Once you have made your home buying decision, there are several costs and fees that need to be addressed. These are “closing costs” associated with your home purchase. We typically ask our clients to budget up to 2% of the purchase price of the home to cover these items. Depending on whether you have purchased a condominium or home, new or re-sale, the following are items you should prepare for:
Survey: in most cases, the agreement of purchase and sale will have a clause requesting the Vendor to provide a survey to the Purchaser, at their costs, within a certain period of time. If the Vendor does not provide you with an acceptable survey, you may need to obtain a new survey for financing purposes. Survey costs can vary from $1,000 - $1,500
Title Insurance. Title Insurance is an insurance policy that protects you, the homeowner against challenges to the ownership of your home from problems related to the title to your home. Check out further details at Royal Bank (www.rbcroyalbank.com/products/mortgages/title_insurance.html)
Land Transfer Tax. The Land Transfer Tax is payable on all purchases. The tax is calculated on the purchase price of the property. See below for calculations:
UP to $55,000 x .5% of total property value
From $55,000 to $250,000 x 1% of total property value
From $250,000 to $400,000 x 1.5% of total property value
Over $400,000 x 2% of total property value
Legal Fees. Legal fees will vary according to the lawyer and the type of home purchase you are making. It is always advisable to obtain a few quotes for the best service and price.
Disbursements. Disbursements and costs that your lawyer will have to pay on your behalf, such as Transfer/Deed registration fees, clearance certificates for realty taxes and zoning compliance, photocopies, etc. Approximate costs can range from $500. To $1,000.
Statement of Adjustments. The Vendor and Purchaser are each responsible for their share of taxes, fuel, and utilities. These costs will be reflected in the Statement of Adjustments which the lawyer puts together. Approximate costs vary depending on the type of property (condo vs freehold) and the time of year.
Home Insurance. Home insurance premiums will vary from one company to another, and of course, depending upon your insurance needs. In a condominium, the building insurance is included in your maintenance fees and does not form part of the closing cots, unlike a house purchase. It is always prudent to shop for competitive insurance prices with different insurance brokers.
Mortgage Application Fee. Financial Institutions typically charge a mortgage application fee of approximately $200.00. Of course, this is always negotiable
Home Inspection. Prior to buying a home, it is always important to have a home inspection performed to identify any significant structural, electrical or plumbing problems with the home. Some lending institutions now require that you have a home inspection completed prior to approving financing. Approximate costs can range from $200 - $500
Status Certificate. Prior to buying a condominium, you should request a Status Certificate. This document provide details on the Condo By-Laws, Rules and Regulations, as well as Finances. Any interior suite restrictions or common element restrictions are also detailed in the Status Certificate. More importantly, it includes information on the condo’s Reserve Fund, which is the amount the condominium corporation has set aside to cover unexpected expenses. The Status Certificate is usually paid for by the seller. Approximate cost is $100.00
CMHC Insurance Premium. This premium is only applicable if you are putting less than 20% of the purchase price as a down payment. Additionally, you have the option of adding the premium to your mortgage and amortizing it over the term of your mortgage. In the latter, it does not form part of your closing costs as you will pay it over the term of the mortgage. Check out more details at www.cmhc.ca
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