Knowing what your current home is worth goes a long way to knowing what you're willing and able to spend on your next home. But with the crazy appreciation in the market currently, this is not a number that can easily be nailed down.
A more predictable part of the price of your move that you'll want to factor in, is the cost of buying and selling itself. It's the haircut you'll take for going from a to b. There's a helpful rule of thumb for that to keep in mind as you factor in your costs. Assuming you're moving up (to a larger, or more finished, or more expensive neighbourhood) take 9% of the new property price and you'll have a number very close to the cost of moving. 4%, over and above your new property's price tag will go to the cost of the buy, while 6% included in your sale price of your current home covers the cost of your sell.
Here is the breakdown:
Most of the 4% cost of buying comes from land transfer tax, which is over and above the price of the home, payable upon property closing. For a purchase over $1 million for example, that tax hovers around 3.5%. A helpful tax calculator is available here > land transfer tax calculator
The other 0.5 % is absorbed by legal fees, along with title insurance, possible bank appraisal, mortgage closing or transfer fees, disbursements and adjustments in addition to moving expenses.
Example: If you are purchasing a $1.5 million dollar home, you can expect to require an additional $60,000 approximately to close the deal, $52,200 of which is land transfer tax.
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The sale of your property will cost you approximately 6% of what you sell your house for. Some of that cost is out of pocket when preparing your property for sale. Most however, is absorbed into the sale price of your home. 5% traditionally goes to realtor commissions: 2.5% to the selling agent and 2.5% to the buying agent, + 13% HST. Legal fees + HST along with disbursements form much of the rest.
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