For many people, a home purchase is one of the biggest financial decisions of their life. The entire process comes with a lot of paperwork to navigate, including various fees and costs that homebuyers should know about before they close on a home.
The same notion applies if you are considering buying a house in Ontario, which is one of the most beautiful and expensive provinces in Canada. Although the cost of living is considered to be pretty high here, that doesn’t mean it isn’t a good place to purchase the home of your dreams.
However, in order to make an informed decision, you should first get acquainted with all the costs related to the home-buying process, so there will be no surprises when you buy your new home.
To help you along, we have created this guide that elaborates on the true cost of buying and owning a property in Ontario.
Down payment is the initial non-refundable payment you need to pay upfront for your new home. In Ontario, if you are purchasing a house under $500,000, you will need to have at least a 5% down payment. If the purchase price of the property you are considering buying is over $500,000 and up to 1 million, then the minimum down payment is 5% on the first 500k and 10% on the remaining amount. For houses over 1 million, your minimum down payment is 20%.
If you are a first-time homebuyer, you may be qualified for the lowest percentage as many lenders often provide programs and incentives for such buyers.
Depending on the purchase price of your home and the current market conditions, you should also factor an up-front deposit into the overall cost of buying a home. The deposit serves as a security measure ensuring you don’t lose the home to another interested buyer. It also acts as an assurance to the seller that you are serious about making the purchase.
In Ontario, the usual time limit to provide the deposit is within 24 hours of acceptance. Because there is no standard deposit amount, you should consider hiring a real estate agent to navigate you and ensure you don’t face any issues with the deal.
Land transfer tax
Before you take ownership of your new home, you are required to pay a land transfer tax on closing. The fee is normally based on the amount paid for the property, in addition to the amount remaining on any mortgage or debt assumed as part of the arrangement to buy it.
In Ontario, the tax is progressive, meaning you will need to pay 0.5% of the first $50,000 and then 1% on $50-250,000. The good news with this is if you are a first-time homebuyer, you can get a break on the land transfer tax and even receive a refund.
When buying a house in Ontario, many homebuyers often forget about the hidden costs that come with the purchase. These can amount to quite a sum, so it is crucial that you are well prepared in advance. Some important hidden costs include home inspection fees, property insurance, legal fees, and moving costs.
For example, the home inspection gives buyers the chance to examine the condition of the house before they move in. The fee varies depending on the size, age and condition of the home and it is worth paying as it can help you avoid many potential pitfalls.
Ongoing living costs
Besides the usual one-time fees and closing costs you need to pay when buying your new home, you should also be aware of the ongoing living expenses that come after you move in. These include your routine costs to maintain your lifestyle, any renovations you plan to do to upgrade your house and “emergency” money used to cover the cost of unplanned expenses.
For example, your routine costs typically include expenses such as food and groceries, mortgage payments, utilities and lawn care, and other miscellaneous costs such as Internet bills.
Ontario is undoubtedly one of the most beautiful provinces in Canada. Many Canadian citizens, as well as immigrants, choose this region as their relocation destination because of the high quality of life that can suit anyone’s taste, budget, and lifestyle.
So, if you are considering moving to Ontario, it is important that you are well aware of all the costs associated with the home-buying process in order to avoid any pitfalls.
To make informed decisions, be sure to refer back to our guide and learn everything about the true cost of buying and owning a home in this Canadian province.