Home Buying Closing Costs
A lot of clients I work with, particularly first time home buyers, aren’t aware of some or all of the potential closing costs involved in buying a home. These closing costs can add up to thousands of dollars. That’s why it’s very important for a home buyer to understand what to expect at the start of their home search and to budget accordingly. This list summarizes some of the more common closing costs but is not an exhaustive list.
Land Transfer Tax
According to the Ontario Ministry of Revenue, if you buy land or an interest in land in Ontario, you must pay Ontario’s land transfer tax, whether or not the transfer is registered at one of Ontario’s land registry office. Land includes any buildings, buildings to be constructed, and fixtures (such as light fixtures, built-in appliances and cabinetry). Land transfer tax is normally based on the amount paid for the land, in addition to the amount remaining on any mortgage or debt assumed as part of the arrangement to buy the land.
The tax rate has not changed since June 1, 1989.
- 0.5% of the value of consideration for the transfer up to and including $55,000,
- 1% of the value of the consideration which exceeds $55,000 up to and including $250,000, and
- 1.5% of the value of the consideration which exceeds $250,000, and
- 2% of the amount by which the value of the consideration exceeds $400,000 for land that contains at least one and not more than two single family residences
In many cases a home buyer can include their property taxes in their monthly mortgage payments. However, if a buyer does not or cannot include taxes in their mortgage, the fee must be paid in addition to their mortgage. For example, a $400,000 home in Toronto could equal approx. $3,500 a year in property tax.
Real estate lawyers provide assistance in many aspect of a real estate transaction including reviewing contracts and status certificates, performing title searches, registering the deed and mortgage and delivering closing funds and financial disbursements. While legal services can vary in size and scope, a typical lawyer will charge approx. $1,500 for closing costs.
Hiring a professional mover can typically cost anywhere from $250 for a simple one bedroom move to $3,000 or more to move the contents of a large house.
Typically, your mortgage lender will require proof of home insurance which covers the replacement value of your home and the contents inside. This can also add hundreds of dollars to your annual home ownership expense.
If you purchase a condominium, you’ll need to pay monthly maintenance fees that go toward repair and maintenance of the common elements within your building. The cost of monthly maintenance fees can vary greatly depending on the building (does it have a pool? Is it older and in need of more repair, etc). Typically it can be between $250 – $800 per month.
When you first move into your new home you’ll need to hook up your phone, internet and television. Utility providers can charge upfront installation fees, typically $50 – $150 each.
If your mortgage lender requires an appraisal of your home before granting a mortgage they could make you responsible for paying the $175-$300 upfront fee.