During the planning process of making a home purchase having a very close estimate of closing costs is imperative to making your purchase successful. Below you will find all buyer home closing costs.
Land transfer tax – Approximate cost: varies
This tax is charged whenever a property changes hands and the tax amount is based on the purchase price. For example, if you are purchasing a home in Toronto for $300,000, the provincial land transfer tax is $2,975 and the municipal land transfer tax is $2,725 for a total cost of $5,700. This example is an illustration only, for exact LTT amounts please click here.
HST on insurance for mortgages – Approximate cost: varies
Usually, mortgage default insurance premiums range between 0.5% and 2.75% of the principal plus applicable fees. If your down payment is less than 20% of the purchase price of your home, you must pay a one-time insurance premium. This can be added to your mortgage, however, the HST on the insurance premium has to be paid on closing. For details click here.
Title insurance – Approximate cost: $400 – $1,000
Title insurance is optional in theory only. Most lawyers will insist on it and it covers problems that may arise due to encroachment issues (for example, a structure on your property is actually
part of your neighbour’s property and needs to be removed), existing liens against the property’s title, title fraud, non-discharged mortgages and other issues relating to the property’s previous owners.
When I find the home I want, how much should I offer? I love this question, as negotiating is my area of expertise. Even when the GTA experienced a hot seller’s market, there were still deals to be had. Questions like – What is the seller’s motivation? What are similar homes in the area selling for? What is the current inventory of homes for sale in the area? How long has the home been on the market? If there’s a set offer date should we consider putting in a “bully offer”? – are just some of the questions that we try to answer in order to try to gain leverage to enhance your negotiating position. As an example, in a recent transaction where I was working for the buyer, we were able to find out from the listing Realtor that the sellers of the property already purchased another home with a set closing date. Armed with this information we made a strong “bully offer” before the set offer date and got the property for roughly 3% less than my buyers were ready and willing to spend. While 3% doesn’t sound like much, on a $500k purchase it equals approximately $15,000.
Property valuation – Approximate cost: $400
Used to determine the property lending value for the mortgagor. The majority of A lenders will pay for the appraisal at the moment.
Home inspection – Approximate cost: $400
The home inspector evaluates the structures and systems that make up your home and provides you with a report.
Interest adjustment – Approximate cost: $100 – $500
You have to pay interest on any gap between the closing date of the purchase and the first mortgage payment date. You can avoid an interest adjustment by arranging the date of your first payment to be exactly one payment period after your closing date.
Legal fee – Approximate cost: $2000
Ensure your lawyer’s quote includes all related expenses and disbursements, not just legal fees.
Property survey – Approximate cost: varies
Although this is not a must-have as most lenders will accept title insurance in lieu of a property survey, it is highly recommended. Check out this article on the importance of a survey.
Adjustments – Approximate cost: varies
Adjustments are items that have been prepaid by the seller which is applied beyond the closing date. The amount that has been over paid by the seller is pro-rated, and payment is made to the seller as an adjustment on closing.