Buying a home is a big investment – most likely the largest one you will ever make. The cost to buy a home should be carefully considered to avoid the risk of financial difficulty in the future.

Home buying has many direct and indirect costs which shall be planned for well in advance to avoid any closing issues. Doing your homework and knowing the average cost of these services in your neighbourhood will help you choose a home within a realistic price range. Here is a list of costs involved in the buying process:

    • Deposit: Depending on your location and the price of the home, you may need to make a deposit to ensure you don’t lose the deal to another interested buyer. If you are required to pay a deposit, it will become part of your down payment once you have purchased the home. Usually it’s around 2% of purchase price but it may vary depending on closing time. Security deposit ensure that buyer closes the deal Seller want to make sure buyer closes the deal if market fluctuate and it goes downside.

    • Down Payment: In Canada, the minimum amount you need to put down on a home is 5%. While this is realistic for most first-time home buyers, having a down payment of 20% or more will help buyers avoid paying Mortgage Loan Insurance.

    • Mortgage Loan Insurance: If your down payment is less than 20% of the total house cost. Premiums for this type of insurance range from 3.10% to 4% and increase if you are self-employed.

    • PST (Provincial sales tax) on Mortgage Insurance: Mortgage insurance will be added in to loan amount but PST which is 8% you have to bring from your pocket as closing cost.

    • Land Transfer Tax: When you buy a home, you are required to pay a land transfer tax to the province upon closing. This tax is normally based on the amount paid for the land, as well as the remaining amount on any mortgage or debt assumed as part of the arrangement to buy the land. Cost will vary depending on your municipality, the size of the land and other factors. Land transfer tax in Toronto may vary from 0.5% to 2.0% depending on your property value. If you are a first-time buyer, you may be eligible to receive a refund for land transfer tax. 
    • Appraisal Fee: An appraisal will normally cost between $250 and $450 but can vary depending on your location. This will help prevent you from borrowing more than you need to and will prevent lenders from giving you too much.

    • Home Inspection: A home inspection is a necessary step in your home buying process and will normally cost an average of $350 depending on the size, age, and condition of the home. This helps ensure there are no unexpected maintenance or home improvement costs upon purchasing the home.

    • Property Insurance: While property insurance is likely already something you have factored into your budget, it’s important to do your research and find a reasonable quote that will ensure you are covered should anything unexpected happen.

    • Lawyer Fees: The fee you will be charged by your lawyer will vary depending on the person representing you and must be paid upon closing. Ask your real estate agent for advice as they likely have a preferred trusted lawyer they can refer you to.

    • Title Insurance: Title insurance is a one-time-fee that provides protection from losses related to the properties title or ownership. For example, if someone steal your identity and register loan on your property and you find out after, you are protected by title insurance all loss occurred.

    • Property Taxes: The cost for property taxes is expressed as a dollar rate for every $1,000 estimated to be the market value of your property. It is different in every Municipality.

    • Maintenance and Energy Costs: Potentially your largest ongoing homeowner expense, these costs include lawn care/ yard work, professional services, additions/upgrades and the cost of keeping the house running year-round.

    • Moving Expenses: It’s easy to forget about the small things
      when moving, but it’s important to remember they can add up quickly! Consider the cost for phone, electricity, and other utility installations and don’t forget about movers, a moving truck and feeding your friends who are helping out!

Now that you have a better idea of the cost to buy a home, it’s time to hit the books to find out how much these services will cost in your area. Make a list, create a budget, and get started!