CLOSING COSTS TO PREPARE FOR WHEN PURCHASING REAL ESTATE
BUYING A HOME? PREPARE FOR THESE COSTS OF HOMEOWNERSHIP
When purchasing a home, whether Toronto real estate, or in another area of Canada, you will be subject to additional costs aside from your down payment and monthly mortgage payments. Our top mortgage brokers have got the details on what kind of funds you’ll need to have saved (an additional 3%-4% of the purchase price is a good budget), so that you can be prepared for closing day and beyond.
Property Appraisal Fees
In the GTA area, the going rate for a home appraisal in 2023 is approximately $500. Some lenders offer rebates or promotions for this fee – ask our mortgage professionals for more details!
Mortgage Loan Insurance Premiums
Lenders will require mortgage loan insurance if a borrower has a down payment of less than 20% of the purchase price of the home. The Mortgage Loan Insurance premium is calculated as a percentage of the loan – the higher your down payment, the lower your mortgage loan insurance premium. Rates vary between 0.6% and 4% for new purchases.
Land Transfer Tax
This cost is calculated based on a percentage of the purchase price of your home. When you purchase your first home, you may qualify for a reduced (or even exempted) land transfer tax fee. Learn more with our Land Transfer Tax Calculator and Guide or connect with one of our mortgage agents who can walk you through the steps of calculation.
Home Inspection
As potentially the largest financial investment you will make in your lifetime, it’s recommended that you hire a professional and trusted home inspector who will assess the property you’ve made an offer on. A home inspector will detail their findings, such as any maintenance and repair concerns to ensure you have the knowledge you need to make an educated purchase. Budget $400 – $600 for this service in Toronto.
Legal Fees and Disbursements
Whether you’re in Toronto, or located in another Canadian city, you’ll need to invest in a real estate lawyer or notary to complete your real estate transaction. The fees of approximately $500-$1,000 include the time to prepare closing documents, complete disbursements, allot funds and transfer the property title. These tasks if not completed correctly can delay your possession date or create costly future problems.
Title Search
Many lenders will require title insurance as it is a way to protect themselves as well as you, the buyer. A title search, at the cost of approximately $20, determines if there are any property ownership disputes, unpaid back taxes or existing liens against the property.
Utility Connection Charges
Utility companies, such as water, electricity, natural gas and communications services may charge or hold a fee to set-up your services. Enquire with your local utility customer service departments prior to finalizing your purchase contract to find out more about these fees in your area.
Professional Moving Services
If you’ve got a more extensive move, or valuable items that require professional services – hiring the moving pros is the way to go. Moving a two-bedroom unit in Toronto to your new home? Budget around $2,500-$3,000 to get your belongings from point A to point B safely.
Home Insurance Costs
After the incredible journey of purchasing a home – do not forget to insure your precious property and its belongings. Connect with your trusted local insurance professional, as home insurance is based on square footage, structure type, distance to fire services, likelihood of natural disasters, internal contents and so much more.
Annual Property Taxes
This is a tough calculation to ballpark as your property taxes are based on a municipal rate that is levied against your assessed value, versus the amount you paid for a home. The quickest way to determine your annual property taxes is to ask your REALTOR® to obtain the most recent property tax statement from the current owners prior to purchase.
Sales Tax (For New Properties)
When purchasing a new home in Ontario, you have to pay the 13% HST, which is the combination of 8% PST (provincial) and 5% GST (federal) taxes. A portion of this tax is often returned to buyers – connect with our team of mortgage advisors to learn more.