The million dollar question is: "How much money do I really need to buy real estate" and the answer, well that depends. When you're buying your first home, you need to factor in a few price tags that you'll be facing (thankfully, we're the free service) but let's start with listing them out.
Everyone is saving one of these since their high school days working a part time job at McDonald's, sadly the value of those savings have gone down when they're leveraged against the rise of real estate prices, but it's a great foundation. In order to avoid the crash of 2008 and with some of the wisdom we gained from the mistakes of our neighbours down south, banks and lenders have tightened the rules - this means that down payments are grouped into brackets of maximum approvals.
Up to a purchase price of $500'000, buyers need a 5% down payment
Up to a purchase price of $1'000'000, buyers need a 10% down payment
Above a purchase price of $1'000'000, buyers need a 20% down payment
These are structured to ensure that given the worst case scenario, banks can still sustain payments and have most likely built up enough equity within these properties to avoid an economic collapse.
Whether you buy with us, or you find a stellar private deal, you'll need a lawyer to complete the transaction for you. Lawyers will help you with the legality of the paperwork, transfer title from the seller to the buyer, and also make sure that the title is clean for the new buyer to avoid any surprises. There is a wealth of other procedural things that your legal team will do as well which they would be better suited to explain. In our role though, we coordinate with the lawyers to make sure that status certificates are clear, the funds will be transferred correctly and that the deal closes smoothly. There is typically a charge for this service which can range from $850-$1500 depending on the complexity of the deal.
LAND TRANSFER TAX:
The government charges a land transfer tax when you purchase a property which is typically based on the purchase price of the home. (The amount and how it's calculated will be discussed in another post, promise!) First time home buyers are eligible for a rebate on this tax, so you may get a break on this bill! Buyers should also beware that the city of Toronto charges a Municipal Land Transfer Tax as well!
MOVERS, CLEANERS, HANDYMAN:
This one is completely optional, but we always recommend having them on speed dial because in the midst of a move, you want to keep your stress as low as possible. In many events, we've personally seen units that have been left in a condition that needs to be cleaned and on top of that, small things may need the attention of a tool box as well, this is why we recommend having cleaners and handyman around after you move. These are completely optional thought!
So all in all, it is important to remember that your purchase price will be mostly determined on how much cash you have on hand; and as a rule of thumb, it is best to keep and additional 1.5-2% in the bank to cover "closing costs".