day you actually become the owner of a house is called "closing day" or
"possession day". On closing day the lender will provide the mortgage
money to your lawyer and you will have to provide your lawyer with the
balance of the funds required to close the deal. There are also some
up-front costs you should keep in mind and plan ahead to cover them. These various
charges can add up, and for the most part they are all legally required
payments in buying a property. We put most of the associated costs
under the term "closing costs” to help you calculate and cover required payments and make sure things go smoothly. Fees
vary greatly by location and, of course, are relative to your house
price. As a rule of thumb, count on between 1.5% to 4% of a home's
selling price plus your down payment.
Here is a list of most of your major closing costs:
Appraisal Fee: Your
mortgage lender may require that the property be appraised at your
expense. An appraisal is an estimate of the value of the property to
determine whether the selling price is reasonable for the market. A
professional appraiser's fee is usually between $250 and $350.
is part of your down payment and must be paid when you make an Offer to
Purchase the property. The cost varies depending on the area and value
of the home. Deposit is part of your down payment.
Down Payment: This
is at least 5% of the purchase price for a high-ratio mortgage and at
least 20% of the purchase price is usually required for a conventional
Estoppel Fee (if applicable): This applies if you are buying a condominium or strata unit. Estimated cost about $100.
You may also be required to pay the costs of such things as heating oil
in the tank, property tax, prepaid utility costs or other prepaid costs incurred by the seller, but included with
house, prior to the closing day.
GST/HST: This tax varies by province and type of home; it is payable to some degree on the purchase price on all new homes,
partial rebates are available on the purchase of most homes, depending on province. A resale
home is usually exempt from GST/HST. Various other closing fees, however,
involve payment of GST/HST.
Home Inspection Fee:
A home inspection is a report on the condition of the home and may cost
over $400, depending on the complexities of the inspection.
Basic inspections on most houses are usually in the $400 to $600 range.
Land Registration Fees:
They are sometimes called a Land Transfer Tax, Deed Registration Fee or
Property Purchases Tax. Anyone buying property in Ontario must pay a
The cost is a percentage of the property's purchase price and may vary.
It usually runs between 0.5 to two per cent of the home's purchase
depending on that price.
Legal Fees and Disbursements:
A lawyer is an essential part of your professional home buying team,
provided involves fees. Most legal fees depend on the complexity of the
transaction. Your lawyer/notary will also bill you direct cost to check
on the legal status of your property. Shop around, ask for an estimate
beforehand so you know what to expect.
Loan Insurance Application Fee and Premium:
If you need a high ratio mortgage, which
any mortgage with less than 20 per cent of the down payment, you may
need mortgage loan insurance. To get this insurance, you may be asked
to pay the required application fee and premium. Lender can add
mortgage loan insurance to your mortgage and include it in your monthly
payments or you can pay it in full before closing.
Mortgage Broker's Fee: A mortgage broker may charge a fee to set up a
for you. In some cases the fee may be included with the legal fees if
lawyer arranges the mortgage, or included in the lender's fees if you
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
this insurance before processing a mortgage.
Survey or Certificate of Location Cost:
The mortgage lender may ask for an up-to-date survey or certificate of
location prior to finalizing the mortgage loan. If the seller does not
have one or does not agree to get one, you will have to pay for it
yourself. Estimated cost between $1,000 and $2,000.
Title Insurance: This
coverage (usually suggested by lawyer or lender) protects you from
title complications and cover loss caused by defects of title to the
property, including real estate fraud. Estimated cost upwards of $400Water Quality Inspection: This
is inspection of the quality of the water. If the home has a well, the
water has to be tested to ensure that the water supply is adequate and
the water is potable. If the seller doesn't have one or does not agree to get one, you will have to pay for it yourself.
Beside "closing costs", there are some other costs to consider:
Appliances: Check out first to see what comes with the house or request some in your Offer to
Purchase the property.
Condominium Fees (if applicable): If you are buying condo unit, you may have to pay the initial payment for these monthly fees.
Decorating Materials: Paint, flooring, wallpaper and tools for redecorating.
Hand Tools/Equipment: You may need some hand tools, gardening equipment, snow clearing equipment or tools for your new home.
There may be hook-up charges and deposits required for appliances and services such
as telephone, TV cable, hydro and other utilities.
forget the basic costs involved in moving from your old place into your
new home, particularly if you use a professional moving company. Just
remember to add them
to your financial plan when saving to buy a home.
Renovations and Repairs: You may need to do some renovation and/or repairs in your new home.
Window Treatments: Check out first to see what comes with the house.