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Is It Possible to Waive Closing Costs Completely When Buying an MLS Listing in Toronto?
Unfortunately no! You would have to pay the closing costs when buying your new home in Toronto. Closing costs usually cover the fees of a range of services - home inspection, title search, appraisal, and more. You need to take the help of these services to make sure the house doesn’t have legal, title, structural, or any other issues. These issues could otherwise become a headache for you later on.
Closing costs also cover property taxes and land transfer tax that are set by the province and are non-negotiable. So, yes, you cannot wave a magic wand and do away with the closing costs. But you can certainly lower the closing costs while buying an MLS listing in Toronto.
Ways to Lower Closing Costs When Buying a Home in Toronto
Look Around at Different Lenders
Usually, closing costs feel too heavy on the wallet because of the hefty fee that the mortgage lender charges. This is why you need to make sure you’re going ahead with a lender that doesn’t charge an unreasonably high fee. And for that, you would have to meet with and compare different lenders.
See how the different lenders compare against each other when it comes to rates, fees, and loan terms. Finally, choose the lender who you feel is offering the best deal. Also, don’t shy away from negotiating the fees with the lender. You never know how a little haggling can help you get a good deal and lower your closing costs.
Sit for a Talk with the Seller
Did you know that you can get a seller concession when buying an MLS listing in Toronto? Let’s fill you in! At times, the seller of a home agrees to cover some or all of the closing costs on behalf of the buyer. Wondering why the seller may lend such a helping hand to you? They might do that when it’s a buyer’s market out there in Toronto. With so many listings on the market, their house might be struggling to get the attention of buyers. Or they might be in a hurry to sell the home and they’re rushing to fix a deal on the home.
So, while you’re sitting at the negotiation table, make sure you bring up the topic of seller concession. You never know it could be your lucky day and the seller might agree to cover your closing costs.
Go for a No-Closing-Cost Mortgage
Another option that you have in your hands is to take a no-closing-cost mortgage. In this loan option, you do not have to pay the closing fees on the closing day. Instead, the lender rolls this in your loan amount. So, yes, you won’t have to pay the fees on the closing day of the MLS listing in Toronto when you opt for a no-closing-cost mortgage. But your loan amount and monthly payments will hike up. Also, there are not many lenders who offer the no-closing-cost mortgage to homebuyers. This means your options will be limited while searching for a mortgage lender.
Increase Your Down Payment Amount
If possible, try to put down a little more towards the down payment of your new home. You must try to put down at least 20% for the down payment. Doing this will help you achieve two things. First, since your down payment is 20%, you won’t have to get private mortgage insurance (PMI). So, your monthly payments after you become a homeowner won’t be much. Secondly, since you’re putting down a larger down payment, you’ll have to borrow less money from the lender. The lesser your loan amount, the lower your closing costs will be. So, by increasing your down payment, you would be basically killing two birds with one stone!
Shop Around for Different Title and Insurance Companies Too
Are you someone who likes to stay on the safe side? Then, we’re guessing you would definitely get the title and homeowner’s insurance. You would have to pay the fees for this insurance on the closing day of the MLS listing in Toronto. So yes, insurance fees are a closing cost you cannot avoid but you can certainly bring it down. How? By checking out different insurance companies and in the end, choosing one that offers the best deal. The insurance company you pick must be offering you the best price and maximum coverage for your new home. Some insurance companies also offer you a discount when you bundle your policy with your other existing policies. So, make sure you check that too while picking the insurance companies.
Choose the Closing Date Wisely
The closing date you choose can have an impact on the closing costs you would have to pay. Here are a few examples -
- Property Taxes - You might already know that in Canada, you pay the property taxes in advance at the beginning of the year. So, if you close on the MLS listing in Toronto in January, you would have to pay property taxes for the entire year. This might be okay if you move into the home immediately. But if you would move into the home after April of that year, you won’t have a great deal. You would have to pay property taxes even for the months when you were not staying in the home. This is why choose the closing date near to your moving day or if possible, towards the end of the year.
- Moving Costs - Next you might know that in spring and summer, MLS listings in Toronto stay in high demand. But as fall and winter come in, the demand drops and also the moving companies become less busy. This means you would be able to bag a big discount if you close and move into a home during non-peak months.
As you’ve seen, there are a lot of ways in which you can bring down the closing fees. But do not go ahead to buy a home expecting that you could waive these closing costs entirely somehow. These fees cover certain services that are non-negotiable (property taxes, land transfer taxes). And some services are there to ensure the home you’re buying has no legal or other issues. So, just like you’re working tirelessly to save for the down payment, keep aside money for the closing costs as well. This way, you won’t be taken aback by any surprises while buying the MLS listing in Toronto.