BUYING 101
COSTS INVOLVED
In order for you to get an idea of the money you will need to put aside for the buying process, here is an overview of all the costs associated with buying a house:
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HOME INSPECTION
I strongly recommend hiring a home inspector for any home you wish to purchase. Cost Range: $400-$650. I can recommend different inspectors depending on the property.
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LEGAL FEES
Depending on the lawyer and purchase price of the property, legal fees could be anywhere between $1400-2200.
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GST/HST
5% on a new purchase
In Ontario, you will need to add the Harmonized Sales Tax (HST) on new properties only. HST does not apply to resale properties.
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ADJUSTMENT COSTS
These are any costs including hydro, gas, property taxes that are paid by the seller that are to be reimbursed when the buyer takes possession of the home. The lawyer calculates these on closing.
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HOME INSURANCE
Your insurance premiums will be dependent on the style of home, the age, location, upgrades and the value of the contents you wish to insure.
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TITLE INSURANCE
Though not mandatory, this may be recommended by your real estate lawyer to protect you against any title issues.
MOVING COSTS
These costs are dependent on your personal situation and the extent of your move. It’s best to contact a few moving companies to get a quote.
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REPAIRS
If you have chosen a property that needs a little love, you will need to factor in the amount of renovations or repairs. This could be anything from a fresh coat of paint to a whole kitchen renovation, I find it’s often best to budget a bit extra to make sure you are over prepared rather than under.
To go to my recommendations on how to make a clear budget click here.
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HOW OFTEN CAN YOU MAKE YOUR MORTGAGE PAYMENTS?
By switching from monthly payments to accelerated weekly or biweekly payments, you can pay off your mortgage faster. Explore your options for mortgage payments and see how much interest you could save by using FCAC’s Mortgage Calculator Tool at: www.fcac-acfc.gc.ca. For more info on mortgages, read this.
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UTILITIES
Some companies (Rogers, Bell, Hydro) charge a fee to move, cancel or change their service. Be sure to ask in advance. This could also be a good time to renegotiate your services as plans may have changed. In the end you might save some money!
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LAND-TRANSFER TAX
All home buyers in Ontario are required to pay a Land Transfer Tax (LTT) when they purchase a property (condo or home). The amount you have to pay depends on the price of your property as well as if you are a first time home buyer or not.
If you purchase within the Toronto boundaries, there is also a Toronto Land Transfer Tax (TLTT) (in addition to the Ontario LTT). I've included a chart below, as a reference. Your real estate lawyer will provide the exact final number to you before closing.
This link offers a quick calculation of your land transfer tax, however a real estate lawyer will provide the final number to you.
CREATING A BUDGET
Owning real estate is truly an amazing experience and opportunity. For most people it’s their largest investment as well as a place where memories are formed. Even though the Toronto market is very competitive I always encourage my clients to buy within a range that feels most comfortable for them. Since most pre-approvals are much higher than what clients feel comfortable spending, I always suggest creating a budget. Here are the steps to create your housing budget:
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1. Itemize everything that you spend money on weekly, monthly and even on a yearly basis.
2. Speak with the mortgage broker to determine what the monthly payments would be at a particular purchase price.
3. Calculate that into your monthly budget to see how it works. Keep in mind there are also property taxes, condo fees (if applicable) and utilities.
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I generally also suggest that clients put aside a certain amount monthly into a forced “house savings” to cover off any maintenance which could arise unexpectedly. Some people might find, that given today’s market conditions that they will need to push themselves a bit which might mean cutting back in other areas of your life. The good news is that this will likely only be temporary and the benefit is you are investing in yourself.
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I have created a working budget for my clients to enter in all their data. If you would like a copy of it, please ask. I am happy to email it.
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PARKING OPTIONS
We are fortunate in the city of Toronto to have a variety of different parking options. Below is an overview:
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Private – This means it’s completely yours. This could mean you have a garage (built-in to the house in some capacity), a stand alone garage or just your own driveway
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Mutual Drive – this is a shared driveway between two homes. It can either lead to individual parking areas behind the house or is just a shared driveway. Depending on your neighbours and their vehicle situations you may or may not be able to park there on a regular basis. One thing I do recommend with any mutual drive is to physically try driving your car down the driveway. I’ve seen many cars not fit and that is the deal breaker for the house.
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Laneway – Usually a lane at the back of the house that you use to access either your parking spot or garage. One thing to check with laneway parking is if the city will be responsible for maintenance of that laneway.
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Street Parking – A valid city of Toronto street parking permit is required in order to park overnight. It is best to contact the city before making an offer on a property to see if there are available permits for the area and what the cost is.
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Front Pad/Yard Parking – The city has very strict rules about this. As per their website it is best to check with them to see if the permit is still valid as the permit does not transfer with the property. New owners will need to apply to have the permit transferred. Please view this page here!
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MAKING AN OFFER
As you have likely heard, offer nights have become quite popular in Toronto. An offer night is a designated date and time where any interested buyers can submit their offer to buy a home. This is also referred to as a ‘closed bid’ system, meaning buyers are not aware of the other prices being submitted. Each buyer’s Realtor submits the offer to the listing Realtor before the deadline and the seller then confidentially decides which offer they would like to accept.
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Some common offer terms include:
Multiple Offers – When two or more buyers have submitted offers on a property.
Pre-emptive Offers or Bully Offers – When a buyer submits an offer to purchase a property in advance of the offer date. This type of offer is meant to motivate the seller to accept it before the offer deadline and is therefore usually much higher than the asking price. Sellers are not legally required to consider this type of offer. Usually a seller’s desire to accept pre-emptive offers is stipulated in the MLS listing.
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NEGOTIATION AND SPEED IS KEY IN THESE CIRCUMSTANCES.
Given how common multiple offers are in the city it’s extremely important you find a Realtor who can think fast, act quickly and change their negotiation strategy at the drop of a hat as the night goes on. While many times it will come down to price there are instances where that’s not always the case and a little creativity can actually help secure you the home you really want.
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