First Time Home Buyer
Closing costs are the fees which are associated with finishing any real estate transaction. In Ontario, these are usually paid for by the buyer, and usually cannot be added to the mortgage. Buyers must have money set aside on top of their down-payment to ensure they can take smooth possession of their property.
In this blog post we will cover the different types of closing costs and how they apply to both resale and pre-construction condos.
Resale condos (those we find on MLS or on MySquareOneCondo) typically have what is commonly referred to as “standard closing costs”. These usually include items like lawyer fees, disbursements, mortgage charge and land transfer tax.
The buyer’s lawyer takes into account any credits the previous owner paid (such as utilities or property tax) and prepares a statement of adjustments. This document breaks down all of the fees and their amounts.
All of these fees are paid for by the buyer, to their lawyer usually 3-5 days before closing. Although there are no set rules on how much the closing costs should be, they typically range around the 2% of the total sale price of any condo purchased in Mississauga. Keep in mind that unlike Toronto, Mississauga does not have a double land transfer tax, making the closing costs lower in Mississauga than Toronto.
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Wednesday, February 24th, 2016 and is filed
One of the main factors, when choosing a new home, for many new home buyers is deciding which city is the right fit. Most people will choose a location close to their work. Others may pick a location associated with higher social status. Which ever factors go into your decision, property tax is something you should consider. Property and land transfer taxes are required to be paid to the owner on your Closing Date. The money is split between the city, region, and province. In this article, we will outline the property tax and land transfer taxes associated with purchasing a property in the Square One region of Mississauga.
When deciding which house to purchase, property tax should play a role in your decision. Mississauga has one of the lowest property tax rates in the Peel region. This makes it especially attractive for real estate investors who wish to invest in the GTA, to invest in properties near Square One.
In the Peel region, residential property tax is calculated using the following formula:
Assessed value x City residential tax rate
Assessed value x Peel residential tax rate
Assessed value x Provincial residential education tax rate
Your total residential property tax bill
Both the Peel and education rates are fixed rates at 0.424% and 0.212% respectively. Between Mississauga, Caledon, and Brampton; Mississauga has the lowest city tax rate.
The total property tax in Mississauga for a condo priced at $269,000 would be $2,492.68 in 2013.
A one bedroom apartment in the Marilyn Monroe Condos across from the Square One shopping centre is selling for $269,000. Let’s look at the property tax between this condo and a similarly priced condo in Brampton.
The total property tax for a condo in Brampton listed at $269,000 would be $3,110.53. As shown in the charts above, property taxes are significantly higher in Brampton as opposed to Mississauga. This makes it more attractive for investors to purchase a home in the Square One region of Peel.
Land Transfer Taxes
Another common tax which is associated with purchasing a new home is land transfer taxes. These costs are added to the purchase price of the home under the closing costs. In Ontario, land transfer taxes remain the same in every city except for Toronto, where additional costs are added. In Ontario land transfer taxes are:
– Up to $55,000 X 0.5 % of total property value
– From $55,000 to $250,000 X 1 % of total property value, less $275
– From $250,000 to $400,000 X 1.5 % of total property value, less $1525
– From $400,000 up X 2 % of total property value, less $ 3525
If we use the example above on a Mississauga condo, than the land transfer tax would be $269,000 x 1.5% – 1525 = $2,510. This cost will be included in the purchase price of the property. If however, the condo was located in Toronto, than an additional transfer tax will have to be included. Toronto home buyers will have additional taxes which are:
– 0.5% on first $55,000,
– 1% on next $345,000, and
+ 2% on portion over $400,000
Purchasing a $269,000 condo in Toronto will now have a Land transfer tax of:
0.5% x 55,000 = $275
0.01% x (269,000-55,000) = $2,140
$2,510 + $275 + $2,140 = $4,925
This may explain why Toronto homes are pricier than other homes in the GTA.
When deciding where you want to purchase a property and at what location you should purchase; the property and land transfer taxes should play a role in your decision as well. Mississauga has the lowest property tax rates in the Peel region, which is something to keep in mind when deciding on where to purchase your property.
About the Author
Allan is an experienced Chartered Accountant, CPA and tax expert. He has extensive experience in handling tax matters and has helped many business owners and individuals save on taxes. He continuously shares his expertise through presentations and other educational venues, whilst coming up with unique tax saving strategies.
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Wednesday, March 5th, 2014 and is filed
It is no secret that many of the condo units around the Square One area are rented out to tenants. In fact, in 2013, there were over 1746 recorded lease transactions on the MLS system in the City Centre area alone. This does not take into account any privately conducted leases, or lease renewals. Although leasing is a viable option for some, most tenants aspire to be owners one day. Over the years, we have helped many tenants transition from renting to owning a condo in Mississauga. In this blog post, we will break down the cost relating to renting and owning a condo in downtown Mississauga.
The Cost Of Renting Vs Owning
In the chart below, we compared the monthly carrying costs of an average priced one bedroom condo in downtown Mississauga. Rent is based on market average of $1,450 per month, and owing is based on a purchase price of $260,000, with $52,000 (20%) down, and at a 3.5% fixed rate amortized over 25 years.
The above chart indicates that owning a one bedroom condo, would typically cost about $163 more per month as opposed to renting it.
The next chart uses the same metrics as above, and calculates the amount of equity which would be accumulated over a 5 year term.
The chart indicates that after 5 years, the owner would pay off over $28,000 in principle, while the renter would build $0 equity.
Anyone who is currently renting, knows that rent rates have been going up steadily over the years. The chart below, on the left, shows the year to year increase of market rent (the amount landlords charge tenants monthly). The second chart, on the right, predicts the capital appreciation (the amount that the property will appreciate in value) over a 5 year period. In our calculation, we have used a variable of 1% yearly for rental increases, and 2% yearly for market average price increases.
Based on historical data, it is safe to assume that a person who is currently paying rent of $1450 per month on their one bedroom condominium in Mississauga, can expect that that amount will increase by around $60 in the next five years. At the same time, a person who is paying off a mortgage for a similar property, would acquire roughly $26,000 in property appreciation over the next five years.
In this blog post we went over the basic costs associated with renting and owning a condo. Based on the figures presented, we saw that owning a condo could cost only $163 more per month than renting it. At the same time, the owner can build equity by paying off their mortgage, and building equity through market appreciation. It’s likely that in less than five years, the owner would have already made back the $52,000 ( $28,000 in principle + $26,000 in capital appreciation) that they have originally put down as a down-payment.
Then why do some people still continue to rent? For some, they are renting because it’s a short term solution and for others it is a temporary solution, in order to save money for a larger down payment.
For anyone who is currently leasing a condo, and is on the fence about buying, I encourage you to check out our rent vs buy calculator. If you are ready to take the next step and see if you qualify, please do contact us and we would be more than happy to help you become a condo owner.
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Tuesday, February 4th, 2014 and is filed
Should I buy in the fall, or wait until the spring when there are more properties? These questions are often asked by buyers searching for Mississauga condos. Although, different Realtors will give different answers, I believe the decision of when to buy really comes down to the individual.
First and foremost, you have to establish your needs, wants and desires when it comes to your dream condo. At the same time you have to be aware of your budget and the carrying costs associated with owning a condo. Buyers should understand that during the spring and summer seasons there will be more selection of properties available for sale, than during the slow winter months. However, at the same time, this also signifies that there is a higher probability that you will be competing against other potential buyers for a condo of your choice. Do not be alarmed if at times the amount needed to secure your property will be over the asking price. You also need to know that the market is really unpredictable. There is no absolute way to know for certain how many available units there will be, how interest rates will be and how stable the market will be in the future. As a general guide, I encourage buyers to follow these eight points:
Buy in Spring/Summer
– If you are a very picky buyer and know exactly what you want. (Example: Looking for only a high floor unit, 1 +den , north facing celebration square with dark hardwood floors)
– If you like to work under pressure in a fast paced environment
– If you are Ok with paying full asking price for the property of your dreams
– If you tried shopping around for a condo in the fall and found nothing particular to your taste
Buy in Fall/Winter
– If you have a pretty broad criteria of what you are looking for in a condo (Example: 2 bedroom, 2 bath, under $350,000, clean unit)
– If you do not like to work under pressure and prefer a slower paced environment
– If you feel that you need to pay below asking price regardless of how nice the property is
– If you tried shopping around for a condo in the spring, and found there are too many buyers competing against you
Once again, the above points are just a general guide based on my own observations. To answer the question – when is the right time to buy a condo? The best time to buy a condo is when you find the one that you really love. There is no prefect “time of the year” to purchase.
Are you a first time home buyer looking to purchase a condo? Remember my services are free, as the seller pays my commission. Contact me, I would love to hear from you!
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Sunday, September 8th, 2013 and is filed
Shopping around for a condo can be an exciting time, especially for first time home buyers. Mixed emotions are present and sometimes significant decisions are made on the spot. During this time, there are numerous things to keep in mind, yet it is easy to get sidetracked and forget what is most important.
In this blog post, I want to cover the three biggest mistakes I see first time home buyers make, when purchasing a Square One condo. I will outline each mistake, identify the common false belief which is then followed by the true fact.
1. Shopping For A Condo Using Only MLS – MLS (Multiple Listing Service) also known as www.realtor.ca is a great starting point for anyone interested in a Mississauga condo. In fact, over 92% of all properties that sell are listed on MLS. However, before any condo is placed on the MLS system and is accessible to the public, it is first placed on www.torontomls.net– a database only accessible to Realtors. Through this internal system, a good portion of real estate properties are sold before the public has a chance to place any offers on them.
False belief: “I do not want to hire a real estate agent when looking for a Mississauga condo because it’s going to cost me a lot of money”
Fact: Almost 99% of the time real estate agents do not charge their clients who are buying a property through them. The real estate agent’s commission is paid out by the seller of the property, which the buyer is purchasing. The other 1% (of the time) were commission is due by the buyer, is when they are under a BRA (buyer representation agreement) contract and the real estate agent introduces them to a property which does not pay the specified commission in the BRA. Most commonly this applies to private sales known as FSBOs.
2. Not Hiring A Real Estate Agent Who Knows The Area – Anybody who has a real estate license in Ontario, is permitted to trade real estate anywhere in Ontario. RECO and REBBA actually prohibit real estate agents from calling themselves “experts” in any particular field or area. However, a lot of the top performing agents like to focus their resources and time on one particular area and by doing so inevitably become the “community experts” . Having a focused approach translates into having a Realtor who understands the community at question. For those seeking a Square One condo, hiring a Realtor familiar with the City Center area, can make the new condo searching more pleasant, educational and save you time and money.
False belief: “My uncle, who is a real estate agent in Toronto, will help me find the best possible deal on a Mississauga condo.”
Fact: Having a distant Realtor in the family is great when you’re selling, but not so good when you’re buying. Any agent can take any property, do a CMA (comparative market analysis) and put it up on MLS for it to sell. However, it takes a lot more skill and practice to answer specific questions a buyer may have about a certain neighborhood. For example, here are some questions you may want to ask your Realtor when seeking a new Mississauga condo: “When was the building built?”, “Who was the builder?”, “How does this condo compare against other condos in the area?” In my opinion, hiring an agent who focuses on one particular area results in a great customer service experience and it saves the client time and money.
3. Not Knowing The Terms Of Your Mortgage – A lot of people get obsessed with finding the lowest possible interest rate on a mortgage. I have seen deals fall apart because clients were upset that the interest rate was 0.10-0.20% more than what they have anticipated. This type of difference in percentage translates only to a few dollars a month. Instead of being solely focused on your interest rate, talk to a mortgage specialist and inquire about the conditions placed on your mortgage. Do you have an option for pre-payment? Can you pay more if you want to? What is the penalty to terminate the mortgage term early? By no means am I a qualified mortgage personal, however, all of these are vital questions you should be asking.
False belief: “I’m going with the cheapest mortgage rate on the market, because that is going to save me the most money in the long run.”
Fact: As stated above, YES, mortgage interest rates are important when buying a Mississauga condo. However, what if you get a 5 year mortgage term and after only 3 years of living in your condo you are forced to sell? Do you know what kind of early termination fees you are faced with? These fees can go up to $20,000 or more! Do your homework.
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Thursday, May 24th, 2012 and is filed
1. Buying a Condo Based On Its Interior/Décor – When you are purchasing a Mississauga condo, you are not buying what is inside the unit but the unit itself. You need to look past the furniture, wall colours and décor and focus on square footage, as well as measuring the unit to make sure that your possessions fit how you envision your unit to look like at the end.
2. Waiting Until Spring To Sell Your Condo – Sure, spring is a very busy season in real estate, however, your condo will sell for its value the rest of the 365 days. It is simply a myth that it will sell quicker in the spring time. People purchase all year round. Just ask yourself – Do people move to Mississauga in the winter? Of course.
3. Not Having A Real Estate Agent – A real estate agent will make sure that your property is listed on MLS. Otherwise, other agents will not know that you are selling your property. At the same time, a realtor can explain everything to you and ensure that you get a fair value for your property. I often see Square One condos listed for sale privately for long periods of time without success. Not surprisingly, the moment the seller lists their condo with an agent, the property ends up selling quick.
4. Purchasing What You Want, And Not What You Need – Before you purchase your next Mississauga condo, you should ask yourself – “What do I need?” This could be, for example, a bigger closet, a larger master bedroom, maybe a balcony etc. It is a good idea to write some options down and tell your real estate agent what you are looking for.
5. Looking At The Perfect Kitchen/But Forgetting Your Finances – Sometimes, we like a property and it’s perfect. Perfect kitchen, big balcony and a spacious master bedroom. Yet, what we should really do first is get pre-approved for a mortgage. Keeping in mind how much we can spend, we can hunt for the perfect property that fits the budget.
6. Believing That Your First Offer Will Get Accepted – The Square One condo market is hot and you cannot expect to make an offer and immediately get the property. This should not discourage you.
7. Being Indecisive – It’s the first property, you like it, but you do not put on an offer because you believe you will find something even better. This way of thinking will make you lose your dream home. It’s never going to be perfect, a 100%. If you like everything but the kitchen cabinets, then you should definitely go for the unit. The cabinets can be upgraded.
8. Trying To Time The Market – Waiting for the best prices in order to buy, or sell. One may be able to predict the market at the minute, or a few months down the road but not in the future. If a financial crisis hits the country or a tornado hits, anything can happen. If the market was predictable a lot of us would be millionaires.
9. We Have To See The Condo To Buy It – This applies to Mississauga pre-construction condos. Developers sell units before the project is complete. Some people say that they cannot use their imagination when looking at floor plans, and that they would rather wait until the condo is built and ready to move in. However, one should keep in mind that prices of units are higher once the condo is complete and ready to move in, as opposed to, when it’s in its first stages.
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Sunday, April 15th, 2012 and is filed
Over the past 2-3 weeks I have been working with several buyers, all looking for a condo at or near Mississauga’s downtown core. The universal problem I am experiencing is locating a property, that fits my clients’particular criteria and which doesn’t sell within the first 5 days, while on the market. By the time my clients get to see the condo, think it over and give me the “go-ahead” to make an offer; that property ends up being sold. Just last Saturday, I had 9 showings booked ahead of time, only to be told that there are no more viewings for 4 of those condos as the properties were already sold conditionally.
What does that mean for Mississauga condo buyers? The Mississauga condo market is hot and time is of essence. If you see a property you like, consider the fact that it might be off the market in a few hours. Also be prepared to go into a multiple offer situation and don’t be surprised if a unit ends up selling over asking price.
The next interesting fact which I would like to point out is the current residential locations of my potential condo buyers. I am having clients contact me from London (Ontario), Hamilton, Brampton, Barrie, Ajax and even Ottawa and Montreal, all hoping to find a condo in downtown Mississauga. When asked why they want to move to Mississauga, I am given a number of reasons ranging from economic growth to believing that Mississauga is a good investment in terms of both personal and private aspects.
This of course is a great sign that people do in fact want to move to Mississauga, since they see the city as, fast paced, expanding and hence with arising opportunities as compared to the city they currently reside in. I do expect this trend to follow in the coming months.
Questions?Comments? Please contact me.
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Monday, January 30th, 2012 and is filed
I often get the following questions asked by buyers looking for Mississauga Condos. What is the best condo layout? What is the worst condo layout? What should I look out for in a condo layout? I always like to say that it all depends on personal preference and style. However, some points are good to keep in mind.
1. Well managed layout – Space is not wasted. Example – too many hallways. Location of the washer/dryer should not be inside a bedroom.
2. Walls – Ideally two bedrooms should not share a common wall between them. It is much nicer to have one bedroom on one side and the other bedroom across from it.
3. Amount of lighting – Having a window in the Master bedroom for more lighting is a must. However, sliding doors where light comes through should be avoided. It is also essential to have lighting or extra lighting in walk-in-closets.
4. Kitchens – Open kitchen concepts have become very popular over the last few years. It makes the entire space look bigger and you are not shut off from view.
5. Spacing – Wide units appear to be more spacious and look great compared to long and narrow units, where you might feel like you live in a corridor.
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Monday, January 23rd, 2012 and is filed
When purchasing a brand new condo in Mississauga, also known as a pre-construction condo, there are a few things to look out for while deciding on the perfect unit.
1. Location – Once you buy any property, you may change many aspects of that property. However, one aspect that you can never change is its location. A condo such as the Absolute Towers at Burnhamthorpe and Hurontario, will be a lot more active and busy, than the Miracle at the west end of Mississauga. Do not be fooled by condo pictures as they are mere artist impressions. It is a good idea to take a look at the neighbourhood and see what is out there.
Therefore, the number one priority when purchasing a new condo in Mississauga is to decide on the lifestyle that you want, and to keep in mind the surrounding area.
2. The floor plan – Memorize your floor plan and take a look at already constructed market comparables. Over the years, condo suites got smaller, yet the price per square foot increased rapidly. In turn, condo developers started to play around with different aspects of floor planning, such as shrinking the size of the furniture on the picture layout. Therefore, what appears to be a queen size bed in the picture, is only a double size bed in reality. Also, a 600 square foot condo may look a sufficient size on paper; however, when built and ready to move into, some might find the space too small for their needs.
3. Pay attention to ceiling height – When buying a new Mississauga condo, know the difference between 8, 9 and 10 foot ceilings.
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Thursday, January 19th, 2012 and is filed
Attention Mississauga condo shoppers! The Mirage condos have now released their VIP agent sale. These are some of the best per square foot condo prices for a brand new condo in the Square One area. In my professional opinion, the mirage condos make a better investment due to the lower price rates, as compared to the condos down the block.
Mirage condos are located at the corner of Confederation and Rathburn in Mississauga. There are those who live, and those who live well. And finally, there are those who choose to live at the cutting edge of style, elegance and convince. Welcome to Mirage. A soaring statement of distinction, rising above the heart of Mississauga’s most desirable neighbourhood. A sleek, modern condominium residence that combines luxury living with a fine roaster of life style amenities.
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Saturday, November 26th, 2011 and is filed