Before you even think about buying a home here in Brantford, you need to do your homework first and understand the costs that will come with buying a house. Unless you have the money to pay for everything you need in one sitting completely, you will want to know more about the costs of buying a home. This is in order for you to make estimates on the amounts of money you need to prepare beforehand.

 

What you need to know about mortgages

Canadian government housing regulations require that you need to make a down payment of 20% of your house’s property in order to close the deal with your mortgage lender. For example, if your house costs $500,000, you would need to pay 20% of that amount or $100,000 upfront.

Most first-time home buyers find this 20% too steep, therefore they stick with just a 5% down payment, provided they pay for mortgage insurance. Since you still have to pay for the remaining 95% of the house’s price, the 5% down payment is an arrangement that is called “high ratio mortgage.” Thus, you have to pay for mortgage insurance as a guarantee in case you fail to pay your housing debt.

Mortgage insurance is actually an added cost when you look at it as not only do you have to pay for your house’s mortgage loan and its interest. You have to pay another amount to keep the lender satisfied. You can apply for mortgage insurance at CMHC (Canada Mortgage and Housing Corp.), Genworth, or Canada Guarantee.

If you have a steady income and good credit, you can pay off these debts within several years. However, economic problems can lead to a spike in loan interest rates. Those companies where you will apply for mortgage insurance want to make sure that you will have a steady income despite economic and personal financial problems. Thus, you must have an idea of the maximum amount of mortgage you can afford given your current and future income, before you apply for a loan.

The CMHC website has calculators you can use to determine if the house price is within your means. Remember that you still have other costs aside from your mortgage, so these calculators also factor in your household budget to help give you precise estimates. When you use those mortgage affordability calculators, you should also consider the amount for savings and the unexpected expenses that may occur such as health emergencies. You may realize that you can’t afford a house even if it appears cheap, especially if you have too many important needs to deal with.

 

What you need to know about legal fees

You are also required to hire a real estate lawyer when buying a house. Their fees can range in value depending upon the services that they provide. We recommend doing your due diligence when selecting a lawyer, keeping in mind it is not always the best to go with the cheapest one. You will want a lawyer who will have your best interest first and can be easily reached in the event they are needed prior to, during, and following the closing of your home.

 

What you need to know about land transfer tax

Mortgage, interest, legal fees, and mortgage insurance are among many of the expenses where you need to prepare money. You must know that the Ontario provincial government levies a land transfer tax (LTT) when you buy a house. The tax rates are not one-time calculations, say 2% of $500,000. There are several steps of calculations which you need to do to determine your LTT, which can be complicated. There are land transfer tax calculators you can search online where you can simply type in your purchase price to avoid the hassle.

 

Other fees you need to consider

When you are about to move to your new house, you will need to pay the moving service. Your utilities and services may also charge you a minor connection/setup fee.

Considering buying a home in Brantford – get in touch with us today, we have a large selection of homes for sales in Brantford to choose from & will be able to help you find the best mortgage for your situation – contact us today for a free consultation.