Closing Expenses for Buyers.

What are the closing expenses?

Purchasing a home involves one-time costs and monthly expenses. The largest one-time cost is the down payment. It usually represents between 5-25% of the total price of the property. In addition to the actual purchase price, there are a number of other expenses that you might be expected to pay for. These are listed below:

GST: You must pay 7% GST on newly constructed homes. However, if your house is less than $450,000 you may be eligible for a rebate. There is no GST on resale housing unless there have been substantial renovations to the property.

Property Transfer Tax: This tax is 1% on the first $100,000 of the sale price and 2% on the remainder. First-time buyers may be exempt from paying this tax.

Prepaid Property Taxes or Utility Bills: You will have to reimburse the sellers for any prepaid property taxes or utilities.

Mortgage Insurance: If you get a high-ratio mortgage (a mortgage where you pay less than a 25% down payment) you will have to buy mortgage loan insurance from CMHC or a private company. If you qualify for a 5% down payment, CMHC charges an insurance fee that equals 2.75% of the mortgage. If you put 10% or 15% down, your insurance fees will decrease to 2.5% and 2% respectively. The insurance premium usually gets added to your mortgage.

Mortgage Application: CMHC's standard fee is $235. CMHC also offers a basic service for a $75 fee but it must be accompanied by an appraisal.

Appraisal: Before your lender approves your mortgage, you may be required to have an appraisal done. Sometimes your lender covers this cost otherwise you are responsible for covering this cost. The fee ranges from $150 to $350.

Survey: Your lender may require an up-to-date survey of the property. If the seller did not provide you with one, you will have to pay to have one done. The fee ranges from $150 to $350. Alternatively Title Insurance can be purchased.

Home Inspection: Most Realtors recommend that you obtain a home inspection by a certified home inspector. It will cost you from $200 to $400 for a smaller house. Large houses may cost more.

Legal Fees: Lawyer and Notary fees for closing the sale range according to the complexity of the deal but they will probably be at least $400.

Disbursements to Land Titles Office: These fees are approximately $300. Your lawyer or notary will arrange this payment.

Expense - Paid
Mortgage Application Fee - At time of application
Appraisal Fee - At inspection
Property Inspection (optional) - Closing
Legal Fees & Disbursements - Closing
Deed and/or mortgage registration - Closing
Property Survey (sometimes provided by seller) - Closing
Land Transfer Tax - Closing
Property Taxes - Closing
Mortgage Interest Adjustment and Take Over Fee (if applicable) - Closing
Adjustments for Fuel, Taxes, etc. - Closing
Mortgage Insurance (if applicable) - Closing
Home and Property Insurance - Closing & on-going
Connection charges for utilities such as gas, water and electricity - Date of move
Moving Expenses - Date of move

Other costs may include landscaping, redecorating, furnishings, appliances and repairs.
Typical monthly costs incurred with home ownership are mortgage payments, maintenance, insurance, condo fees, property taxes and utilities.

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