Closing Costs

Real property in most jurisdictions is conveyed from the seller to the buyer through a real estate contract. The point in time at which the contract is actually executed and the title to the property is conveyed to the buyer is known as the "closing". It is common for a variety of costs associated with the transaction (above and beyond the price of the property itself) to be incurred by either the buyer or the seller. These costs are typically paid at the closing, and are known as closing costs.

Home buying closing costs are the charges your lawyer presents to you on the closing date of your home. Many people are surprised at the additional costs, over and above the purchase price of the home. 

According to Canada Mortgage and Housing Corporation you should have at least 1.5% of the purchase price for closing costs, in addition to the down payment. I would suggest to make it around 2% to 2.5% just to be on the safe side.

While these vary depending on the situation, typical costs include:

Survey

In most cases, the agreement of purchase and sale will have a clause asking for the vendor to provide a survey to the purchaser at their cost within a certain period of time. If the vendor does not provide you with an acceptable survey, you may need to obtain a new survey. Approximate cost: : $650 . In most cases however, the survey is provided by the vendor.

 

Title Insurance  

A title insurance policy can eliminate the requirement for a new survey. Title insurance is an insured statement of the condition of title or ownership of real property, at the time the policy is issued. Approximate cost: $250-275 (residential).

 

Land Transfer Tax 

The Land Transfer Tax is payable on all purchases. The tax is calculated on the purchase price of a home according to a specific formula.(click here to learn more about land   transfer tax  or click here to go directly to the land transfer tax calculator)

 

Legal Fees 

Legal fees will vary according to the lawyer. Approximate cost: $600 to $800 Disbursements.

 

Disbursements 

Disbursements are costs that you lawyer will have to pay on your behalf, such as registration fees, photocopies, etc. Approximate cost: $400 to $600.

 

Statement of Adjustments 

The purchaser and the vendor are each responsible for their share of taxes, fuel, and utilities. These costs will be reflected in the statement of adjustments which the lawyer puts together. Approximate cost: Varies depending on type of property (condo vs. freehold) and time of year.

 

Home Insurance

Home insurance premiums will vary from one insurance company to another and according to your insurance needs. In a condominium, the building insurance is included in your maintenance fees and does not form part of the closing costs, unlike a house purchase. Approximate cost: Varies

 

Mortgage Application 

Your lending institution may charge a fee for processing your mortgage application. Approximate cost: Varies

 

Mortgage Appraisal 

Approximate cost: $200. This may be waived depending on how you negotiate.

 

Home Inspection

Prior to buying a home, you should have a home inspection performed to identify any significant structural, electrical or plumbing problems with the home. Some lending institutions require that you have a home inspection completed before approving financing. Approximate cost: $200 - $450 tax.

 

Status Certificate 

Prior to buying a condo, you should request a Status Certificate. This document provides detail on the Condo Bylaws, Rules and Regulations, as well as Finances. Any In suite restrictions or common element restrictions are also detailed in the Status Certificate. Most importantly, it includes information on the condo's Reserve Fund, which is the amount the condo corporation has set aside to cover unexpected expenses. The Status Certificate is usually paid for by the seller. Approximate cost: $100.

 

CMHC Insurance Premium 

This premium is only applicable if you are putting less than 20% of the purchase price as a down payment. Additionally, you have the option of adding the premium to your mortgage and amortizing it over the term of your mortgage. In the latter case, it does not form part of your closing costs as you will pay it over the term of the mortgage. Please click here to calculate how much your premium will be if you are intending to put less than 20% as a down payment.

Other costs that should be budgeted for includes moving costs.