Home Closing Costs
Buying a home costs more than the offer you make. There are numerous other expenses that will add to the amount that you’ll need to consider. This purchase price checklist outlines all the costs you can expect. Please note that they can vary by province and are subject to change.
- Purchase Price
- Legal Fees and Registration Costs
- Land Transfer Tax
- Registration Fees
- Home Inspection
- Land Survey
- Survey or Title Insurance
- Property Tax Adjustments
- Interest Adjustment (IA)
The starting point in your calculation… if you’re like most first-time home buyers, you’ll need a mortgage for the majority of this!
Legal Fees and Registration Costs
Although fees vary across the nation, it can cost you up to $1200-$1500 on a purchase, and $500-800 for a refinance.
Land Transfer Tax
A tax payable to the Provincial Government by the purchaser upon the transfer of title from a seller. This amount is usually not anticipated by most homeowners and can be sizeable (click here for the Ontario Land Transfer Tax calculator and here for the Ontario New Home Buyer Land Transfer Tax Refund Bulletin). The amount varies from province to province and is generally a percentage of your purchase price. We can advise you on this matter.
Fees paid to the provincial government for recording a title transfer, mortgage registration or other instrument such as an Assignment or Lien with the local authorities.
A report commissioned by a property owner or purchaser, usually to verify the condition of a property prior to the “firming up” of a purchase agreement. The scope and detail may vary, but most reports outline any particular problems and associated repair costs.
The legal written and/or mapped description of the location and dimensions of your land. The survey should also show the dimensions and placement on the lot of any structure, including additions such as pools, sheds and fences. An up-to-date survey is often required by a lender as part of the mortgage transaction.
Survey or Title Insurance
New to Canadian consumers over the last few years is the introduction of title insurance into the home buying process. Title insurance can be purchased by home buyers to protect against potential deficiencies in a number of areas, such as the land survey. There are numerous benefits to this product, and you should consult your lawyer.
Some local utility companies (hydro, gas, oil) charge a fee on closing to connect new buyers up to their service. More common, however, is an extra charge on the first billing.
Property Tax Adjustments
If the previous owner prepaid property taxes or other utilities, they will be credited the portion on closing. If they paid all their taxes by April, expect a large adjustment cost on closing!
Interest Adjustment (IA)
If you arrange to make your mortgage payments monthly on the first day of the month, and your transaction closes after the first day of the month, your lender will charge you interest on closing to the next interest date, called the Interest Adjustment Date (IAD), when your payment cycle will commence. This can be a sizeable amount, but it is the correct interest you should pay. For example, close on June 15th, pay 15 days interest on closing and start payments on August 1st.