It’s no secret that purchasing a home in Toronto is no inexpensive endeavour. In fact, for most people, it almost certainly ends up being the most expensive transaction of their life.
With that, tons of attention is given to the most relevant cost associated with the acquisition of a home – the final sale price of the property itself. Doing so however, overlooks many additional costs associated with buying a home within the transaction itself, and then also a failure to consider the monthly and yearly costs with home ownership can set one up in a financially challenging situation.
In this blog post, we’ll explore what it costs to own a home in Toronto, and take a look at the costs at the point of the transaction outside of the actual final sale price, as well as the ongoing costs one must be cognizant of.
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How Much Do Homes Cost in Toronto?
Let’s start with the cost of the home itself. As of the TRREB data which came out following November of 2024, the five regions of Toronto have an average cost of home of the following:
- City of Toronto – $1.08M
- Peel Region – $1.04M
- Halton Region – $1.27M
- York Region – $1.31M
- Durham Region – $904K
What’s the correlation between interest rates and home prices in Toronto? Read our post: Are Interest Rates Actually Important When Buying a House right here.
How Much Do Real Estate Transactions Cost in Toronto?
In terms of transaction costs, there are five major expense.
Downpayment: As of December 15th, 2024 the CMHC downpayment requirements have changed. They are as follows:
- Up to $500,000: A minimum of 5% down payment
- $500,000–$1.5 million: A minimum of 10% down payment
- Over $1.5 million: A minimum of 20% down payment
For example, on a $1.1M home, the downpayment required would be $25,000 for the first portion of the payment, and an additional $60,000 for the next portion, totalling a cost of $85,000.
Do you have more questions about affordability when buying a home in Toronto? Here are few more posts you might find interesting:
- Should You Compromise When Buying a Home?
- Can You Still Find Cheap Real Estate in Toronto?
- How to Choose the Right Type of Mortgage
However, the second consideration for a transactional charge is mortgage insurance. Should one choose to make a downpayment of less than 20%, they are required to insure their mortgage through CMHC.
This is calculated as a percentage of a purchase price. If your downpayment is 5%, you have a one-time payment of 4% of your purchase price, and if the downpayment is 10% there is a 3.1% premium for your purchase price. This cost can be paid in a lump-sum at the time of the transaction, or blended into the mortgage payments for the length of your mortgage.
In Ontario, buyers pay a land transfer tax upon purchasing a property. Toronto buyers also pay a municipal land transfer tax which is the same amount as the provincial cost. The rates calculated as follows:
- Provincial: 0.5% on the first $55,000, 1% on the next $195,000, 1.5% on the next $150,000, and 2% on anything above $400,000
- Municipal: As stated, the Toronto land transfer tax is calculated at the same rate as the provincial rate, so you would double the above amount.
The province and the city have introduced rebates for first-time homebuyers, which amount to $4,000 on the provincial land transfer tax and $4,475 on the municipal land transfer tax.
Keep reading these posts next to learn the ins and outs of Toronto real estate:
- When is the Best Time to Buy a Home in Toronto
- What NOT to Do Before Buying a Home
- Is Seasonality Over in Real Estate?
Are there Any Other Fees to Know When Buying a House in Toronto?
A real estate lawyer is required to facilitate a transaction in Ontario. In Toronto, a typical lawyer fee will range from $1,500 to $3,000 which covers the title searches, document creation and registration of title.
Finally, most people who transact real estate in Toronto will elect to purchase Title Insurance, which protects the consumer against title-fraud and disputes over title and property. This will typically cost somewhere between $200 and $500.
Why is title insurance so important? Read our post The Truth About Title Search right here.
What is the Actual Cost of Home Ownership in Toronto?
In terms of ongoing costs of home ownership, the first non-mortgage expense to consider is property taxes, which in Toronto is based on the assessed value of the property. It’s important to note that in almost every instance the “assessed” value of a property is less than the cost it would sell for on the open market. The tax is calculated at 0.63% of the assessed value, so a property with an assessed value of $1,000,000 will have a property tax of $6,300 annually.
With regards to the mortgage payment, which will be the largest cost of home ownership in almost every case, the amount will depend on the loan amount, the amortization period, and the interest rate. There are plenty of mortgage calculators available online, but as an example, a $700,000 mortgage with a 5% interest rate amortized over 25 years will work out to approximately $4,070/month.
Utilities are another ongoing cost of home ownership. While Toronto’s climate makes certain payments vary wildly by season, and the age, size and style of a home can impact these costs significantly, it is reasonable to expect the following:
- Hydro: $100 per month, more in the summer if you have AC and it is powered by electricity.
- Gas: $50-$200 per month, with a significant increase in cost during the cooler months.
- Water/Waste: $50-$75/month.
- Security System: $20-$50/month
- Telecom: $100-$250/month, depending on the needs and robustness of your plan.
Cost of Condo Ownership in Toronto
If the property you are purchasing is a condo, there are monthly maintenance fees associated with the management and upkeep of the common areas and amenities of the condo building. A newer building will cost roughly $0.60/square foot, and an older building that’s managed efficiently will approach $1/square foot. You can even see buildings with maintenance fees in excess of $1/square foot, but that is rarer and is a detriment to the underlying value of the unit. A $1,000 square foot unit with maintenance fees of $0.8/square foot will cost $800/month.
Condo questions? Here are some more posts you might find helpful:
- New Construction Vs. Resale Condo in Toronto: What’s Best for Me?
- Are Assignment Sales Still Happening in Toronto?
- What is the Purpose of a Condo Association?
Something to Consider
On top of all that, there is the cost of general home maintenance. Whether this is updating out of date features or fixtures, dealing with the impact of the environment the property finds itself in, or fixing items that break, a good rule of thumb is to allocate 1% of the homes total value on an annual basis. If a home is worth $1,500,000, it’s responsible to account for costs of $15,000.
Ultimately, home ownership is a massive financial decision, and getting pre-approved and using that pre-approval to build a realistic budget, while accounting for closing costs and creating an emergency fund is a responsible way to ensure you’ll navigate the undertaking in a stress-free way. Partnering with an experienced realtor who you can trust will allow you to get the full understanding of the costs, and prepare you and your family financially for your exciting next step.
If you have any further questions about the costs of real estate, or want to discuss your next steps, please never hesitate to reach out. We are always happy to connect!
Give us a call at 416.642.2660 or email us directly at admin@torontorealtygroup.com.
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