The Buyer’s Handbook: Financing your First Home
The first step towards homeownership is to understand all the costs related to your purchase. This will help you set a realistic budget and filter through cost-appropriate listings on the market .
Here is a list of costs you will have to consider for home purchases in Quebec:
Down payment: Anywhere above 5% of the purchase price of a house or duplex, and above 10% for a triplex.
Notary Costs: 1000- 1500$
Certificate of Location: 700- 1500$
Welcome Tax (Property Transfer Duties): 0.5% on the first 50 000$ and 1% of the property value between 50 000$ and 250 0000$, and 1.5% of the value above 250 000$
Lease Cancellation (varies if applicable)
Mortgage Insurance: .5% – 2.9% of the total amount of the loan.
Inspection Fee: 500$ or more.
Home Appraisal Fee: This is done for free by brokers, and some financial institutions, but paying a professional appraiser will cost you about 350$
Other varying fees: condo fees, moving, furnishing, municipal and school taxes.
These are all costs you’ll have to pay during the initial phases of the purchase. The most important cost to consider, however, is the mortgage.
Mortgage costs vary according to interest rate, amortization period and downpayment. Click here to calculate the monthly mortgage amount for a specific price point.
Here’s an example:
lets take this condo on St Ambroise street.
Total Price: 299,000$
Mortgage: For a property of 299,000$, at a 10% downpayment, on a 25 year mortage at 3%, you’ll expect to pay 1277$ per month. That’s less that most people spend on rent.
The immediate costs are:
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Downpayment: at 10%: 29,900$
Notary Costs: 1000$
Certificate of Location: 1000$
Welcome Tax: about 3000$
Inspection Fee: 500$
Home Appraisal: free with broker, 350$ without.
Total: About 35,500$
Once you’ve gotten a good overall view of the costs involved in a purchase, it’s time to apply for a mortgage pre-approval.
There are several advantages to applying for a pre-approval before you even start your house hunting.
1. It determines your exact buying capacity, preventing you from wasting your time looking at properties that cost more than what your financial institution will lend you.
2. It secures the best term for your financing, by ensuring a low interest rate for a predetermined period. If the interest rates spike, yours will stay stable for the duration of the pre-approval’s term.
3. It strengthens your offer. Owners will always favour a candidate with a pre-approval over one without one. By having one, you reassure the seller of your commitment by having already taken the first step.