Real Estate & Mortgage Broker

Closing costs are a list of charges your lawyer presents to you on the closing date of your home.  Many people are surprised at the additional costs over and above the price of the home.  According to the CMHC and Genworth Financial you should have at least 1.5% of the purchase price for closing costs in addition to the down payment (have around 2.5% to be on the safe side).  The costs vary among provinces and cities.

Below you will find a brief explanation of these costs.  Please note these are some of the closing costs you may encounter depending on your specific situation.  Use this as a guideline then talk with your lawyer who can provide a more realistic estimate for your situation.

Appraisal Fee Generally Required with New Homes

An appraisal provides the lender with a professional opinion of the market value of the property.  This cost is normally the responsibility of the and it can cost between $100 - $300.

Home Inspection Fee Generally Required with Resale Homes

A professional inspection of the home, top to bottom, is for the benefit of the buyer. A home inspection can cost anywhere from $300 - $400 and is well worth the investment.  When hiring a home inspector make sure the inspector has liability insurance just in case they overlook something.

Fire Insurance

Mortgage lenders require a certificate of fire insurance to be in place from the time you take possession of the home.  The amount required is generally the amount of the mortgage or the replacement cost of the home. This cost can vary on the property size, amount of coverage, the insurance company and the municipality. The cost can vary anywhere from $250-$600 annually for most properties.

Provincial Sales Tax on Mortgage Insurance

If your mortgage is insured, (CMHC or Genworth Financial), you will be required to pay the applicable taxes on the insurance premium on closing.  While the insurance premium can be added to the mortgage amount, the tax must be paid at closing.

Land Survey Fee or Title Insurance Fee

A recent survey of the property is usually required by lenders.  If one is not available the cost can range between $600 - $900 for a new survey.  In lieu of the survey most lenders today will accept title insurance which can cost considerably less.

Legal Costs and Disbursements

Lawyers and notaries charge fees for their services involved in drafting the title deed, preparing the mortgage, and conducting the various searches.

Disbursements are out-of-pocket expenses incurred during the process such as registrations, searches, and supplies.

Land Transfer Tax

If you purchase a property for $260,000 in Ontario, for example, .5 per cent is charged on the first $55,000, 1 per cent is charged on $55,000 - $250,000, while the $250,000 - $400,000 range is taxed at 1.5 per cent. Your total tax bill? $2,375.00.  

New Home Warranty

In most provinces new homes are covered by a new home warranty program. The cost to the purchaser for this warranty is approximately $600 and 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.