Up to 1.5% of the purchase price
Closing costs are the fees and disbursements associated with an exchange of real estate. Costs vary depending on the transaction but 1.5% is a good rule of thumb.
- An appraiser is dispatched by the lender to confirm the property is worth the price. This fee is sometimes paid by the bank to get your business but it is not unusual for the lender to ask the buyer to pay, usually between $300 and $500 (or more if it’s a commercial appraisal).
- A professional home inspection is considered mandatory even for bare land, condos, and homes that will be torn down. An inspector will look for things like buried oil tanks, moisture in the structure, and items that will need fixing. The cost is usually between $350-$500 due at the time of inspection.
- Fire insurance is required by all lenders to safeguard their investment in your mortgage. Your lawyer will require proof of insurance at the time of closing so be sure to have it ready for inspection. Insurance varies depending on use and type of property. The cost is between $50 and $150 for most residential houses and condos.
- Provincial land transfer tax is due on all real estate sales. The costs vary but a good estimate is 1% of the purchase price. Refer to the Ontario Government website for details or ask your REALTOR® for an exact amount.
- Provincial sales tax on mortgage insurance. The mortgage insurance is added to the loan advanced by the lender but the provincial sales tax on the insurance is due at closing. Budget 8% of the insurance amount.
- Title insurance covers mistakes or hidden problems with the title that could cause the property to revert ownership back to the seller. The cost is minimal and highly recommended.
- A land survey is required by lenders when one does not exist. Usually there is a survey on file with the province and this cost is waived. For larger parcels or those with ambiguous boundaries, you may want to hire a surveyer to confirm that you’re receiving all the acres advertised. This is less of a problem with city lots and not an issue with condos.
- Legal costs are fees paid to your lawyer to conduct searches and prepare the mortgage and transfer documents. Disbursements include items such as settling contracts for rental equipment transferred with the title (hot water tanks), and miscellaneous expenses.
- Adjustments may include property taxes paid/refunded to seller/buyer, prepaid utility bills, and other charges. Any bills after the closing date are the responsibility of the purchaser.
- New home expenses include:
- In most provinces new homes are covered by a new home warranty program. The cost to the purchaser for this warranty is approximately $600. Should the builder default or fail to build to an agreed-upon standard the fund will finish or repair the deficiencies to a maximum amount. For more information on Ontario new home warranty visit http://www.tarion.com.
- HST is payable on the purchase of a newly constructed homes only. On the offer, the purchase price will say “Plus HST” or “HST Included”. Ask who will receive the New Home HST Rebates. Many builders have included this cost into the purchase price so the buyer does not have to come up with it at closing.
Plan with confidence
Ask us to give you an estimate of your closing costs in writing so you can plan with confidence
Closing costs are due at the time of closing
Your lawyer will ask you to bring a cashier’s cheque to your appointment to cover costs and the remainder of the down payment
Mortgage insurance premiums are included in the loan amount, not paid at closing