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What are The Home Buying Closing Costs ?

What are The Home Buying Closing Costs ?

By

David Doe
*

Published in

Real Estate
*

06 Jan 2022


So, you've decided to purchase a home. Your offer has been accepted, your mortgage has been approved, and you have received your down payment. Isn't this a sign that you're ready to go ? Not quite yet. Will you still have to pay for Closing Costs ? Closing costs can vary in-between 1.5 per cent to 4% of the purchase price of the home, including legal and administrative fees !

What are Closing Costs ?

What are Closing Costs ?

Closing costs are the legal and administrative fees you'll have to pay when your home purchase contract is finalized. They are a one-time fee, but there are multiple costs to be aware of, and they can quickly add up, so they should be factored into your budget. While some closing costs are optional, many are required !

How Much are Closing Costs ?

Your overall closing expenses will be influenced by several factors, including where you live and the kind of home you're buying. In general, it's a good idea to set aside 1.5 per cent to 4% of the home's purchase price for closing costs !

Closing Costs List:

Fee for a Property Evaluation:

A reputable home appraiser provides a professional opinion on the property's market value. The lender may require this to determine whether the selling price is fair in the market !

Estimated Cost: $300 or more is paid to the lender to arrange an appraisal, depending on the property's location. The cost of a land surveyor is a certificate of location. If the seller cannot provide an up-to-date survey or certification of the area, you may be required to pay for one before closing on the mortgage loan. In some cases, title insurance can be used in place of a survey.

The cost of a land surveyor is a certificate of location. If the seller cannot provide an up-to-date survey or certification of the area, you may be required to pay for one before closing on the mortgage loan. In some cases, title insurance can be used in place of a survey !

The cost is estimated to be between $1,000 and $2,000, depending on the size and type of the property !

Title Insurance:

Title insurance covers you in the event of a loss caused by a defect in the property's title, such as real estate title fraud. Legal fees are estimated to cost around $400. Your lawyer will conduct a title search, draught the title deed, and prepare mortgage, among other things !

Estimated Cost: $500 plus GST/HST, payable to your lawyer at the time of closing !

Municipal and Provincial Tax:

Land Transfer Tax, Property Transfer Tax, Land Registration Fees, Deed Registration Fees, or Tariff is all terms for the same thing. This is a provincial or municipal tax calculated differently by province and municipality and based on the purchase price. Although some areas may levy a tax on new construction, it generally only applies to resale homes !

Fire/Property Insurance:

To budget accurately, ask your lawyer or notary for the most recent calculations for your region. You must ensure your home for at least its replacement cost in the event of a fire or significant damage. On the day of closing, the insurance policy must be in effect. It's also a good idea to get enough coverage to protect your home's contents, such as furniture, electronics, clothes, and jewellery, from damage, loss, or theft. Replacement value, coverage type, and discounts all influence the estimated cost. It can be paid on an annual, quarterly, or monthly basis. For a personalized quote, contact your insurance agent or broker !

Prepaid Property Taxes, Utility Payments and Other Expenses:

The tax and utility costs that the seller has prepaid must be reimbursed by the buyer, also known as "adjustments." The lawyer calculates the amount owed !

Cost Estimate: Allow $1,000 to $2,000 for legal fees to pay the lawyer ! Home Inspection Fee: Making your offer conditional on a favourable home inspection is always a good idea ! Estimated Cost: This is usually determined by the home's size and complexity. Budget $500 for a typical urban or suburban bungalow, paid directly to the inspector you hire !

Inspection Fee for Water Quality:

If your home gets its drinking water from a well, you'll need to have the water tested to make sure it's safe to drink !

Cost Estimate: In most cases, you can negotiate the price with the vendor and enclose it in the Offer to Purchase !

Mortgage Default Insurance

Your mortgage provider will arrange mortgage default insurance if your down payment is less than 20% (known as a high-ratio mortgage). Usually, the amount is added to the mortgage, but it can also be paid in full at closing !

The cost is estimated to be between 0.6 and 6.5 per cent of the loan amount. Your mortgage provider will provide the specific amounts for your situation. To qualify for this insurance, you must have at least 1.5 per cent of the purchase price for closing costs above your down payment in addition to the down payment !

Estoppel Certificate Fee

If you're buying a condominium or strata unit, you'll have to pay this fee (except in Quebec). The certificate will be accompanied by the condo corporation's financial statements, which will detail the standard fees for your unit as well as the status of the seller's payments, the reserve fund, and so on. This document is required by your lawyer/notary to complete the purchase transaction. After reviewing the financial statements, they will identify any flaws !

Estimated Cost: Up to $100

GST:

You must pay GST/ HST on a newly constructed home; you must pay GST/HST. A home that has been significantly refurbished may also be subject to GST/HST. Remember that the builder's selling price may already include the rebate. Go to Service Canada or the Canada Revenue Agency's website for more information !

Moving Expenses

You can save money by doing it yourself, but if you have many heavy items or need to move quickly, you may need to hire movers. Local movers will give you an estimate based on the size of your current home and the new home's location !

Professional movers can cost up to $2,000 in some cases !

Miscellaneous Costs

These include utility hook-up, new appliances, tools, painting, decorating, cleaning supplies, window treatments, etc !

Estimated Cost: This varies greatly, but it's a good idea to budget at least $1,000-$2,000 to cover the essentials !

Mortgage Payment Protection (Optional)

Provides insurance coverage to assist you in meeting the financial obligations of your new mortgage. In the event of death, critical illness, disability, or involuntary job loss, it can help protect your family, lifestyle, and assets. Balance Protection (life and critical illness insurance) and Payment Protection are two options (disability and job loss insurance). Coverage is an option you can apply for simultaneously as your mortgage application !

Cost of Owning a Home Worksheet

What you can afford to buy is determined by how much money you can set aside each month to live in your home. While mortgage principal and interest will account for a significant portion of monthly expenses, they will not be the only ones !

As you can see, many variables go into home buying closing costs. While not all of these fees may apply to your situation, it's a good idea to keep them in mind and budget for them when looking to buy a home. So, If you are looking to buy and sell your property in Canada, contact Guglu Homes !

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