Figuring
your optimal house price, best interest rate, mortgage and mortgage payments compose the majority of cost calculations regarding the purchase of your home. This said, there are a few other up front costs that a buyer must be aware of when taking into consideration the total cost of home purchase. This article will take care in describing the honest, yet brutal upfront home purchase costs, costs that you can help minimize by working with a knowledgeable and experienced mortgage broker, such as myselfJ. In most cases the services provided by a mortgage broker are completely free.
You will need to plan ahead to cover the many up front costs of buying a home. Here we go…
Mortgage Loan Insurance Premium: If yours is a high ratio mortgage (less than 20% down payment), your lender will probably need mortgage insurance. This could be upwards of 6% of the total cost of the mortgage and can be integrated into your mortgage aggregate to be paid off over years. Talk to your broker about lowering these fees.
Appraisal Fee: Your mortgage lender may require that the property be appraised at your expense. An appraisal is an estimate of the value of your home. The cost is usually between $250 and $350. Some lenders will refund these fees after the mortgage has officially closed.
Deposit: This can form part of your down payment and must be paid when you make an offer to purchase. The charge could be up to 5% of the purchase price. If you give a deposit of 5% and your down payment is 5%, then your down payment is considered to be made.
Down Payment: You can own your home with little or no down payment. If you have at least 20% down payment, you will not require any mortgage insurance as long as your mortgage is 25 years or less.
Estoppel Certificate Fee: Only if you are buying a condo and can cost up to $100.
Home Inspection Fee: This may be a condition of your offer to purchase and can cost around $500, depending of the complexities of the inspection.
Land Registration Fees: This is a provincial and municipal. The rate is 0.5 percent on the first $55,000 of the price, 1 percent on the next $195,000, 1.5 percent on the next $150,000 and 2 percent on the balance.
Legal Fees: This fee must be paid on closing and costs a minimum of $500 (plus GST and PST).
Property Insurance: Any lender will require to purchase home insurance to ensure security of the mortgage.
These are the most common fees encountered when purchasing a home. As mentioned, the more qualified your mortgage broker, the better you will fare when dealing with these fees. A knowledge mortgage broker will know who to refer you to, so you get the best service with the lowest fees. We all know that every dollar counts.
See the CMHC ‘Homebuying Step by Step’ for a more comprehensive home buying guide.
Feel free to leave a comment or question below!
Comments