damage to your home.
Getting a home inspection is a no-brainer. A home inspector will alert you to any issues with your property that will need attention such as new plumbing, heating, and roofing. Expect to pay somewhere in the ballpark of $300.
CMHC Insurance Premium
If you bought your new home with less than 20% down, you would have been required to get CMHC insurance. The cost of the insurance is rolled into your mortgage; however, the PST tax on the insurance is due at closing.
If you’re planning on boarding the ‘condo-train’, you should request a Status Certificate which will provide details on the condo bylaws and regulations. The cost is approximately $100.
First-time home buyer rebates
Home buyer newbies can receive land transfer tax rebates at the provincial and municipal levels. Note: Toronto is the only city in Canada that has an additional land transfer tax on top of the provincial tax.
Also, the government supplies a First-time Home Buyers’ Tax Credit to help you recoup some of your money. The rebate works out to $750 which you’ll have to fill out on your personal income tax form in the year the home was purchased. Also, home buyer newbies can receive a rebate on their land transfer tax at the provincial and municipal levels.
And those awesome developments you’re seeing renderings of? Here’s a list of a few of the favourites we included here:
Photo of Toronto courtesy of Kanwar Sandhu