The total cost of buying a house goes beyond just its price. Your Real Estate Agent or Lawyer will be able to tell you exactly how much you’ll have to pay.
LAND TRANSFER TAX | .5-2% of value
When a home changes hands, many provinces and a few municipalities, charge a property transfer tax, or title transfer fee. It can add thousands to your purchase price. (First time home buyers qualify for rebates or exemptions in some provinces)
APPRAISAL FEE | around $500
Your lender may ask you to have a home appraised to confirm its market value. Fees vary depending on a property’s value and complexity.
LEGAL FEES | $500-$800
A lawyer or notary will help protect your interest by reviewing your purchase agreement, searching the property titles, and ensuring that all documents are completed properly.
HOME INSPECTION | $350-$450
An inspection can help make you aware of issues related to a house’s structure and systems; such as plumbing electrical and recommended or necessary repairs.
HOME/FIRE INSURANCE | $1000-$2000/year
Your lender will require proof that the property is insured in case of fire and/or other damage. Insurance costs vary depending on the coverage needed.
TITLE INSURANCE | $150-$350
Title insurance can safeguard you against fraud and problems with your property title or survey.
COSTS FOR NEWLY CONSTRUCTED HOMES
If you’re buying a brand new home, be prepared to settle any items not quoted in the original price; including upgrades, paving or landscaping fees. New home are also subject to 5% GST or 13% HST, (although this is often included in your purchase price). A general rebate reduces the GST, or the federal part of the HST to about 3.5% for homes valued at $350,000 or less.
PREPAID COSTS
Is the seller has paid property taxes, water bills, or utilities in advance, you’ll need to reimburse these at closing. Although this can add hundreds to your up-front costs, these bills will be paid for your first months in your new home!
TAX ON MORTGAGE INSURANCE
If you have less than a 20% down payment, your lender will require that you obtain mortgage default insurance. You can roll the cost into your mortgage payments, although the PST is due at closing. For example if your mortgage insurance is $5,000 and the PST is 6%, you’ll pay $300.
MOVING-IN COSTS | $500
Before the big day, budget for all of those last minute things: $100 or more to rent a truck, or a few hundred for professional movers, $50 to $60 for cleaning supplies and a lock-smith to re-key your locks.
FAQs
What closing costs should I budget for when buying a home?
Beyond the purchase price, buyers may need to budget for land transfer tax, legal fees, an appraisal, a home inspection, insurance, title insurance, prepaid costs, and moving expenses. Your real estate agent or lawyer can provide a more accurate estimate for your specific purchase.
How much does a home inspection cost, and is it worth getting one?
The excerpt estimates a home inspection at approximately $350 to $450. An inspection can identify concerns with the home’s structure and systems, including plumbing, electrical work, and repairs that may be recommended or necessary.
Do I have to pay tax when buying a newly constructed home?
Newly constructed homes may be subject to 5% GST or 13% HST, although the tax is often included in the purchase price. Buyers should also confirm whether upgrades, paving, landscaping, or other items are included in the original price.
What prepaid costs might I have to pay at closing?
If the seller has paid property taxes, water bills, or utilities in advance, you may need to reimburse the seller for your share at closing. These costs can add hundreds to your upfront expenses, but they cover services or bills for the first months in your new home.
What closing costs apply if I have less than a 20% down payment?
With less than a 20% down payment, your lender will generally require mortgage default insurance. The insurance premium can be added to your mortgage, but the provincial sales tax on that insurance is due at closing. For example, a $5,000 insurance premium with 6% tax would create a $300 payment at closing.
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