For a first time home buyer, there may be a few surprises when it comes to purchasing your first home. Many eager home buyers save up the minimum down payment of 5% and jump into the market without any financial cushion. While the down payment is the largest cost when buying a home, its not the only.
There are a few benefits as a first time home buyer, which I’ll focus on in another article. One benefit I will mention as it falls under the cost category, is a land transfer tax rebate. Whenever anyone buys a home in Ontario, they must pay land transfer taxes. As a first time home buyer you receive a $4000 rebate on the cost of the land transfer. This generally covers most of or all the cost. Here’s an example:
A $400,000 home in Ontario would cost $4,475 in land transfer tax.
A first time home buyer would receive the $4000 rebate and only pay a total of $475.
It’s required by the lender that an appraisal is done on the property you are looking to purchase. Appraisals cost roughly $300. Along with appraisals, its always a good idea to get a home inspector assess the property and make sure there are no serious issues with the structure of the home. Home inspections cost roughly $350.
Then there’s the cost of moving into the home. This can range from hiring movers, renting trucks, food, gas, time away from work, etc. Being prepared and organized on moving day help keep costs a bit lower. Be mindful of the time and the means of everything being shipped.
Lastly, the lawyer fees and title insurance. Lawyers deal with the official documents required when purchasing a home and account for any exchange of money in the process. Title insurance is usually required by the lender as it protects the property from any disputes in the future. This insurance is purchased through the lawyer as well. Combined, these costs are estimated at $1500.
All the above costs considered, you should be prepared to pay between 1-1.5% of your home in closing costs.
A $400,000 home with a 1.33% closing cost comes to $5,325. This includes estimates of all the costs mentioned above and the remaining balance of the land transfer tax.
There can be additional costs such as Final Adjustments or Mortgage Insurance Tax. To learn more about closing costs and calculate them for yourself, download my free app located on the home page.