Don’t Forget Closing Costs When Buying a Home
When planning to buy your dream home, most buyers focus on the down payment—but closing costs are just as important. Even with today’s low mortgage rates, these additional expenses can add up quickly. Understanding them upfront helps you budget accurately and avoid surprises at the closing table.
What Are Closing Costs?
Closing costs are the various legal and administrative fees required to complete a property purchase. While amounts vary depending on the property and location, these costs are mandatory in most real estate transactions. Here’s a breakdown of the major closing costs you should expect when buying a home in Ontario.
1. Legal Fees
A real estate lawyer is essential to your home-buying team. Legal fees typically cover title searches, property surveys (if necessary), and other disbursements required to finalize your purchase.
2. Mortgage Insurance and Application Fees
If your mortgage is high-ratio (covering 75% or more of the purchase price), your lender will require mortgage insurance. An application fee may also apply.
3. Mortgage Broker Fees
If you work with a mortgage broker, a setup fee may be charged. In some cases, this fee is included in legal or lender costs, depending on how your mortgage is arranged.
4. Property Insurance
Lenders require proof of property insurance before approving your mortgage. This insurance covers the replacement value of your home and its contents.
5. Home Inspection
A professional home inspection can reveal hidden issues that may affect your decision. Typical inspections range from $150 to $300, depending on the property size and complexity.
6. Land Transfer Tax
In Ontario, all homebuyers must pay a land transfer tax. The amount usually ranges from 0.5% to 2% of the purchase price, depending on the value of the property.
7. GST
Goods and Services Tax (GST) applies to some new homes, though partial rebates may be available. Most resale homes are exempt, but other closing-related services may still include GST.
8. Additional Costs
Other fees may include:
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Prepaid utilities, such as heating oil or hydro, included by the seller
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Hook-up charges for appliances, cable, or utilities
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Moving costs, especially if using a professional moving company
The MovingSimcoe.com Team: Helping Homeowners Navigate Today’s Market
