CLOSING COSTS: HOW TO ESTIMATE YOUR CLOSING COSTS
A lawyer is the professional who can provide a more realistic estimate for your specific situation. To calculate Land Transfer taxes, simply go to: http://www.landtransfertaxcalculator.ca/ . If the property you are purchasing is in Toronto, you pay both Provincial and Municipal. If the property is outside of Toronto (Markham, Vaughan, Newmarket, Aurora, Oshawa, etc.) you pay ONLY the Municipal Land Transfer Tax.
- Provincial Land Transfer Tax (PLTT): Maximum $2000 - Municipal Land Transfer Tax (MLTT): Maximum $3725
- Under $250,000: Purchase price x 1% less $275.00
- Over $250,000: Purchase price x 1.5% less $1525.00
- Over $400,000: Purchase price x 2% less $3525.00
- Note: If you are a first time home buyer in Ontario you are eligible for an instant refund of the provincial land transfer tax up to $2,000. Any tax amount due over $2000.00 you must still pay
- If you are purchasing a home in the City of Toronto, there is a second, additional tax! Toronto Land Transfer Tax amounts are similar to the provincial tax, and you are exempt from this tax if you are a first time buyer, and the purchase price is less than $400,000
7. Prepaid Expenses: (Utilities, taxes, condo maintenance fees). These are expenses that the seller may have prepaid and which they get reimbursed for. This amount will be reflected in the statement of adjustments that you receive from your lawyer. For example, if the Seller has prepaid their municipal property taxes through to the end of the year, and your closing date is 60 days before the end of the year, then the Seller must be reimbursed...and you, the Buyer, are required to pay them this money back in full, at closing.
8. Mortgage Insurance: (CMHC - Canada Mortage and Housing Corporation). If your down payment is less than 20% of the total purchase price of the home, Canadian banking regulations require that you pay a mortgage loan insurance premium to protect the lender. This premium can be several thousand dollars, but it then allows you to buy a home for as little as 5% downpayment. These fees can be prepaid up front, but they are usually added to the mortgage loan amount, adding a relatively small amount to your monthly carrying cost. A mortgage broker will be able to answer all your questions regarding how this works.
9. PST on CMHC premium: Even though the CMHC Mortgage Insurance mentioned in #8 can be rolled into your monthly mortgage payment, there is PST tax which is assessed on the CMHC premium, and this PST amount must be paid in full at closing. So just as an example, if the CMHC fee is, say, $5000,00, you don't have to pay that fee today - it is typically added to your total mortgage loan, resulting in a small increase in your monthly payments, but there is PST to pay on it. PST in Ontario is currently 8%, and 8% of $5000.00 is $400.00 - which is the amount you would have to pay your lawyer on closing day.
10. Interest/Payment adjustment: Monthly mortgage payments are due on the 1st of the month. Unless the closing date is the 1st, you must repay the amount of interest accruing up to the 1st day of the following month, which is the Interest Adjustment Date. For example if the closing date is March 15th but, the IAD is April 1st, interest from March 15th to the 31st must be paid.
11. Home Insurance: all lenders will require you to have home insurance on your freehold property, before they will advance your mortgage loan funds (needed for closing). Basic home insurance for an average house can range from $600.00 - $700.00 per year, and many insurance companies will require that you pay the entire year's premium up front.. If you are buying a condo, the good news is that the building insurance is already included with your condo maintenance fees; nevertheless it is also a good idea to get contents insurance for your unit, covering fire and theft.
These are most of the typical real estate closing costs which you will need to factor in when you buy a house or condo in Ontario. Do you still have questions? I work to provide a full service for both novice and experienced buyers - my goal is to provide you with a level of service unlike no one else. I strive to make things easy, and stressfree. If you are interested in getting more detailed information about our buyers' services, or if you have any other questions, just email me at firstname.lastname@example.org or call me at 416-919-9722.
CENTURY 21 Leading Edge Realty Inc., Brokerage*