What it costs you to buy in Toronto.
Tuesday Sep 20th, 2016Share
As already mentioned in my previous post from September 13, 2016, in August the average Toronto price jumped to $710,410 for all properties and to $1.2 mil. for the detached properties. As one of my clients just told me these are some crazy numbers!!!
But is it still possible to find a detached property in Toronto for under $1 million. Actually it still is! But you need to be ready that in the most neighborhoods it will be a fixer upper. You also have to be willing/able to spend money and energy to bring it into the 21st century.
If you’re actively looking for a house in #Toronto, here is a vintage detached bungalow-raised property in the heart of Princess-Rosethorn (W08) with the prestigious St. George & French Immersion Rosethorn School districts. It’s consedrably within short distance to public transit (Kipling Station) & Hwy 427 (Good Transit Score 58 while low Walk Score of just 28).
Highlights: 3 Bedrooms & 2 Bathrooms, Renovated Kitchen. Separate entrance to the basement, quite sizeable backyard for Toronto.
Curious to know what it will take you to buy this house and how much will be your monthly mortgage payments and your closing costs? Keep on reading!
Financials: Listing/Asking Price $799,000
Property taxes: Annual $3,839 (2016), Monthly $319.92
Minimum Downpayment*: $54,900 (5% on $500,000 =$25,000 plus 10% on $299,000=$29,900) or 6.87% of asking price.
Mortgage Default/Loan Insurance**: $26,788 added to the mortgage.
Total Mortgage: $770,888= $799,000 - $54,900 (down) + $26,788 (default insurance)
Your Monthly Mortgage Payment: $3,531
25 Amortization Period***, 2.7% (current prime rate), 5-year fixed term****.
Gross Total Monthly Payment: $3,850.49 = $3,531 (mortgage payments) + $319.92 property taxes monthly
In 5 years when it’s time to renew your mortgage (considering you never pre-paid any extra amount above your monthly payments), your outstanding balance to be refinanced/renew will be $655,072.
You would repay a lender $115,816 of the mortgage principal and$96,019 in interest. Basically, your lender gross profit for financing your house for 5 years would be $96,019.
One Time Closing Costs include: legal fees and disbursements, prepaid utilities and property tax adjustments, title insurance.
And, of course the biggest one time cost will be the Land Transfer Tax:$12,455 ($2,000 instant rebate for the 1st time home buyers). And since we buy in Toronto add the Municipal Land Transfer Tax: $11,705 ($3,725 instant rebate for the 1st time home buyers)
Total Provincial & Municipal Land Transfer Tax: $18,435 = $24,160 - $5,725 (Instant Rebate)
In addition, don’t forget to budget for home inspection starting from $450 depending on the square footage, moving costs, home owner insurance, and other costs.
In general, I advice my clients to be ready to spend for closing costs for up to 2.5-3% from the selling price.
Please be advised that above scenario will not be the same to everyone. The calculations will change, if you decide to put 20% down payment, in which case you will totally avoid paying the mortgage default insurance. Your rate could be lower or higher depending on your credit score, credit history, consumer and other debts outstanding.
*As of February 2016, the federal government introduced new mortgage rules intended to “cool down” the real estate markets in some areas by requiring buyers to put down more than 5% on a home worth half a million dollars or more: New blended rate is 5 per cent down on the first $500,000, and 10 per cent down on any dollar value above that amount.
**Mortgage DefaultI nsurance is financed through your mortgage and is mandatory for the down payments up to 19.99%. Unlike the Closing Costs, it does not require a lump sum cash outlay at the time of your purchase. Instead, Mortgage Default Insurance Premium is added to your mortgage amount and paid off over the life of your loan. Cost to homebuyers 1.80% - 3.60% (as of June 1, 2015) of the mortgage amount.
***Amortization period: The total length of time it will take you to pay off your mortgage. If your down payment is less than 20% of the purchase price of your home, the longest amortization period allowed is 25 years. If it’s 20% or more than the longest period period allowed is 35 years.
****Mortgage Term: The length of time you commit to the mortgage rate, lender, and associated mortgage terms and conditions. The term you choose will have a direct effect on your mortgage rate, with short terms historically to be lower than long-term mortgage rates. When the term is up, you must either repay the outstanding mortgage amount or renew your mortage at a new rate available at the end of the term.
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