Buying any kind of property may be confusing for some. But, with a bit of knowledge, residential buyers will find that it’s fairly easy to keep track of a transaction if they have some background on other costs involved in buying a house.
Closing costs surprise many residential buyers, as they increase the necessary payments to seal a deal. These are charges a lawyer presents; although the costs vary among provinces and cities in Canada, the advisable amount a buyer should be prepared for is some 2-2.5% of the purchase price for the house. Here are some general guidelines regarding closing costs, with the notice that not all apply to every buyer’s situation. It’s still best to consult a lawyer regarding a purchase.
An appraisal fee generally required with new homes may cost from $100-$300, in which a professional appraisal of the property’s market value is given. A home inspection fee generally required with resale homes, around $300-$400, is meant to cover the cost of having an expert inspect the new property thoroughly, from top to bottom. This protects the buyer from any fraudulent claims on the seller’s part.
Fire insurance is required by lenders. The amount depends on the size of the property, insurance coverage, the insurance company and local regulations, but generally the required sum is the amount of the mortgage or the replacement expenditures for the property. Provincial sales tax on mortgage insurance applies if the buyer’s mortgage is insured, payable at the closing. A land survey fee/title insurance fee is necessary for a survey of the property, meant for lenders. A new survey can cost from $600-$900, but the good news is, many mortgage lenders accept title insurance.
Land transfer tax is charged by majority of Canadian provinces, depending on which province the property is in. First-time buyers are entitled to rebates. Other closing costs for residential buyers are legal costs and disbursements, which are payments made for legal services such as drafting a deed and preparing the mortgage, new home warranty and HST for new structures only and closing adjustments for expenses the seller has already paid for, such as utility bills and property taxes.