Buyers
WHERE DO YOU START WITH YOUR HOME PURCHASE?
Great! You’ve decided to purchase a new home, and we’re here to help. To get a bit of background knowledge on some of the steps involved, you can read the note below. Or better yet, contact us with whatever questions you have.Mortgage Pre-Approval
A mortgage pre-approval is a document that secures a mortgage amount at a pre-determined rate (for fixed-rate mortgages) for a specific length of time, usually 90 days. It allows you to comfortably shop for your new home, knowing your budget, terms, and monthly payments. The advantage of a mortgage pre-approval is that you are not under an obligation to use it, while it nearly guarantees you a loan for the amount and rate specified. Of course, your financial situation must remain as it was when the pre-approval was provided in order for it to be valid.HST
Whenever you purchase a new home or condo, you will be required to pay HST on the purchase price of the home. There are rebates in place for certain situations. For example, homes purchased for less than $400,000 qualify for a 6% rebate. In certain cases, the HST may be included in the purchase price of the property. Resale properties are exempt from HST. HST is also charged on the services of Realtors or other professionals involved in the real estate transaction. There are government programs in place to provide you with rebates in certain scenarios. You may be eligible to claim a rebate for a part of the HST you pay on the purchase price or cost of building your home if:- You buy a new or substantially renovated home (including the land or if you lease the land) from a builder;
- You buy a new mobile home (including a modular home) or a floating home from a builder or vendor;
- You buy a share of capital stock of a co-operative housing corporation;
- You construct or substantially renovate your own home, or carry out a major addition (or hire another person to do so); or
- Your home is destroyed in a fire and is subsequently rebuilt.
Details
- The purchase price of resale homes are exempt from the HST.
- New home buyers can apply for a 36% rebate of the federal portion of HST applicable to the purchase price to a maximum of $6,300 for homes costing $350,000 or less. For new homes priced between $350,000 and $450,000, the rebate on the federal portion of the HST rebate would be reduced proportionately.
- New homes priced $450,000 or higher would not receive a rebate of the federal portion of the HST.
- New home buyers can apply for a 75% rebate of the provincial portion of the HST applicable to the purchase price to a maximum of $24,000.
Closing Costs
There are various fees and charges that you, as a buyer, are required to pay upon closing your home. Depending on your situation, these fees can range from several hundred dollars, to thousands of dollars.- Depending on your bank, you may need to pay for an independent appraisal of your home in order to provide the bank with a confirmation of your property’s value. This can range from $200 to $400, or more for larger homes.
- For resale homes, a professional home inspection is recommended for your benefit and peace of mind. Depending on the size of the property, home inspections generally start at $400.
- Mortgage insurance may be necessary if your downpayment is less than 20%. You will be required to pay mortgage insurance, through CMHC or Genworth Financial. To calculate your mortgage insurance amount, click here.
- Title insurance is becoming increasingly popular, and simply protects the purchaser and the lender against loss or damage from forced removal of structures, fraudulent claims, forgery, zoning and set-back non-compliance, and more. The specifics of the coverage provided by title insurance is very complicated, so please discuss the details with us or your lawyer before making a decision towards purchasing it. The charge for title insurance is usually between $250 to $700.
- There are legal fees for any real estate transaction involving the purchase or sale of a property. Including the fees that your lawyer pays on your behalf for conducting searches and drafting documents, legal fees for buyers are approximately $1300.
- You will also be required to pay a land transfer tax, which varies depending on the price of the property, and on whether or not it is located in Toronto. For more information about the land transfer tax, or to use our calculator, click here.
- For new homes, the builder will usually charge you approximately $500 to $600, which they will pay to Tarion. For more details, please visit tarion.com, and consult us and your builder.
- For new homes, you may also be required to pay HST on the price of the property. In certain cases, the builder may include the amount in the purchase price for simplicity.
