Are you a first-time home buyer and you are wondering what costs to expect when buying your very first home. In this blog, I am going to walk you through some of those expenses that you need to be aware of so you can budget accordingly!
Your first cost may be your deposit. That will be delivered to the Listing Brokerage or Seller’s Lawyer once you have an accepted offer and that amount can vary. This amount will be credited to you on closing and you will review this document with your lawyer. This document is called a Statement of Adjustments and it is going to indicate the balance that you owe to the Seller on closing as well. Your first conversations with your bank or mortgage broker will not only help you figure out your mortgage that you will be approved for but what some of the costs will be. If you are buying for $500,000 or less, your minimum downpayment is 5%. If you are buying for more than $500,000, your minimum down payment is 10%. If you are buying for $600,000 for example, your total down payment would be $35,000.
Your lawyer will assist you with the legal work and they are going to ensure that you have valid title and they will register the Deed into your name. There are many expenses that you need to consider both with lawyer’s fees and disbursements. Lawyer’s fess do vary from lawyer to lawyer. You can speak with them to get more of an accurate cost. The biggest expense will probably be Land Transfer Tax which is a government tax that everyone pays when they purchase property, It is a formula based on the purchase price. However, there are rebates out there for you first time home buyers, if you qualify. To qualify, you must not have owned a home anywhere in the world and your spouse cannot have owned a home while they were spouses with you. The maximum amount of the refund is $4,000.00 and there is no land transfer tax payable on buying property up to $368,000.00. If you purchase a home for $600,000.00, taking into consideration your rebate and buying outside of Toronto, your land transfer would be $4,475.00. Request a free buyer’s guideline from me and I’ll give you more information on that. There are disbursement expenses you need to keep in mind, for example, searching title, registering your Deed, Mortgage, Title insurance. Speak to your lawyer about title insurance. Some companies’ benefit plans may cover this cost. Another cost would be house insurance ,which is mandatory if you have a mortgage. If you are renting now and you have a tenant’s insurance package, speak with your insurance company about binding insurance on your new home. You may receive a discount if you have multiple policies with the same insurance company. They will have many questions about the home, so ask your realtor to help you answer some of these.
Property Owners pay property taxes and that is a formula based on the mill rate that the Town or City sets multiplied by the assessed value. Property taxes, as well as propane or oil costs, these will be indicated on the statement of adjustments that I mentioned earlier. These amounts will be adjusted fairly on this document and will either be credited to you or the seller based on the proportionate share. Other costs to consider would be moving costs. Once you have a firm Offer you should contact movers right away to schedule moving day. Their prices may vary, but for example a minimum of of 4 Hour move that could run you $185.00 an hour plus tax. Of course, you are going to need utilities and you are going to have to contact utility companies to put the utilities in your name. If you are a new account holder, they may ask you for a deposit so make those calls to see.