Typical Closing Costs Associated with Buying a Home
When buying a home, you will discover that the purchase price is not the only expenditure.
There are other costs you'll encounter and have to consider.
1. Appraisal Fee's ( $250- $350 )
If you're going to have a mortgage, the lender will want the property appraised before the loan is issued.
2. Home Inspection ( $300 - $500 )
A home inspection is not required but is often recommended. An inpsector will evaluate the property's mechanical systems and structure as well as for mold, asbestos and overall general condition of the property and issue an extensive report.
3. High Ratio Mortgage Insurance ( 0.60% - 6.25% )
If you are putting less than 20% down on the purchase price of the home, you will have to acquire Mortgage Insurance which is a one time lump payment added to your mortgage.
***There is also a sales tax that is charged on the insurance amount that will not be added to the mortgage. This cost is paid out at closing.***
Up to 25% premium refund may be available when CMHC Mortgage Loan Insurance is used to Finance an Energy-Efficient Home.
4. Land Transfer Tax ( Click Here for Calculator )
Land transfer tax is collected on closing when changing ownership. There are 2 calculations. If you make a purchase outside the
Toronto area, you'll only pay the Ontario LTT but if you purchase a property in Toronto, you'll have to pay 2 Land Transfer Tax.
Ontario Land Transfer Tax:
0.5% of the value of the property up to and including $55,000
1% of the value which exceeds $55,000 up to and including $250,000
1.5% of the value which exceeds $250,000 up to and including $400,000
2% of the value between $400,000 and $2,000,000
2.5% for amounts exceeding $2,000,000, where the land contains one or two single family residences
Toronto Land Transfer Tax:
0.5% up to and including the frst $55,000 1% of the value which exceeds $55,000 up to and including $250,000
1.5% of the value between $250,000 and $400,000
2% of the value between $400,000 and $2,000,000
2.5% of the value over $2,000,000
***LTT Rebate for 1st time home buyers up to $4,000***
5. Title Insurance ( Starts at $250 for the average home )
Title insurance is another cost that is not a requirement but is surely recommended. In fact, some lawyers won't close a deal without a Title Insurance Certificate. The purpose of title insurance is to protect you if there’s a problem with your title. Those problems can turn
into expensive nightmares in the small chance that you encounter them. Examples include ownership disputes on your property, title fraud, un-discharged liens, encroachments, zoning issues, survey problems, property tax arrears and so on.
There are two broad types of title insurance:
1. Homeowner policies, which:
- Cover the homeowner
- Last as long as you own the property
- Are priced based on the property value
2. Lender policies, which:
- Protect the lender’s interest in your mortgage
- Last as long as you have your mortgage
- Are priced based on the mortgage size
6. Legal Fees and Disbursements ( $100 - $1500 Fees ) and ( $400 - $500 in Disbursements )
Lawyers usually charge a standard fee to close a typical residential transfer of ownership. The disbursements include faxing, photocopying, Registered mail charges, registration on the Land Registry and anything else related to processing the transfer of title.
7. Home Insurance ( $1,000 to $2,000 )
You must arrange Home Insurance which includes Nre protection. This is a requirement if you are securing a mortgage. The lender will not transfer the funds until there is proof of insurance and you will not be able to close on the property.
8. Adjustments ( $200 or more )
Adjustments are calculated at the time of closing by your lawyer and issued on a Statment of Adjustments. These costs usually reimburse the owner for overpayment of taxes and utility charges.
9. Property Survey ( $1,000 to $2,000 )
It's a document that illustrates the property boundaries and measurements, specifies the location of buildings on the property, and indicates any easements or encroachments. This may not be required if Title Insurance is obtained.
***All costs are for illustration purposes and considered average***
Miscellaneous Costs
There are other costs involved in the purchase of a new home that are not part of the purchase but part of the process. Below are a few examples.
1. Moving costs
2. Utility set up fees
3. Minor repairs
4. Cosmetic touch ups
5. Furniture purchasing
6. Time off work
...and other miscellaneous expenditures.
