How to Buy a House in Canada - People Involved and Your Expenses
Wondering how to buy a house in Canada? Buying a property is a very important and rather complex process, therefore there are several specialists involved in the process to help you carry it out smoothly.
1. Real Estate Agent
A key figure in this process, because what you buy and on what terms depends on his or her abilities. Good agents usually help customers to choose other specialists involved in the transaction, and control the entire process until completion.
Lawyer is a mandatory player in the transaction. Correct paperwork and conducting the registration in the municipal authority is entirely his responsibility.
3. Financial Broker
Whether you will get a mortgage, and under what bank interest, depends on this person.
4. Technical Inspector
Technical inspector is a highly important figure, as his or her inspection may reveal serious defects in the house.
How to buy a House in Canada: Expenses incurred by the buyer
1. Real estate agent services - free of charge
Typically, the buyer does not pay the agent for his or her services. A situation where the buyer has to pay the agent very is rare.
2. Legal Fee
The buyer pays lawyer for preparation of all documents, conducting title search, and recording the transaction. It may also include fees for registration of a mortgage loan. This amount generally is $ 1,000 and above.
3. Title Insurance
This insurance covers problems with rights of ownership and property ownership documents. This insurance has become very popular lately, and lawyers h4ly recommend to buy it. It covers all the possible problems that may arise with the appearance of previously unknown heirs or other property claimants, liens, unpaid debts, errors in the documents, and so on. The amount of insurance is about $ 350.
4. Land Transfer Tax
This is a mandatory one-time payment to the State for transfer of property from one owner to another. The size depends on the price of the house and the area. for example, if a house is worth $ 500,000 the amount of Land Transfer Tax is approximately $ 6,475 CAD. If a house is worth $ 1,000,000 - land transfer tax would be $ 16.475.
5. Home Inspection
Payable at the time of inspection, in a period of about a week from the date of the accepting an Offer, ie the transaction. Theoretically, home inspection is not mandatory, you get to decide to carry it out or not. But it is generally recommended to do that. The amount of technical inspection is about $ 250 - $ 350.
At the time of getting a mortgage loan from financial institution, you may request an evaluation of the cost of buying a property by a professional appraiser who can provide Appraisal Report. The amount for appraisal is approximately $ 250 - $ 300.
2. Mortgage payments
Paid on a regular basis (monthly, weekly or biweekly). The payoff amount is calculated based on the amortization term, interest rate, loan amount and frequency of payments.
3. Property Insurance
Mandatory insurance of the house (around $ 500 - $ 600 CAD per year).
4. Property Tax
The amount of property tax depends on the municipality and the real estate value. Calculated on the progressive scale. For property valued of about $ 500,000 the property tax is about $ 3,500 - $ 4,500 CAD per year.
5. The initial contribution (downpayment)
For those who do not have the status of a citizen or a permanent resident of Canada and who do not have a job in Canada, who do business or are self-employed, as well as for those who do not have a credit history in Canada, the downpayment is at least 35% of the purchase price.
For those who have a job in Canada, have a stable income, this percentage is lower (10-25%).
Since the purchase of real estate in Toronto is a complex process with many nuances, it is h4ly suggested to consult with your agent, who will have to answer your questions.
On How to Buy a House in Canada I used materials written by Helen Riabinin, Sales Representative, Century 21 St.Andrew's Realty Inc. for Russian Toronto.
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