This is a guide to some of the common closing costs that you can expect when purchasing you next home. For a detailed break down you may also check out the Mortgage Calculator. (The information below should be used as a guideline only as costs may vary. Seek independant legal advice from your lawyer or notary):
Property Transfer Tax
This provincial tax is based on the property's purchase price (1% of first $200,000 and 2% on the rest) and is levied when property changes hands. First time buyers may be exempt for purchases up to $425K (February 20, 2008) if you qualify.
Goods & Services Tax (GST)
GST is applicable on new housing and commercial properties and is currently charged at 5%. If the buyer is an individual who will use the house as his or her primary place of residence and the purchase price is less than $450,000, the buyer may be entitled to the GST new housing rebate.
Legal costs for buying a new home with a mortgage are approximately $1000 regardless of whether the buyer retains the services of a Lawyer or Notary Public. It is important to understand what is or is not included in the fees and what might be added as additional charges (holdback charges). Costs that are usually included are professional fees, land title search and registration fees and miscellaneous office disbursements plus GST and PST.
Adjustments / Disbursements
There a some closing adjustments which have to be calculated to cover items such as municipal property taxes, municipal water and sewer fees, strata maintenance fees, rent and security deposits. Each of these items will be pro-rated by your lawyer or notary. For example:
Municipal taxes - [Total for year / 365 X number of days until the end of the year.]
If your down payment is less than 20% of the home price, you will typically need a high-ratio mortgage. A high-ratio mortgage usually requires mortgage loan insurance. CMHC is a major provider of mortgage loan insurance. Genworth Canada Financial and Canada Guarantee are private insurance options. Your lender may add the mortgage loan insurance premium to your mortgage or ask you to pay it in full upon closing. Consult with your mortgage broker or lender for more details.
Example of $300,000 Home Closing Costs:
- Deposit/Downpayment: $15,000 (5% minimum)
- Property Transfer Tax: $4000 (1% of first $200K & 2% on the remainder. First time home owners may be exempt).
- GST: $15,000 (5% on NEW homes & commercial properties, excluding rebates)
- Mortage Insurance: Fee can be added to mortgage amount (% of purchase price) $10,000 down pymt = 10% of mortgage + CMHC Insurance (2% of purchase price)
- Appraisal Fee: $400 & up (most mortgage lenders will absorb this fee unless there are unusual circumstances).
- Lawyer/Notary fees: $1000
- Prepaid property tax & Utilities: Adjustments calculated by lawyer if pre-paid by the sellers.
- Home Inspection: $400-$500
- Survey Map: $500 and up
- Title insurance: $400
First time Buyer (existing home) - $16,500 + adjustments
New home purchase (Including PTT) - $35,000 + adjustments
2nd purchase (existing home) - $20,500 + adjustments
Need help crunching the numbers? Fill out the form below and I will help make some sense to it all...
Purchase Price $599,000
Down Payment $29,950
Legal Fees $1000
Property Transfer Tax $9,980
Appraisal Fee $400
Title Insurance $300
Tax Adjustment ?
Total Closing Costs $11,680
Net Due at Lawyers $41,630
Other Possible Costs
Survey certificate $800
Home inspection $500
Utility hook-up fees (telephone, cable, etc)
Renovations and/or repairs
Strata/lease fees (If applicable)
*Consult your lawyer or notary