Closing Costs When BUYING a House or Condo

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If you’re just starting to look at houses for sale in Toronto (or Condos), and want to know what costs to expect today I’m going to share those costs with you. 

Once you find a home you that you like and you want to make an offer, before the offer is a firm & binding deal, you will likely want to do an Inspection.

For the importance of doing an inspection be sure to check out my video post called “The [REAL] Purpose of a Home Inspection & What Home Inspectors Do”

If you hire a Home Inspector you should budget approximately $500 for that inspection.

If you’ve already made a deal to purchase a property on a certain date then you’ve already paid the “Deposit” when you made the deal. 

The balance of the purchase price is due on closing but that goes from your bank or lender (in the form of your new mortgage) through the real estate lawyer to the Seller’s Lawyer.  

If you’re Down Payment (the amount you are putting down on your purchase) is more than your initial deposit when you signed the papers then you will have to speak with your Mortgage Broker or Bank about how & when to provide them with the rest of your Down Payment. 

If you’re not clear on the difference between a Down Payment vs. a Deposit then be sure to check out my video post called “Down Payment vs. Deposit When Buying a Home”.

After the initial funds are provided, such as purchase deposit & down payment, there are some other closing costs you should be aware of plan for:

1- Land Transfer Tax:

If you live outside of the City of Toronto boundaries (ie. the suburbs like York Region, Peel, Durham, Halton Hills, Niagara, or Simcoe County, then there is a provincial Land Transfer Tax. 

If you live in the City of Toronto there is additional Municipal Land Transfer Tax. This is arranged through your real estate Lawyer so you can speak to him or her about the Land Transfer Tax(es). 

If you want to know the approximate amount here is a link to an online Land Transfer Tax calculator. 

Land Transfer Tax is based on the amount of the purchase. If you’re a first-time home buyer there might be Land Transfer Tax exclusions too. 

Be sure to check out my video post called: “Toronto Land Transfer Tax Update June 2020”

2- Legal Fees & Disbursements: This total can range anywhere from $850 (usually) to $1,500 (again usually) so you can ask your Real Estate Lawyer about those specific fees. 

3 – Title Insurance: Today, most lenders require Title Insurance to protect you against losses in the event of a property ownership dispute. This is purchased through your Real Estate Lawyer and costs usually costs between $450 to $950 dollars for an average size home.

I offer a video post explaining all of the benefits & risks of Title Insurance called: “Title Insurance: 4 Ways It Can SAVE You Money & Protect You”

4 – CMHC Insurance:  If you are buying a house or condo with less than a 20% down-payment then you’ll be required to buy mortgage default insurance which is commonly referred to as CMHC insurance.

CMHC stands for Canadian Mortgage & Housing Corporation. CMHC Insurance protects the lender if the borrower defaults on the mortgage. 

The cost of CMHC Insurance, although considered a closing cost is not something you need cash for. Usually the lender will allow you to include the cost of buying the insurance into the overall mortgage. However, PST on CMHC Insurance must be paid by the borrower (buyer) at the time of closing of the purchase.

5 – Utility Company Deposits: If you are moving from a current home to a new property then the utility companies might not require a deposit, pre-payment, or setup fee. 

But if you are a first-time home owner and setting up a new hydro or gas account in your name, some companies require a deposit, pre-payment, and/or setup fee. 

6 – Movers & Moving Fees: Some people try to save money doing it themselves, but you might need to hire movers if you have a lot of heavy things, or if you need to complete the move quickly. 

Local movers will provide you with an estimate based upon the size of your current home and the location of the new home. Based on a starter home to mid-size property it moving fees can cost between $1,500 – $3,000 for professional movers. Obviously more for larger properties.

7 – Personal Preferences Costs: 

Some people like to pay for doggie daycare or pet sitting for a few days during their move. 

Some people like to pay the post office to have their mail forwarded for a period of time from their old address to their new address.

Professional Cleaners to clean the home or new cleaning supplies if you intend to do it yourself.

8 – GST & HST: When you buy a resale property for residential use, usually there is no HST on top of (in addition to) the purchase price. 

However, newly constructed and substantially renovated homes may be subject to GST or HST.  If you pay GST and HST, you may qualify for a new housing rebate.

Here are some other costs to consider, as they might (or might not) apply in every real estate purchase. 

If you’re buying a Condo you might have to give a (refundable) deposit on moving day (or prior to moving day) to reserve the elevator.

If you’re buying a house with a septic tank or well-water then:

• Septic tanks should also be tested to ensure it is in good working order. 

• Water Tests should be done done If the home has a well.

  You’ll want to test the quality of the water and ensure there is an adequate supply, as well if the water is potable. 

• Property Insurance. Property insurance, which covers the cost of replacing your home and its contents, must be in place on closing day. This insurance is often paid in monthly or annual premiums. But your annual premium or first monthly payment will be due close to the closing date of your purchase.

And depending on what season you are moving in you might want to set aside some cash or credit for the following:

• • Landscaping or lawn maintenance,
  • Possible maintenance needs once you get the keys to your new home,
  • Snow removal,
  • Repairs and home improvement,
  • Maintenance products (garden products, furnace filters),
  • And a Contingency fund,

If you are thinking of buying a home and want to talk more about how to do it safely and smoothly I’m always happy to chat.

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