Home Buyer’s Plan & Other Savings & Fees For First-Time Homebuyers

Well, you did it! After all that hard work, credit checks and savings, you’re ready to put a down payment on your first property and follow through on your home buyer’s plan. But where do you start?

Real estate transactions can be overwhelming, there’s much to know and do in order to ensure an easy and successful home purchase. While real estate experts will help guide you along the journey, it’s important to be empowered with some basic knowledge and understanding of what you’re getting into to, and make informed decisions along the way. Consider a real estate agent the one who hands you water and Gatorade while cheering you on along your marathon. But you wouldn’t have entered the race in the first place with out a considerable amount of training!

The following costs, fees and savings tips are some that we feel to be especially important to note for new buyers. Keep an eye on these and you won’t be met with surprises or roadblocks along your pace to the finish line – and that dream Montreal home!

1) Home Buyer’s Plan

The federal government has recently upped the limit on a withdrawal from your Registered Retirement Savings Plan (RRSP) for first-time homebuyers. You may now be eligible to withdraw up to $25,000 tax-free, as long as it is paid back within 15 years. This withdrawl amount can be added to a down payment or to cover purchase costs. A spouse or partner can also do the same for a total of $50,000 combined. The main factors to consider for qualification include making the withdraw request the same year you chose to participate in the Home Buyer’s Plan, and you have not owned a home in the last five years. For more information on this plan, visit the Home Buyer’s Plan web page.

2.) Mortgage Default Insurance & Appraisal Fees

The Mortgage Default Insurance allows first-time homebuyers in Canada to purchase their first properties with less than a 20% down payment. There is a sliding scale of fees for this, and rates have recently risen, which can be paid at the time of sale or added to the mortgage that has been determined by your Home Buyer’s Plan. In terms of Mortgage Appraisal fees, if your mortgage lender requests an appraisal of the property you will need to cover this cost. Fees for this range from $300-$350.

3.) Notery Fees

Homebuyers will need a real estate lawyer at the end of a transaction to review a purchase agreement, registers the deed and handles the transfer of funds. While the cost of legal fees for this will vary you should find services for this in the $1000-$1500 range plus disbursements. Another consideration, if you do have some spare cash in the budget, is to hire a lawyer early in the home-buying process which could save you time, risk and financial strain if unexpected problems arise. Sometimes a lawyer who is reviewing paperwork ahead of time can spot problems that can be corrected at less cost than after the fact. A real estate lawyer can also protect your interests in terms of financing. Find out more about what a notary can do for you.

4.) Registration Fees/ ‘Welcome Tax’

The registration fee is paid to to the provincial government for recording the title transfer and mortgage registration with the local authorities. The prices are based on the purchase price of your new home and vary from province to province. call us for the present MTL rates. (1-1.5%)

*The welcome tax (or land transfer tax) is calculated based on the higher amount of either the purchase price of your new home or the municipal evaluation. If your municipal evaluation is more than the the purchase price of the home, please enter that amount into the calculator above.

5.) Property Tax

The property tax you pay each year for homeownership, which is determined by individual properties and their locations, goes towards the provincial government and the City of Montreal. Currently, Montreal has the lowest municipal property taxes amongst Canadian municipalities surveyed in 2016. Portions of your property tax fees will go towards key service areas including police, roads, parks, recreation and community & neighbourhood services. There are various ways to pay this fee including internet and telephone banking or in an Tax Installment Payment Plan that allows you to pay the taxes in monthly installments rather than a lump sum annually. Your lawyer will review the property taxes at the time of sale and you should be prepared to pay an adjustment at the time of property transfer. For more information on Property Tax visit the City web page.

6.) Title Insurance

As well as mortgage default insurance, another insurance may be required by mortgage lenders at the closing transaction of your home buyer’s plan. This Title Insurance protects against defects in the registration of the home such as forged deeds, a title transfer by someone under age, or invalid divorces. These are a just a few of the issues that can arise, so the title insurance ensures you will not be in jeopardy of losing your investment. The cost is around $200 but is relative to the cost of your home. For more information visit Calgary Real Estate Review.

7.) Home Buyer Tax Credit (HBTC):

You’ll be able to receive up to $750 back from the federal government if you apply for the Home Buyer Tax Credit in the same year the house was purchased. Qualifications include whether you or your partner has acquired a qualifying home and you did not live in another home owned by you (or your partner) previously to purchase. For more information see the Home Buyer Tax Credit web page.



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