Buying a New Condominium

Developers often put new condominiums up for sale before their construction has been completed or even begun. You may be selecting your unit from a floor plan. This has advantages — you may be able to ask for changes — and risks — the as-built result may differ from the plan or what you had envisioned and the completion date could be later than promised.

When considering a new condominium, you should have a close look at your unit’s specifications and the building’s plan and other governing documents to ensure that your unit is acceptable and that you’re fully aware of regulations and the corporation’s budget.

You’ll want to find out from the developer what work must still be done on the project and check that your purchase agreement specifies a completion date and under what conditions the developer may change it. The developer should also be able to give you details about the property manager who will hold the key responsibility for the day-to-day running of the condominium.

Buying a Resale Condominium

When you purchase a resale unit you have the advantage of seeing what you’re buying. It’s clear how much space you’ll have, what the layout is like and, where the common elements are. But you’ll also want to find out about less obvious aspects, such as what steps have been taken to limit noise between units and how odors are controlled.

On the financial and legal side, you should review the corporation’s annual operating budget, financial statements and estoppel or status certificate. The estoppel or status certificate is a package of legal documents that may include the declaration, bylaws, rules and information about the corporation’s insurance, reserve fund, property management contract ,and any outstanding judgments. You may have to pay a fee to cover the corporation's costs of providing these documents, but it will be well worth it — so much so that you should make any offer to purchase conditional on a satisfactory review of these documents.

Buyer's Closing Costs

Home buying closing costs are the charges your lawyer asks you to pay on the closing date of your home. Many people don’t know about additional costs, over and above the purchase price of the home. You should have around 1.5% of the purchase price for closing costs.

List of Buyer's Closing Costs

Below you will find a brief explanation of these costs. (Please note these are some of the closing costs you may encounter depending on your specific situation.  Use this as a guideline then talk with your lawyer who can provide a more realistic estimate for your situation.)

1)  Land Transfer Tax

When you a buy a house, condo or land in Ontario you are subject to land transfer tax

which is due upon closing.

A -  Ontario Land Transfer Tax  

Ontario charges a provincial land transfer tax .This tax is levied on properties

changing owners and has to be paid by the buyer. Land transfer tax is based on the

purchase price and depending on where you live. 

For first time home buyers, there is a maximum $4,000 tax rebate on the Ontario land transfer tax. Based on Ontario’s land transfer tax rates, this refund will cover the full tax for homes up to $368,333. For homes purchased for more than $368,333, buyers will receive the full $4,000 rebate and pay the remaining LTT balance.

For Example:

First-time Eligibility :

• You must be a Canadian citizen or permanent resident of Canada.
• You must be 18 years or older.
• You must occupy the home within 9 months of purchase.
• You cannot have owned a home or interest in a home anywhere in the world.
• Your spouse cannot have owned a home while being your spouse (but maybe a previous homeowner).
• If the home is newly constructed, it must be eligible for a home warranty.
• Homebuyers must apply for the refund within 18 months of purchase.

B - Municipal Land Transfer Tax 

In addition to the Ontario Land Transfer Tax , It will be applied just to purchases on all properties

in the city of Toronto ( you don't need to pay for properties located out of the city of Toronto) .

The first time buyer is entitled to a rebate up to a maximum amount of $3,725.  

2) Home Inspection

You should have a home inspection before buying a home. An  Inspector examines

both the interior and exterior of your home, and find anything that is wrong, or could

potentially go wrong in the near future. When they are done, they will give you a

detailed report of their findings (with pictures!), as well as potential timelines of when

certain projects may need to be done.. When hiring a home inspector makes sure the

inspector has liability insurance. The cost of a typical home inspection is between

$300 and $600.

3 ) CMHC Mortgage Loan Insurance 

Mortgage default insurance (CMHC) is mandatory if you are putting less than 20% of

the purchase price as a down payment. Mortgage default insurance protects lenders

if a homeowner defaults on their mortgage.

To get mortgage loan insurance, you’ll need a minimum down payment. The amount

depends on the home’s purchase price:

• If the home costs $500,000 or less, you’ll need a minimum down payment of 5%.

• If the home costs more than $500,000, you’ll need a minimum of 5% down on the first $500,000 and 10% on the remainder.

• If the home costs $1,000,000 or more, mortgage loan insurance is not available.

Your lender pays an insurance premium on mortgage loan insurance. It’s calculated

as a percentage of the mortgage and is based on the size of your down payment.

Your lender will pass this cost on to you. 

( CMHC is not a part of your closing costs that you pay from your pocket and you will pay

it over the term of the mortgage)

4)  Mortgage Insurance Tax

Those who purchase a residence in Ontario are required to pay a tax on CMHC

insurance. The current rate of insurance tax, as of April 2011, is eight percent that

you may need to pay for with cash and that amount is due on closing day.

For example, if your CMHC insurance amounts is $6,200 and you live in Ontario, the PST on your CMHC insurance would be:

$ 6, 200  x  % 8 =  $ 496

5 ) Legal Fees and Disbursements ( Lawyer Fee )

A lawyer or notary will charge a fee for their professional services involved in drafting

the title deed, preparing the mortgage, conducting the various searches

and disbursements costs ( lawyer will have to pay on your behalf, such as registration

fees, photocopies, searches, supplies etc., plus G.S.T) ( cost: $1000 to $ 1500 vary

according to the lawyer ).

6 )  HST

HST applies to the purchase price of newly constructed homes only. You make sure who pays

HST If you are purchasing a new home.