First Mortgage Solutions
First mortgage Toronto
When it comes to your first mortgage in Toronto, there are many expenses that arise other than your monthly mortgage payment. There are a number of one-time, hidden expenses referred to as “closing costs” that your mortgage experts should inform you of so you are fully prepared.
At Northwood Mortgage, we realise that your first mortgage is a big step for you, especially considering the high prices of real estate in Toronto. Beyond the closing costs and other expenses you are likely to find in a bank mortgage calculator, there are some other one-time and recurrent costs of owning a home in Toronto that you should consider.
Can you afford your Toronto home?
Many bank affordability calculators leave out the cost of property maintenance and upkeep – foundation repair, roofers, electricians, plumbers, lighting, window coverings, appliances, furniture, and much more.
These calculators may factor in other existing debts, like an auto loan or student loan, but they still omit the monthly cost of water, electricity, internet, and phone service, among others. You might also need to upgrade your new house, perhaps with additional ceiling height, hardwood flooring, or granite kitchen countertops. Such expenses increase the cost of purchasing your home, and can be paid for in cash, or added to the mortgage proceeds.
The benefit of using a mortgage calculator is to help you anticipate how much you can borrow at different rates, but don’t forget to take into account additional costs of owning a home, particularly so when saving the amount needed for a down payment.
Here are some of the expenses you will incur when getting your first mortgage in Toronto:
- Provincial Sales Tax (PST): This amount is paid at closing
- High ratio (or default) mortgage insurance premium and PST: Lenders typically require you to insure your mortgage if your deposit is less than 20 percent of the home purchase price. This ratio minus the PST is added to your mortgage balance
- Appraisal fee: Your mortgage bank will probably have hired a commercial appraiser to get an independent view on the value of the property you want to purchase, and whether or not it satisfies the lending criteria
- Bridge financing: In the event that your home purchase is wrapped up prior to the sale of your current home, you may have to finance the cost of the home purchase until the sale is complete. Bridge financing is costly and not recommended, so try talking to your lender if such a situation arises
- Estoppels Certificate: This applies to condominium/strata units, and refers to documentation of the condo corporation’s legal state and financial well-being
- Certificate of location: This is required by the financial institution to approve your mortgage. Your lawyer or notary also requires this for transfer of ownership
- Utility bill adjustments: Any amount that the seller has prepaid in excess should be reimbursed by the new occupant (you)
- Welcome tax: This is a one-time land transfer tax calculated on a percentage of the purchase price of your property
Keep other costs in mind
Most of these costs are part of the real estate transactions, and Northwood Mortgage, your mortgage experts, will help you prepare adequately for them when getting your first mortgage in Toronto. The other non-transaction based expenses should still be budgeted for, or at least taken into consideration so you can identify what to put off until after settling into your new home.