MENU		HOME BUYING COSTS		MAINTENANCE FUND
HOW MUCH CAN YOU AFFORD CALCULATOR		Likely the largest debt you will ever take on, a mortgage, is a loan to finance the purchase of your home. Your home is collateral for the loan, which is also a legal contract you sign to promise that you will pay the debt, with interest and other costs, typically over 15 to 30 years. The mortgage is repaid in regular payments which are blended payments. This means that the payment includes the principal (amount borrowed) plus the interest (the charge for borrowing money). The payment may also include a portion of the property taxes and the mortgage insurance premium.		It is a good idea, particularly if you are buying an older home, to start a separate maintenance fund by setting aside $500 - $1,000 and adding to it regularly. This reserve can be used to cover the costs of anticipated or unexpected repairs or replacements of such things as the roof or appliances.
		HOW MUCH CAN YOU AFFORD?		GDS RATIO & TDS RATIO
		As you think about applying for a home loan, you need to consider your personal finances first. How much you can afford depends on a number of factors and your gross household income is one of them. This will include any regular and reoccurring income that you can document. Next you need to calculate your monthly debt load. This includes all monthly debt obligations like credit cards, loans and other ongoing obligations like alimony or child support. Two other important factors to determine how much you can afford are your down payment and the mortgage interest rate. Based on the GDS and TDS ratio (see at right), lenders will advise you of the maximum home price they think you can afford. Most lenders don't want you to take out a loan that will overload your ability to repay everybody you owe. Depending on your individual situation, there may be more or less flexibility in the guidelines as mentioned. For example, if you are able to buy the home by making a large cash down payment, the qualifying ratios become less critical. Likewise, if a rich family member is willing to cosign on the loan with you, lenders will be much less focused on the guidelines discussed here. Keep in mind that most home buyers today keep their debt ratios comfortably below the maximums prescribed here. The lower your debt load, the more affordable your home and lifestyle will be.		Lenders follow two simple rules to determine how much you can afford. The first rule is that your monthly housing costs should not be more than 32% of your gross monthly income. Housing costs include monthly mortgage payments of principal and interest, taxes and heating expenses, also known as P.I.T.H. If applicable, this sum also includes half of the monthly condominium fees and all of the annual site lease in the case of a leasehold tenure. Lenders add up these housing costs to determine what percentage they are of your gross monthly income. This figure is your Gross Debt Service (GDS) ratio. The second affordability rule is that your entire monthly debt should not be more than 40% of your gross monthly income. This includes housing costs and other debts such as car loans and credit card payments. Lenders add up these debts to determine what percentage they are of your gross monthly income. This figure is your Total Debt Service (TDS) ratio.
		HOUSE HUNTING IN TORONTO PREFERRED MORTGAGE PARTNER
		For your convenience the House Hunting In Toronto website has selected Preferred Partners for several real estate related services. Our Preferred Mortgage Partner is Michael Pezzack, mortgage consultant for Buyingblock. His job is to help you decide on the best mortgage package then find you the lowest rate - his service is free. To contact Michael, give him a call at 416-850-2642.
		MORTGAGE LOAN INSURANCE
		When you need a mortgage loan that is more than 75% of the purchase price of your home, mortgage loan insurance is required. The coverage does not protect you, it protects the lender from you defaulting on the mortgage. There are two components: an application fee and an insurance premium. The application fee typically ranges from $75.00 to $235.00. The mortgage loan insurance premium is calculated as a percentage of the loan and is based on the size of the downpayment in relation to the total purchase price. For example, a downpayment of 25% would incur an insurance premium of .75% of the total loan value and a downpayment of 5% would incur an insurance payment of 2.75% of the total loan value. You can pay this premium in a single lump sum (saving interest on this charge), or add it to your mortgage and include it in your monthly payments. Some of the criteria that must be met: The home must be in Canada and must be your principal residence. Housing payments, including principal, interest, property taxes, heating (P.I.T.H.), the annual site lease in the case of leasehold tenure and 50% of applicable condominium fees, can not be more than 32% of your gross household income (GDS ratio). Your total debt load can not be more than 40% of your gross household income (TDS ratio). Other criteria apply and are subject to change. You can obtain mortgage loan insurance from CMHC or a private insurer. CMHC will insure mortgages of up to 95% of the home's purchase price or the market value of the property, whichever is less. Both new and resale homes are eligible.
		OTHER COSTS TO BE AWARE OF WHEN YOU BUY
		TAXES: Very few things in life are certain, but paying taxes is surely one of them. It is not an exception when buying a home. First of all there is Property Tax, based on a percentage of the value of your home. You must continue to pay property taxes as long as you own the property, even after your mortgage is paid off. If you have a high-ratio mortgage, your lender may require that you have your property tax installments added to your mortgage payments. Furthermore there is Provincial Land Transfer Tax. It varies as a percentage of the property's purchase price. It is usually about .5% - 2%. However, for first-time buyers there is a refund program (see the First-Time Home Buyers page). Current Provincial land transfer tax rates 0.5% of the value of consideration for the transfer up to and including $55,000, plus 1% of the value of the consideration which exceeds $55,000 up to and including $250,000, plus 1.5% of the value of the consideration which exceeds $250,000, plus 2% of the amount by which the value of the consideration exceeds $400,000 for land that contains at least one and not more than two single family residences. As a taxation measure granted under the City of Toronto Act,2006, Toronto City Council approved a new Municipal Land Transfer Tax effective February 1, 2008 that will be applied to purchases on all properties in the city of Toronto in addition to the Province's Land Transfer Tax. Current Municipal Land Transfer Tax Rates 0.5% of the value of consideration for the transfer up to and including $55,000, plus 1% of the value of the consideration which exceeds $55,000 up to and including $400,000, and 2.0% of the value of the consideration which exceeds $400,000. There is a refund program for first-time home buyers (see the First-Time Home Buyers page). Prepaid Taxes and/or Utility Bills. You will also have to reimburse the vendor on a prorated basis if some taxes and or utility bills have been prepaid beyond the closing date. Finally, there is some good news for you as well. If you are buying resale housing, there is no 7% GST unless the home has been substantially renovated, and then the tax is applied as if it were a new home. Appraisal Fee. Your lender may require a property appraisal at your expense. A basic appraisal for mortgage purposes will usually cost between $150 and $250. Survey Fee. Your lender may require an up-to-date survey. Ask the vendor to provide one as a condition of your Offer to Purchase, or you may be required to pay to have one done. Property Insurance. This insurance covers the replacement value of the structure of your home and its contents. Your lender will insist on this because your home is the security for your mortgage. Lawyer Fees. Even a straightforward home purchase requires a lawyer to review the Offer to Purchase, search the title, draw up mortgage documents and tend to the closing details. Lawyers fees for a purchase and/or mortgage transaction range widely depending on the complexity of the deal. Mortgage Broker's Fee. A broker may charge a fee to find you a lender. Moving Costs. Don't forget the costs for a professional moving company or a rental truck if you move yourself. For a comprehensive overview, including packing and storage, see the MOVING-section. Status Certificate. A certificate that outlines a condominium corporation's financial and legal state. The certificate and supporting documents will cost you up to $100. Condominium Fees. Condominium Corporations charge monthly fees for common-area maintenance, such as groundskeeping and carpet cleaning. Fees range widely depending on the type of structure but will probably be at least a few hundred dollars per month. Home Inspection Fees. The best way to avoid unpleasant surprises is to arrange for a home inspection before you buy. A good home inspection is an objective, top-to-bottom examination of the home and everything that comes with it. Fees range widely, from about $250 to $375 for a home priced under $400,000. Renovations and Repairs. If you buy a "fixer-upper", an inexpensive home in need of repairs, you will need a renovation fund. One general rule is that renovations always take longer than, and cost more than, you think. Also, the home inspection may indicate that the home needs major structural repairs such as a new roof. FIND YOUR NEW HOME WITH

CONTACT INFORMATION
		Rick McGuigan Toronto real estate sales representative Coldwell Banker Case Realty Phone: 416-696-5100 Pager: 416-461-0925
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