A real estate transaction is a multi-step process, full of nuances and dozens of decision points at every turn. It can be hard to grasp all of the costs involved in buying a house
while getting caught up in the details – and hopefully – the excitement of the upcoming move.
Unlike buying a typical commodity, a real estate purchase involves more than just the sale price plus any applicable taxes. It’s more complex; there’s the listing price, often negotiable, then a down payment and deposit, along with a host of administrative fees and closing costs.
In this post, we’ll provide a detailed picture of the costs to consider when buying a house.
Curious about what to look for in your next home or what the buying process will be like in today’s market? Book a meeting with us today, and we will walk you through the steps.
The Actual Price of the House
The main expense when buying a house in Ontario, especially in Toronto, is the cost of the property itself. Home values in the GTA have hovered around or above $1 million for quite a few years now. The actual range can vary depending on the structure of the home and the location.
- A small condo or a townhouse could be significantly less expensive, while still offering you a high quality of life and a convenient location.
- A high-end luxury home would be well over the two million-dollar mark, especially in Toronto, which includes Etobicoke.
The listing price is typically negotiable. During a buyer’s market with little to no competition, you might succeed in offering a little under the asking price. If it’s a seller’s market and the property is in high demand, the price can get inflated due to multiple offers. While you want to be mindful of your budget, remember that underbidding by too much can cause you to miss out on a home you want.
In some cases, you might have to come in a little higher right out of the gate. An experienced real estate agent is essential so that you can make a compelling offer without overpaying for the home.
There will be other fees when buying a house in Ontario, and many of the closing costs will be based on the final selling price. It helps to have a budget in mind before you even begin your search. From here, you can get a better understanding of the other expenses and fees when buying a house.
An understanding of Etobicoke real estate puts you at an advantage when buying your house. The posts below will bring you up-to-date:
- Is It a Good Time to Buy or Sell a Home in Etobicoke?
- Our Top Etobicoke Neighbourhoods
- Why Working with a Local Etobicoke Realtor® is More Critical than Ever
Initial Fees When Buying a House
Your first major outlay of funds is the down payment for your house. Canada has a minimum down payment requirement for insured mortgages. However, it is advisable to offer more if you are able. A higher down payment now could reduce the amount of interest you pay over the long term. If you can cover 20% or more, you’ll also save on mortgage insurance.
The minimum down payment is calculated by a tiered percentage based on the price of the house.
- 5% on the first $500,000
- 10% from $500,000 to $1.5 million
- 20% on all homes $1.5 million and above
When buying a house in Ontario, you pay the down payment in two stages. As soon as a seller accepts your offer, you provide a deposit, which is held in trust by the listing brokerage. This amount is negotiable, but is usually 5% of the total purchase price. On your closing day, you’ll provide the rest of your down payment, and your lender will release the remaining funds to the seller.
What Are Closing Costs?
This is one of the first questions we receive from clients, often before viewing the first home. It is wise to think of everything in advance since it means being able to create a comfortable budget.
Costs to account for include legal fees and disbursements, title insurance, division of property taxes, mortgage insurance (if applicable) and utility setups. During the closing process, you may also have home inspection and appraisal fees.
Provincial and municipal land transfer taxes are included in closing costs, with both provincial and municipal fees when buying a house in Toronto. Our closing costs calculator will give you a better idea of how much you will need for tax and insurance once all is said and done.
Are you looking for tips to get great value for a house in Etobicoke? Start with the related reading below:
- How To Make Your Home Purchase More Affordable
- Where Is The Best Value In Etobicoke When Buying A Home?
- How Can Home Buyers Find A Great Deal In Etobicoke?
Other Expenses When Buying a House
Not every cost is directly related to the purchase price or closing process, but they can still add up quickly. It helps to be prepared for anything, including a myriad of incidentals and other expenses. Think of how much you will need for moving.
- Professional movers typically have a minimum fee, with an additional hourly rate. Even if you decide to tackle the process yourself with the help of friends and family, you may still need to rent a vehicle and purchase packing boxes and bubble wrap.
- If you don’t take possession of your new home right away, you may also incur some storage costs for your belongings.
- Once you move in, there’s always the possibility of unexpected repairs over and above any upgrades or renovations you have planned for.
Even with a move-in ready home, you will undoubtedly want to add a few personal touches to make it your own. New furniture, window coverings, and a host of unique decor items may be in order as you start settling in and making yourself at home.
Are you in the planning stages to buy your next home? Our Etobicoke real estate agents are here for anything you need. Reach out today at 647-282-7653 or email contact@sileckythompson.com with any questions or to get started.
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