Closing Costs

BUYER'S CLOSING COSTS

Beside legal fees when buying a home, lawyers will charge for disbursements (out of pocket expenses like couriers, travel time, postage requests to the utility companies plus GST)

The adjustments include property & school taxes, condominium fees, utilities & rental income. You may have charges for arranging a new mortgage & appraisal fees.

For a resale home, set aside an extra 2% of the purchase price to cover these additional costs. For a new home, the costs will be slightly more, closer to 2.5-3% of the purchase price. All of the closing costs listed below may not apply to every purchase, consult a professional for a detailed closing cost estimate.

Up Front Cost

• Mortgage Loan Insurance Premium.
• 0.5-3.25% of the principal amount of the mortgage.
• If your mortgage is a high ratio mortgage (less than 25% down payment), you may need mortgage loan insurance. To get this insurance you will be asked to pay the required insurance premium. Your lender may add the mortgage insurance premium to your mortgage or ask you to pay it in full upon closing.

Appraisal Fee

• $250-$350
• Your mortgage lender may require that the property be appraised at your expense. An appraisal is an estimate of the value of the home. The cost is usually between $250-$350 and must be paid when you contract for those services.

Deposit

• This is part of your down payment and must be paid when you make an offer to purchase. It may be up to 5% of the purchase price. The deposit is placed in trust by the Buyer when an offer to purchase is made. The amount is held "In Trust" by the Real Estate Brokerage or lawyer until the sale is closed and then forms part of the purchase price.

Down Payment

• At least 0%-5% of the purchase price is usually required for a high ratio mortgage and at least 25% of the purchase price is usually required for a conventional mortgage. The amount is not financed by the mortgage loan.

Estoppel Certificate

• This applies if you are Buying a condominium and could cost up to $100.

Home Inspection

• $350-$500.
• This varies between firms and the size of the home. Check if the Inspector is registered and has insurance. Check their credentials prior to making an appointment.

Land Survey

• $1000-$2000.
• May not be required as most lawyers use Title Insurance.

Legal Fees

• $550-$1200 (varies between firms).
• Always check a couple of different firms and ask what their legal fees are minus Land Transfer Tax, adjustments and disbursements.

Land Transfer Tax

• This is a mandatory provincial tax payable on all home purchases made in Ontario. The tax is paid by the Buyer on closing and is calculated as follows:
• 0.5% of purchase price on the first $55,000 plus
• 1.0% of purchase price from $55,000 to $250,000 plus
• 1.5% of purchase price from $250,000 to $400,000 plus
• 2.0% of purchase price on homes over $400,000.

Click Here for an automatic Land Transfer Tax Calculator

Disbursements

• $750-$1000.
• Charged in addition to legal fees and may include; title search, mortgage registration, tax certificate, deed registration, zoning, building searches & utility searches.

Title Insurance

• $150-$300.
• This amount varies between firms, price range of property or whether it is a condominium. Your lawyer may suggest title insurance to cover loss caused by defects of title to the property.

Adjustments

• Charged in addition to legal fees and disbursements, may include pre-paid taxes, utilities, condominium fees and the cost of a full talk of oil.

Property Insurance

• The mortgage lender requires this because the home is security for the mortgage. This insurance covers the cost of replacing the structure of your home and its contents. Property insurance must be in place on closing day.

Water Quality Inspection

• If the home has a well, you will want to have the quality of the water tested to ensure that the water supply is adequate and the water is potable. This is usually one of the conditions in the Offer to Purchase.

SELLER'S CLOSING COSTS

Legal Fees

• $450-$650 (Varies with the firm)

Discharge Penalties

• Many mortgage lenders will charge a discharge penalty if you attempt to discharge or pay out your mortgage before the maturity date. Check before selling your home if your mortgage is assumable, portable or can be increased.

Renting

• Check your lease for all your legal obligations. A lease is a legal contract and if you break your lease it could result in financial consequences, which could ruin your credit rating. Under the Ontario Rental Housing Tribunal, you must give 60 days notice to the Landlord. For clarification check with the Ontario Rental Housing Tribunal.

OTHER COSTS

Beside up-front costs there are other expenses to consider

• Appliances. Check to see what comes with the house, if anything.
• Window treatments. Check to see what comes with the house.
• Decorating materials. Paint, wall paper, flooring & tools for redecorating.
• Moving Expenses.
• Renovations or Repairs.
• Service Hook-up Fees, charged for utilities. You may be required to pay a deposit for utilities such as telephone.
• Condominium Fees. You may have to make the initial payment for these monthly fees.

*Please note* All services are subject to GST. All costs are estimates and are not guaranteed.