Costs and Fees
Costs and Fees by Scot Campbell
It comes as a surprise to some buyers that the up-front fees involved in buying a home are more than the initial deposit! Some buyers pay only the deposit amount stipulated in the offer, which usually works out to about 5% of the property’s purchase price. Others prefer to supplement this amount with an additional down payment during the closing period – obviously if you have a substantial chunk of money set aside, it makes sense to put more down on the house because you can save thousands in mortgage interest later. The amount of your additional down payment is up to you, but remember to save some money for closing! My Closing Costs page will give you a good idea of the amount that will be required to actually close your home. One of the most significant costs is Land Transfer Tax; please see the chart on my website to calculate the amount of tax you’ll need to pay based on the property’s price tag. There is some good news – first time buyers don’t pay the City of Toronto tax on the first $400,000 of a property purchase.
Another consideration when deciding how much of a down payment to make is CMHC Insurance. If your new mortgage is going to be more than 80% of the purchase price, the Canada Mortgage and Housing Corporation steps in to insure the loan amount above 80% of the price. Of course, they charge interest for this privilege – so if you can possibly put 20% or more down, it’ll save you money on CMHC premiums! The rates charged by CMHC can fluctuate; for up to date rates, please visit the CMHC website.