Typical Real Estate Closing Costs
Today, it is possible to buy a home with little money down, however, everyone who buys any form of real estate will have some other costs to consider. Closing costs vary by jurisdiction and transaction, but the following chart will give you an idea of expenses to be considered:
Deposit: Usually submitted upon acceptance of an Offer to Purchase. The deposit is usually held in trust by the Listing Brokerage and it forms part of the down payment on the closing date. Typically ranges from $1,000 to 5% of the purchase price
Septic Inspection Report: Approximately $600 – $800
Legal Fees & Expenses: Varies but normally $900 to $1300 for legal fees, plus disbursements.
Land Transfer Tax: This is a provincial tax levied when title to land is transferred. It is payable by the Buyer upon the registration of every transfer of land. (i.e. on closing day) The calculation of this tax on a single-family home in Ontario is as follows:
|Purchase Price||Calculation of LTT|
|0 – 55,000||.005 x Amount|
|55,001 – 250,000||(.01 x Amount) minus 275|
|250,001 – 400,000||(.015 x Amount) minus 1,525|
|400,000 +||(.02 x Amount) minus 3,525|
|2,000,000+||(.025 X Amount) minus $13,525|
Home Inspection: $450-$700 plus HST. Not mandatory, but recommended!
Bank Appraisal Fee: Ask your lender
Mortgage Application Fee: Find out whether or not your lending institution charges to process your mortgage application. In many cases, if you are dealing with a bank that you have other accounts with, they will waive the application fee.
HST: Typically, resale homes are exempt from HST unless it has been “extensively renovated.” HST is payable on the fees paid to real estate agents, mortgage brokers, appraisers, lawyers fees, etc. A new home is not exempt from HST even if the home is in an individual’s name but may be rebated in part if it will be your principal residence. HST may be paid by either the builder or the buyer, depending on what is negotiated at the time of purchase. HST is payable on hi-ratio (ie. CMHC Insurance Premium) loan insurance premium.
Survey: Varies and depends on property size
Title Insurance: Title insurance is an insured statement of the condition of title or ownership of real property, at the time the policy is issued. Approximate cost $250 to $350 depending on the value of the house and the insurer you choose.
Status Certificate: $100 and only applies to condominiums
Tax Adjustment: Depending on what the Seller has already paid for the year, there will be an adjustment based on the number of days you will own the house in that year.
Mortgage Insurance Premium: This premium is usually only applicable if you are putting less than 20% of the purchase price as a down payment on a residential home. You have the option of adding the premium to your mortgage and amortizing it over the term of your mortgage. See below for typical mortgage insurance premiums, from Canada Mortgage and Housing Corporation:
Fuel Adjustment: In the case of oil heat, the Seller may top up the tank on closing and you would be charged that amount.
Homeowners Insurance: Varies
Moving Costs: Varies
Service and Utility Connections: Depends on the service provider.
This summary of closing costs for real estate is a guideline only to assist you but should not be relied upon. For a closer examination of costs, it is best to contact each party directly.
Rebates, Credits and Programs to Note:
Using RRSP savings towards a home purchase can be done through the Federal Home Buyers Plan. For details, visit: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html
First-time Buyers may also be eligible for a Federal Home Buyers Tax Credit. Learn more details at http://www.cra-arc.gc.ca/gncy/bdgt/2009/fqhbtc-eng.html
In addition, note that First-time Buyers are eligible for a land transfer tax refund of up to $2,000. Your lawyer can assist you in applying for the rebate. Find out more at http://www.fin.gov.on.ca/en/refund/newhome/index.html
Marg Scheben-Edey is a Broker with RE/MAX four seasons realty limited, Brokerage in beautiful Collingwood, ON. With three decades of experience, Marg is a leader in the local real estate marketplace and is ready to help guide both Buyers and Sellers in achieving their real estate goals. Email Marg