Buyer Cost Breakdown: Understanding the True Costs of Homeownership
When embarking on the exciting journey of buying a home, one of the most important steps is understanding the full scope of costs involved. While your purchase price will be the largest expense, it’s crucial to prepare for several additional costs that come with buying a home. Here’s a breakdown of everything you need to know to avoid financial surprises and start your journey with confidence.
1. Purchase Price
The most obvious and significant cost is the purchase price of your home. This is typically funded by a combination of:
- Down Payment: The portion you pay upfront.
- Mortgage: The loan you secure for the remainder.
Proper planning and consultation with a mortgage specialist will ensure you’re clear on what you can afford.
2. Land Transfer Tax (LTT)
In Ontario, every homebuyer pays a Provincial Land Transfer Tax. If you’re purchasing within Toronto, you’ll also pay an additional Municipal Land Transfer Tax.
- Cost: 2.5% – 4% of the purchase price for homes under $2,000,000.
- Discounts: First-time buyers in Toronto receive a rebate of up to $8,475.
- Use online LTT calculators to estimate your exact costs.
3. Legal Fees
You’ll need a real estate lawyer to handle the legal aspects of your transaction. Consult with your Real Estate Professional for any recommendations!
- Cost Range: Approximately $1,500 – $3,000.
This covers tasks like title searches, document preparation, and registration.
4. Title Insurance
Title insurance is a one-time fee that protects you and your lender against title-related issues.
- Mandatory for mortgages but optional for cash purchases (highly recommended!).
- Cost Range: $400 – $2,000 for homes under $2,000,000.
5. Home Inspection (Optional)
A home inspection provides peace of mind by identifying potential issues before you buy.
- Cost Range: $300 – $1,000.
The need for an inspection depends on the property and market conditions.
6. Appraisal Fee (May Apply)
If you’re securing a mortgage, your lender may require a property appraisal to confirm its value.
- Cost Range: A few hundred dollars.
(Some lenders cover this fee, so check with your provider.)
7. Mortgage Default Insurance
If your down payment is less than 20% of the purchase price, mortgage default insurance is required.
- Cost: 2.8% – 4% of the mortgage amount (added to your mortgage).
- Additional Cost: In Ontario, you’ll need to pay 8% PST on the premium upfront at closing.
8. Closing Adjustments
These reimbursements cover prepaid expenses by the seller that extend beyond your closing date, such as:
- Property taxes.
- Condo maintenance fees (if applicable).
- Rental equipment (e.g., hot water tanks) (if applicable).
9. Moving Costs
Don’t forget to budget for the actual move and any new furniture or decor for your home. The cost range varies based on moving distance and household size:
Local Move (Same City/Region)
- Apartment/Small Home: $700 – $1,500
- Medium Home (2–3 Bedrooms): $1,500 – $3,800
- Large Home (4+ Bedrooms): $3,800+
Long-Distance Move (Across Provinces/States)
- Small Home/Apartment: $2,000 – $5,000
- Medium Home (2–3 Bedrooms): $5,000 – $8,000
- Large Home (4+ Bedrooms): $8,000 – $15,000+
Additional Costs to Consider
- Packing Services: $300 – $1,500+
- Moving Supplies: $75 – $300
- Storage Fees: $150 – $500/month
- Truck/Travel Fee: $100 – $300 (for local moves)
- Insurance & Liability Coverage: Varies by provider
Why Proper Planning Matters
Understanding these costs ahead of time allows you to properly budget and avoid unexpected financial stress. With everything accounted for, you’ll be well-prepared to navigate the exciting process of buying your dream home.
Our team equips you with all the knowledge you need to budget confidently and begin your home-buying journey stress-free!
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