The closing costs in Toronto for condominiums and residential homes are the charges that your lawyer will give to you once you reach the closing date on your home. Many buyers are unprepared for these additional costs — which are above and beyond the cost of the actual home. But according to the Canada Mortgage and Housing Corporation and Genworth Financial, a buyer should be prepared for closing costs to come to at 1.5 percent of the purchase price, and possibly as much as 2.5 percent. These costs may vary from province to province and from city to city. The sections below discuss some of the costs that you may face, depending on your particular purchase. These are guidelines only, and you should discuss closing costs with your lawyer, who should be able to provide a more specific situation for your own particular purchase.
Appraisal Fee, Usually Needed with New Homes
- An appraisal gives the lender, usually a bank, with a professional’s estimate of the actual market value of the property for sale. The cost of the appraisal is generally absorbed by the seller, and normally costs between $100 and $300.
Home Inspection Fee, Usually Required with Resale Homes
- A professional inspection of the home prior to sale is an excellent idea for any buyer. A home inspection will generally cost the buyer between $300 and $400, but it’s money well spent. When choosing a home inspector, ensure the inspector has liability insurance, just in case they miss something important during their inspection.
- Any mortgage lender will stipulate that the buyer present a certificate of fire insurance, with the insurance to be in place from the day you take actual possession of the property. The amount of the insurance will usually match the amount of the mortgage or the amount it would cost to replace the home. The cost of purchasing insurance will vary depending on the insurance company, the size of the property, the amount of coverage desired and the municipality. For most properties, though, the annual cost will be somewhere between $250 and $600.
Provincial Sales Tax on Mortgage Insurance
- If you want insurance on your mortgage (Canada Mortgage and Housing Corporation or Genworth Financial), you will have to pay the applicable taxes on the insurance premium upon closing on the property. The premium can be added on to the mortgage, but the tax must be paid upon closing.
Land Survey or Title Insurance Fee
- Most mortgage lenders will ask for a recent survey of the property. If one hasn’t been done recently, a survey can cost between $600 and $900. Most lenders today will accept title insurance — which costs much less — as a substitute.
Legal Costs and Disbursements
- Don’t forget that lawyers and notaries will charge fees for their work in drafting title deeds, preparing mortgages or conducting various searches. You will also be required to pay disbursements, the out-of-pocket expenses the lawyers paid out while conducting searches or registrations or buying supplies.
Land Transfer Tax
- Most provinces, and some cities, will charge a land transfer tax to be paid by the buyer. The amount will vary by province, but is based on the purchase price of the property. First-time home buyers may be able to claim a refund.
New Home Warranty
- In most Canadian provinces, new homes are covered by a warranty program. The buyer has to purchase the warranty, usually at a cost of about $600, but the warranty will cover the cost of finishing construction or repairs to a set maximum amount should the builder default or should the property fail to meet a previously agreed-upon standard of quality. For information on Ontario’s new home warranty program, go to http:www.tarion.com.
- HST has to be paid only on the purchase of newly constructed homes. If you are buying such a home, make sure you have an agreement with the builder as to who will pay the HST. The offer should say “Plus HST” or “HST included,” and should also specify who will receive any HST rebates. Many builders include the HST in the purchase price so the buyer won’t face any unexpected additional costs at the closing.
- The seller should provide an estimate for closing adjustments for bills the seller has prepaid, including expenses such as property taxes, utility bills or other charges. Any bills that come due after the closing date are the responsibility of the buyer. The buyer’s lawyer should be able to provide the cost of those bills upon completing searches on the property.