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The Costs of Buying a Condo in Toronto

This guide will help you understand what a condominium is. It includes everything from “what is a condo?” to the condo-buying process.

This chapter looks at the costs of buying a condo in Toronto in 2022. We’ll discuss the mortgage, down payment, land transfer taxes, and final condo closing costs. We will also examine how much it will cost you to maintain your new home.

Sample costs for an $800,000 condo

To purchase a condo in Toronto, you will need a mortgage unless you are a superstar. It’s no secret that Toronto is one of the most expensive cities in Canada. It can be difficult for first-time home buyers and those without a lot of money to find an affordable condo with reliable services near where they live or work daily!

What is a mortgage?

You must take a mortgage from a bank or other lending institution when buying a condo. A mortgage is a loan that covers the cost of the purchase of the condo unit. The mortgage will have to be paid back over 20 or 25 years.

The mortgage amount will be based on the purchase price of the condo and the buyer’s income and credit score. These factors will also determine the interest on the mortgage rate.

Mortgages can be expensive, so shopping for the best deal is important. It is also important to make sure you can afford the monthly payments on the mortgage.

How much mortgage do I need?

There are a few things to consider when determining how much mortgage you need.

1. The first is the purchase price of the condo.

2. The second is your income and credit score.

3. And finally, the interest rate on the mortgage.

These factors will help determine how much money you can borrow from a bank or other lending institution. Generally, you will need to make a down payment of at least 20% of the condo’s purchase price.

That means you’d want to make a total income of around $140,000 – $180,000 for a purchase of $800,000

The condo down payment

When you buy a condo, you need to pay some money upfront. This is called a down payment. The size of your down payment depends on how much money you have saved. The more money you put down on your mortgage, the lower your monthly payments will be. However, down payments have minimums determined by the purchase price.

What’s the minimum down payment for a condo?

  • The minimum down payment for condos costing $500,000 or less is 5%.
  • For condos costing $500,000 to $999,999, the minimum down payment for a condo is 5% of the first $500,000 and 10% of the remaining balance.
  • The minimum down payment for mansions priced at least $1 million is 10-20%, depending on the situation.

The average cost to buy a condo in Toronto by neighbourhood

The Danforth, East York: $500,000

Junction, High Park: $700,000

Cabbagetown, St.Lawrence Market, Distillery District, and Church Corridor: $750,000

High Park: $730,000

Rosedale, Summerhill: $1.2 million

The Annex, Yorkville: $1.1 million

Forest Hill, Toronto: $2.2 million

King and Queen, Little Italy, Dundas West: $750,000

Leslieville, Riverside, Riverdale: $760,000

What is mortgage loan insurance?

Mortgage loan insurance is a type of insurance that helps protect the lender in case the borrower defaults on their mortgage. The lender usually requires this insurance if the down payment is less than 20% of the condo’s purchase price.

The mortgage loan insurance varies, but it can be quite expensive. Shopping around for the best deal from the banks or mortgage brokers and ensuring you can afford the monthly payments is important.

How much are closing costs for a condo?

Closing costs for a unit in a condo complex can include two real estate transfer taxes (in Toronto) and the last administrative fees. Closing expenses are typically between 1% and 4% of the purchase price.

Full mortgage options for $800,000 condo example:

Down payment % Cost of down payment CMHC + insurance Total mortgage
5% $40,000 $30,400 $790,400
10% $80,000 $22,320 $742,320
15% $120,000 $19,040 $699,040
20% $160,000 $0 $640,000

Toronto Land Transfer Tax

In Ontario, there is a tax on the transfer of property ownership. The buyer always pays this tax. The tax rate ranges from 0.5% to 2.5 percent, depending on the property’s value. The higher the cost, the greater the tax burden.

The City of Toronto also charges a municipal land transfer fee. You must pay both taxes if you acquire a condominium or home in Toronto. But first-time purchasers, such as yourself, may receive a tax credit on the city and provincial taxes.

When the time comes, you can find out exactly what your land transfer tax rates are. Using a land transfer tax calculator is probably easier. When you acquire property ownership, land transfer taxes are charged on the closing date; therefore, keep it in mind when preparing your budget.

Land Transfer Tax Rebate for first-time buyers

If you are a first-time buyer, you may be eligible for a refund on the provincial and municipal land transfer taxes. You can claim this refund on your income tax return. 

The maximum refund you can receive in Ontario is $4,000. You can claim this refund on your income tax return by filling out Form T2202, Certificate of Eligibility for the Home Buyers’ Tax Credit. 

• The maximum Land Transfer Tax refund in Ontario is $4,000

• The maximum Land Transfer Tax refund in Toronto is $4,475

=Total refund will be $8,475

The Canadian government provides several programs and incentives to assist first-time buyers. Make sure to file your tax return on time to receive your refund as soon as possible.

Can I get the Ontario land transfer tax refunds?

To be eligible for the tax refund, you must be:

  • A Canadian citizen or permanent resident
  • At least 18 years old
  • You cannot have owned an eligible home anywhere in the world
  • Purchasing a residential property in Ontario

Condo closing costs

Included in your closing costs are the administrative and professional fees for your real estate lawyer or home inspector. These professionals can help you make safe and sound decisions. You should budget $3,500-$5,000 for this.

Fees for a real estate lawyer

When you purchase a pre-construction or resale condo, you need to hire a real estate lawyer to help you with the transaction. The cost of hiring a real estate lawyer can vary, but typically lawyer fees are between $1,500 and $2,000

Finding an experienced and fast-working lawyer when dealing with condo transactions is important. They will be able to help you understand the terms of the purchase agreement and ensure that your interests are protected.

You should also remember to budget the cost of closing the deal, which includes administrative and professional fees. These fees can range from $3,000 to $5,000.

Fees for a home inspection

When purchasing a condo, it is important to have it inspected by a professional. This will help you find any major property issues before you buy it. Home inspection fees can vary depending on the size and age of the condo, as well as the location. In Toronto, the average fee for a home inspection is $500.

Paying property tax

Closing fees are usually the seller’s responsibility, but they may also be reimbursed for prior property taxes at closing. The property tax would differ based on your circumstances, but a reasonable estimate is $300. Charges associated with connecting up to your new utility services may also be charged.

Don’t I have to Pay My Real Estate Agent?

When buying or selling a property, you may wonder if you have to pay your real estate agent. The answer is no—you don’t have to pay your agent anything unless they’re working for both the buyer and the seller (a dual agent).

If you’re working with an agent who only represents you, you don’t have to pay them anything. They should be paid out of the sale proceeds of the property once it’s sold. Remember that some agents may require a deposit before they start working with you, but this is not common.

If you’re unhappy with your current agent or want to switch agents, it’s important to remember that you don’t have to pay them. Be sure to ask them for their withdrawal form so that they can officially end their representation of you.

Hopefully, you got an idea of how much it costs to buy a condo. Next time we will look at the ongoing costs associated with condominium ownership, starting with mortgage payments, condo maintenance fees, property taxes, etc. Stay tuned!

By Daniel La Gamba

Daniel is one of the founding partners of LD Law. Having closed thousands of real estate transactions in his career, Daniel caters to a wide range of clients from the nervous first time homebuyer to the seasoned real estate investor. In addition, Daniel also advises clients on wills and estates and business and corporate law matters. Daniel is a well-known real estate lawyer Toronto.