Determine What You Can Afford
- One Time Costs associated with buying a property.
- Ongoing ownership costs
Determining what you can afford and all those extra expenses are sometimes overlooked in purchasing a property.
To calculate how much monthly payment you can afford, you need to figure your debt-service ratio:
To figure your debt-service ratio:
- List all your loans: car, personal loans, monthly credit card balances
- plus your rent or future mortgage payment (includes principal & interest)
- property taxes.
This total should not exceed approximately 40% of your gross monthly income.
The monthly mortgage payment and monthly house taxes should not exceed approximately 30% of your gross monthly income.
Please use this calculator to help you calculate automatically the maximum mortgage for which you are qualified by income and expenses (often there are exceptional circumstances so don't hestitate to contact me with any particularities of your situation).
If you have less than 20% downpayment when purchasing your house, you will need CMHC (Canada Mortgage & Housing) insurance. More information & those costs.
As a general rule, when purchasing a home, the buyer does not pay real estate commission fees. But there are some costs when buying.
One Time Costs Associated With Buying
The deposit due at offer is part of the downpayment, and all goes toward the purchase price, therefore is not considered a one-time cost.
Purchasing a home involves one-time costs of approximately $18000 for a $600K house. This is the breakdown:
Typical Expenses
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CMHC Fees:
Rate is .5% - 3.75% of loan depending on down payment (ask your banker).
Canada Mortgage & Housing Corp. is required to insure all mortgages that are less than 20% down payment (also called high ratio mortgage). Can be added to principal mortgage amount or paid at closing.
Home Insurance Cannot close your property without this - mortgagee must be notified of policy. $400. & up.
- Land Transfer Tax For Residential Resale. Payable on closing. These rates are the Ontario LTT. There are many discounts for first time buyers up to $400k purchase price.
Double this simple calculation or use the calculator to include Toronto LTT and Ontario LTT:
1. From $55,000. - $250,000. -
Multiply $10 per thousand less $275.
2. Property $250,000. - $400,000.
Multiply $15/thousand less $1525.
3. Property over $400,000.
Multiply $20/thousand less $3525.
Land Transfer Tax Calculator available here. - Home Inspection (optional) Approximately $300. + GST - Paid at time of Inspection
Usually done within a couple of days of acceptance of offer. - Lawyer Fees Approximately $1000 depending on the lawyer & scope of work demanded by the property.
- Miscellaneous:
1. Gas Connection Charges
2. Telephone Connection Charges
3. Electricity Connection Charges
4. Moving Expenses Keep a cash reserve for furnishings & gardening.
What you DON'T pay for is our amazing consultation, negotiation and handling of the many transactional details - we are compensated by the seller when they purchase their home. As our clients, you'll sign a Buyer Representation Agreement further outlining your rights & responsibilities in our working relationship
Typical Costs Ongoing with Homeownership
Sample annual expenses when owning a $500,000. single family residence.
- Property Taxes: Conservatively budget 1% of value of house
UTILITIES
- Hydro: $100.00/month
- Gas: $2500.00
- Water: $500.00
- ++ Monthly mortgage payments
- Maintenance
- Annual house & fire insurance $600/year
- Monthly condo maintenance fees if applicable.
