There is a basic question for millennials or first-time buyers who see all the condo construction projects especially in Downtown Toronto: how to afford a condo in Toronto?
In order to become a homeowner instead of a tenant, you need to consider a few important points. The most important tip is that since you don’t have enough knowledge about the Toronto real estate market, you should ask for the advice of a professional Toronto real estate agent to give you all the instructions about how much it cost to buy a condo apartment in Toronto.
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Whether you are going to buy a condo as an investment or as a residential property, you should consider the following important tips:
Approve your financial affordability and possibilities: you will need a mortgage to buy a condo, but the lender institution will need a few financial documents to pre-approve you for a mortgage: Your credit check, an employment letter (stating your status, start date, position and salary), last year’s T-4, Notice of Assessment. Then you can calculate your affordability and your downpayment. The standard amount is paying at least 5% of the purchase price as a downpayment to buy a condo under $1 million, and a 20% downpayment for condos priced over $1 million.
Land Transfer Tax: Another cost you should pay for buying a condo in Toronto is a tax on the transfer of property ownership. It is ranging from 0.5% to 2.5% (based on a percentage of the property value). The more expensive the condo, the higher the land transfer tax. It should be paid on the closing date of your purchase when ownership is transferred to your name. So, don’t forget to consider the land transfer tax cost from your budget.
You should learn about closing costs: When you buy a condo in Toronto, you’ll have to pay provincial land transfer tax, municipal land transfer tax, legal fees, lender or appraisal fees and any adjustments. The seller will pay for your real estate agent commission.
Be ready for the costs of owning a condo: when you decide to buy a condo you should know everything about buying a condo in Toronto and all your present and future expenses. One of these expenses is condo Maintenance Fees, which may vary significantly between buildings. But it generally includes water, garbage, common elements, building insurance, hydro, gas and air conditioning.
It is important to know and estimate the condo maintenance fees to calculate your future monthly costs. And pay attention that the condo fees generally increase each year and for brand new condos, the maintenance fees will quite significantly increase within the first few years. There are also other expenses, including home insurance, internet or cable, and property taxes.
