Purchasing a Home: The Real Costs
When thinking about the costs of purchasing a house people often only think about the purchase price of the home. Many people forget about the closing costs that must be paid to close the purchase. You should ensure that your lawyer is upfront with you about these hidden costs as they can be substantial. To
To simplify things we’ve given you a breakdown of many of the costs you will likely encounter when purchasing a home. These costs are subject to change based on certain factors but they should give you a fair overview of what to expect.
Appraisal Fee ($175)
If you require a mortgage on your home the lender will usually require an appraisal of the home.Home Inspection Fees ($300)
A common condition purchasers will put in their purchase agreements is a home inspection. The home inspector will provide a report on the condition of your home.
Property Survey ($750-$1000)
The survey sets out the boundaries and measurements of your property and any easements or encroachments. This will not normally be required where you obtain title insurance.
Land Transfer Tax
The Land Transfer Tax is a bit more complicated than just providing an estimate. The cost depends on which jurisdiction you are purchasing the home in, whether you are eligible for the land transfer tax exemption and the price of your home. If you are purchasing in Toronto you will be liable to pay land transfer tax for Ontario and for Toronto. See below for how to calculate the land transfer tax:
Municipal Land Transfer Tax (MLTT)
Up to and including $55,000.00 X 0.5% of total property value
From $55,000.01 to $400,000.00 X 1% of total property value
Over $400,000.00 X 2% of total property value
Provincial Land Transfer Tax (PLTT)
Up to $55,000 X 0.5% of total property value
From $55,000 to $250,000 X 1% of total property value
From $250,000 to $400,000 X 1.5% of total property value
From $400,000 up X 2% of total property value
If you are a first time home buyer you are eligible for rebates for both the Municipal (Maximum rebate of $3,725) and Provincial (Maximum rebate of $2,000) land transfer tax.
If you are purchasing a new home from a builder and you or your family member do not intend to reside in the home you will be charged the HST rebate that the builder would normally enjoy. If you rent out the new home for a year you may be entitled to a refund of the HST paid. If you have rented out your home please contact us and we can apply to the Canada Revenue Agency for a rebate.
Mortgage Loan Insurance
Mortgage loan insurance is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price. The premium payable is based on a percentage of the home’s purchase price that is financed by a mortgage. The premium can be paid upfront or added to the mortgage amount.
Mortgage Life Insurance
This is an option you may want to consider. It provides insurance on your mortgage payments in the event you or your spouse dies during the term of the mortgage.
This is an obvious item but it is a cost to consider.
Title Insurance ($350)
Most lenders require you to obtain title insurance the cost of which is based on the purchase price for the home. Title insurance protects you and the lender from issues that may arise relating to title such as encroachment issues, existing liens against title, fraud and undischarged mortgages. 95% of purchases in Ontario use title insurance and we highly recommend it to our clients.
Legal Fees including disbursements ($1,350.00 plus HST)
Our fees for the purchase of a home are $695.00 plus HST and for one mortgage $295.00 plus HST. Disbursements which generally include items like ordering a tax certificate, couriers, faxes, execution searches and registration of documents amount to approximately $400.00 plus HST. Keep in mind that these are estimates and are subject to change based on certain factors.
We are always happy to review your purchase agreement free of charge and if you don’t end up closing the purchase we won’t charge you!
Topics: Real Estate