How Much Will It Really Cost?
You will need to plan ahead to calculate closing costs when buying a home. There are additional expenses that do not relate directly to the transaction itself, including legal fees and disbursements, provincial land-transfer filing fees and property purchase taxes. Other potential expenses include new home warranty fees, mortgage life insurance premiums, condominium maintenance fee adjustments, utility connection charges, repairs that may be required prior to occupancy, and moving expenses. Not all the following expenses will be applicable in your case, but it is helpful to be aware of them.
Appraisal Fee. Your lender may require that the property be appraised at your expense as security for a loan, because it wants to make sure that the property will sell for at least the amount of money it is lending. ($250 - $350)
Mortgage Loan Insurance Premium. If your down payment is less than 20%, you will have to obtain mortgage loan insurance when you purchase a home. This insurance policy is in place for lenders, if, the borrower defaults their mortgage. You might have the option of adding your premium to your mortgage or pay it in full upon closing.
Deposit. When you make an offer to purchase, this part of your down payment must be paid. With as little as five per cent down payment, all home buyers have access to mortgage insurance enabling them to enter the housing market, as long as they can meet the standards for a five year fixed-rate mortgage.
Down Payment. With mortgage loan insurance from CMHC you can own your home with a minimum down payment of 5%. At least 20% of the purchase price is usually required for a conventional mortgage.
Estoppel Certificate Fee. Outlines a condominium corporation's legal and financial state of affairs. This fee is not applicable in Quebec. ($100)
Home Inspection Fee. You also have to worry about whether the home itself has any hidden problems that could become costly down the road. Professional Certified Home Inspectors, look for those hidden problems for you. The home inspection is an assessment of the condition of the home. It provides you a report on the condition of the physical structure and various systems within a home, depending on the complexities of the inspection. Giving you peace of mind on what may be the largest purchase you'll ever make. ($250-$350)
Land Registration fee (sometimes called a Land Transfer Tax, Deed Registration Fee, Tariff or Property Purchases Tax). This is a mandatory tax in most Canadian provinces, which is between 0.5% and 2% of property value when you buy land. This fee is normally based on the amount paid for the land, in addition to the amount remaining on any mortgage or debt assumed as part of the arrangement to buy the land.
Prepaid Property Taxes and/or Utility Bills. If the previous owner prepaid property taxes or other utilities, such as property taxes, filling the oil tank and so on, they will be credited the prepaid portion on closing.
Property Insurance. Whether you rent or own, you will want to protect your home and everything in it by purchasing property insurance. Property insurance can provide financial protection in the following situations:
- If your home or possessions are damaged, for example, by a fire
- If your possessions are stolen, either from your home or while you're travelling
- If someone is injured while visiting your home
Septic tank. A malfunctioning well or septic system can pose a health risk to your family and neighbours, and can be expensive to repair or replace. It is therefore important to conduct a detailed inspection of both the well and septic systems prior to purchasing a home.
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. ($1,000 - $2,000)
Title Search. Your home had many owners, such as banks, government, construction companies and other people. Title search ensures that you are the only lawful owner of the property. It also checks for mistakes to prevent future problems. This fee can range from ($50 - $200)
Title Insurance. Protects your ownership rights. Title insurance protects you to the full cost of the property in case a person or a company emerges and claims ownership of the property. For example daughter of the previous owner shows up and states she owns the property because her father used to. If she wins the case, title insurance will pay lender whatever home is worth. Title insurance only covers lenders. You need to arrange your own. ($300 - $500)
Water Tests (does not apply to condos). Water tests examine if water supply in your house is safe and drinkable. Professionals measure water mixture levels and report results to you and your lender. Not all our lenders require water tests. Condominiums do not require water tests. ($100 - $150)
Legal Fees and Disbursements. Must be paid upon closing and cost a minimum of $500 (plus GST/HST).Your lawyer/notary will also bill you direct costs to check on the legal status of your property.