Despite
the low cost of carrying a mortgage these days, you should keep in mind
"closing costs” in addition to your down payment for that dream home.
These various
charges can add up, and for the most part they are all legally required
payments in buying a property. Here is a list of most of your major
"closing
costs."
Legal fees:
Since a lawyer is an essential part of your home buying team, the work
provided involves fees. Most legal fees include searching the title of
the property, arranging a property survey if necessary and handling
other
disbursements as required.
Mortgage
insurance and application fee: For any high ratio mortgage, which
is
any mortgage in which 75 or more per cent of the house's purchase price
is covered by the mortgage, the lender requires mortgage
insurance.
Mortgage
broker's fee: A mortgage broker may charge a fee to set up a
mortgage
for you. In some cases the fee may be included with the legal fees if
your
lawyer arranges the mortgage, or included in the lender's fees if you
deal
directly with a lender such as a bank.
Property
insurance: This insurance covers the replacement value of your home
and its contents. Most mortgage lenders will require proof that you
have
this insurance before processing a mortgage.
Home Inspection:
A professional home inspector knows what to look for and can confirm or
add to the information you've gleaned from the Realtor or your
inspection.
Basic inspections on most houses are usually in the $150 to $300 range.
Land transfer
tax: Anyone buying property in Ontario must pay a land transfer
tax.
It usually runs between 0.5 to two per cent of the home's purchase
price,
depending on that price.
GST:
GST is payable to some degree on the purchase price on all new homes,
although
partial rebates are available on the purchase of most homes. A resale
residential
home is usually exempt from GST. Various other closing fees, however,
do
involve payment of GST.
Extra charges:
You may also be required to pay the costs of such things as heating oil
in the tank, or other costs incurred by the seller, but included with
the
house, prior to the closing day.
Hook-ups:
There may be hook-up charges required for appliances and services such
as telephone, TV cable, hydro and other utilities.
Moving costs:
Don’t forget the basic costs involved in moving from your old place
into
your new home, particularly if you use a professional moving company.
A Realtor
can explain further details on closing costs. Just remember to add them
to your financial plan when saving to buy a home.
Ontario
Real Estate Association
Commercial
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