If you’re thinking of buying a home soon, it’s important to educate yourself on both your local real estate market as well as how large of a mortgage you can actually afford to take on. In this series, we look at the average home price in your city or province and walk you through the mortgage payment calculations with our provincial mortgage calculator. For today’s post, we are going to calculate the mortgage payment on an average home in Ontario.
According to the Canadian Real Estate Association (CREA), the average home price in Ontario is $409,102. This figure has risen over the last year, but the average home price in Ontario still remains significantly lower than average home price in Toronto. So, what does owning an average Ontario home look like in terms of a monthly mortgage payment? Let’s look at a home in Ottawa that is priced close to the provincial average home price and run the numbers with our Ontario mortgage calculator.
The three-bedroom house seen above is located in the Hunt Club Park area of Ottawa and is priced at $409,000. Using this home, we will walk you through the potential mortgage payments, using both a 5% and 20% down payment. For both calculations, we are using a 5-year fixed mortgage rate of 2.79% and an amortization period of 25 years.
Looking to determine your mortgage payment?
With a 5% down payment:
A 5% down payment on a $409,000 home is $20,450. Since the down payment is below 20%, you will also be required to pay Ontario CMHC insurance (mortgage default insurance). In this example, the Ontario CMHC insurance is $10,685 and is included in the total mortgage of $399,235. Assuming a 5-year fixed rate of 2.79%, your monthly mortgage payment would be $1,847 for this home.
With a 20% down payment:
A 20% down payment on a $409,000 home is $81,800. And because you made a down payment of 20% or more, you would not need to pay for Ontario CMHC insurance. Therefore, your total mortgage would be the purchase price minus your down payment ($409,000- $81,800 = $327,200). Assuming you took on a 5-year fixed mortgage rate of 2.79%, your monthly mortgage payment would be $1,513.
Aside from your mortgage, there are a number of closing costs to consider. In Ontario, home buyers must pay the Ontario land transfer tax (LTT). For this example, your total LTT would be $4,655. If you are a first-time homebuyer, you would be eligible for an LTT rebate of $2,000. The LTT is an additional closing cost you would need to save up and pay for in cash on closing day. Consider hiring a real estate lawyer in Ottawa and a home inspector in Ottawa to assist you with Ottawa closing costs.
Our calculator tells you what your monthly mortgage payment would be but you can also choose to make payments on your mortgage loan more frequently. Most lenders offer the option of monthly, bi-weekly or accelerated bi-weekly payments. To learn more about these, you can read about mortgage payment options here.