As a buyer you will want to budget for the closing costs typically associated with purchasing a home.
A down payment is the part of the home price that does not come from the mortgage loan. The down payment comes from your own money
The deposit is paid when you make an Offer to Purchase to show that you are a serious buyer. The deposit will form part of your down payment with the remainder owing at time of closing.
Your mortgage lender may ask you to pay for a recognized appraisal in order to complete a mortgage loan. An appraisal is an estimate of the value of the home. The cost is usually between $250 and $350.
Mortgage Loan Insurance Premium
If you make less than a 20% down payment, you have a high-ratio mortgage. With a high-ratio mortgage your lender will need mortgage loan insurance. Mortgage loan insurance lets you buy a home with a minimum down payment of 5%. See the Calculator section to estimate premium. The premium is generally added to the mortgage however you are required to pay the HST on the premium up front on the day of closing.
Home Inspection Fee
A qualified home inspector will generally costs between $250 and $400.
Your lender, lawyer, or notary may suggest that you get title insurance. This will cover loss caused by defects of title to the property. Typically between $300 and $400.
Land Transfer Tax
Required by everyone except first time home buyers who are exempted to a certain dollar value. Use the Land Transfer Calculator to estimate this tax.
Estoppel Certificate Fee
This applies if you are buying a condominium, or strata unit, and could cost up to $100. Also called a Status Certificate it outlines a condominium corporation’s financial and legal state.
Adjustments, Prepaid Property Taxes and/or Utility Bills
Property taxes are charged by the municipality where the home is located. They are based on the value of the home. The seller may have already paid property tax or other expenses that apply to the time after the house passes into your hands. You need to pay back the seller for taxes and other costs (including items like filling the oil tank).
The mortgage lender requires you to have property insurance because your home is security for the mortgage. Property insurance covers the cost of replacing your home and its contents in case of loss. Property insurance must be in place on closing day.
Legal fees and related costs must be paid on closing day. The minimum cost is $500 (plus GST/HST). In addition, your lawyer or notary will charge you direct costs to check on the legal status of the property.
Be sure to budget for movers, renovations or repairs, service connection fees, appliances, and cleaning supplies.
Deb Moysiuk, ABR, ASA, Broker
RE/MAX Chatham-Kent Realty Inc., Brokerage
Cell: (519) 809-1555
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