Buying a home is an exciting time! You are laying down the foundation for the life you are building and creating a space to build many great memories with friends and family. By the time you have saved up for a down payment, you are probably in a financially sound place to make a purchase. However, there are several associated costs of home buying that not all home buyers are aware of! Let’s break down these associated costs of home buying so you’re informed and ready to make an offer.
Legal Fees
When you sign an offer to purchase, you’ll need to hire a real estate lawyer to handle your transactions and file paperwork. Some of the functions they perform include a title search, registering your home in your name, and making sure the down payment and land transfer tax go to the correct offices on time. What’s more, buying a new construction home tends to be more complicated than purchasing resale, and your real estate lawyer will help guide you through this process. Purchase agreements contain extra clauses and contracts around closing dates can contain complicated language that can confuse the layman. Your lawyer can decipher the legalese and ensure you understand your move-in date. You can expect to pay upwards of $1,500 for this; however, a good real estate lawyer protects your interests so it’s money well spent!
Land Transfer Fees
As mentioned above, the province of Ontario requires you to pay a land transfer tax when you purchase property. This is due upon closing and the transferring of the funds will be handled by your lawyer. Depending on the value of your property, the land transfer tax in Ontario will be between .5% and 2%; you can use this online calculator to get an estimate. The good news is that first-time buyers may be eligible for a rebate of up to $4,000! Head over to the Ministry of Ontario Finance site to see if you qualify for a rebate.
Municipal Land Transfer Tax
If you are buying within the City of Toronto, you can expect to pay between .5% and 2% of the value of your land on a municipal land transfer tax (MLTT.) Several areas of the GTA fall outside city boundaries and aren’t subject to this tax, such as Mississauga, Brampton, and Vaughan. However, if you are buying within the City of Toronto as a first-time buyer, you may be eligible for a rebate!
Moving Costs
This one may seem obvious, but with all the details involved in house hunting and buying, many people forget that moving can put a significant dent in your bank account. Our tips to offset costs are to move in the off-season, ask you local grocery store for moving boxes from their recycling, and to consider renting your own truck and having friends and family pitch in to help with the move. The costs of moving can be up to $5,000 if you hire movers and buy supplies; however, if you follow our money-saving ideas you’re likely to spend much less!
Home Insurance
Homes are likely to be our most valuable asset, so it’s always smart to protect them! There are generally three areas covered in insurance policies: the contents of your home, the home itself, and personal liability, such as if someone were to be injured on your property. Check with an agent to find out which policy is the right fit for you. Home insurance typically costs between $1,000 and $2,000 and is paid annually.
Now that you’ve had 5 associated costs of home buying explained, you’re armed and prepared to approach house hunting with confidence! After all, half the battle is knowing what to expect and saving appropriately. Don’t forget our tips on saving, including moving yourself and checking for rebates! We hope you’ve learned something new, and don’t forget to follow along on the Caliber Homes Blog for more home buying tips!