ONTARIO REAL ESTATE CLOSING COSTS when BUYING A HOUSE:

Closing costs are the fees which you, as a BUYER, must pay when purchasing a home in Ontario. These are fees which are normally payable in full on the day you get the keys to your new home (the "Closing Day"). Here is an outline of what you should expect:

1. Purchase Price (from offer) less the deposit you have made with the offer.

2. Home inspection fee: This one is due before closing...if you are doing a home inspection as part of your offer, costs for this generally range from $300.00 - $500.00, and you must pay the Home Inspector on the day he or she does their inspection.

3. Appraisal fee: your bank lender will arrange an appraisal of the property at your expense, prior to advancing any mortgage loan. Approximate cost: $250.00

4. Legal fee for purchase of home: It's usually best to budget about $1500.00 in all. Lawyers are funny - these will advertise a "basic" fee, but will then add lots of additional charges to pay for various components of your Purchase. Almost always, once these additional fees are included, such as title search fees, registration fees, disbursements, photocopies, courier costs, etc., the total amount will approach about $1200.00 - $1300.00. Once the HST is added to this, the grand total usually approaches approximately $1500.00. If you budget $1500.00, and it comes in less, you will be happy! Incidently, when selling a house, the fee is usually a couple of hundred dollars less, as title search is not required.

These are the regular legal fees. Lawyers' fees can increase if there are any unusual circumstances associated with the sale - delays in closing, power of sale, will probates, etc.

Many lawyers offer a better rate if you are both buying and selling a home and they both close on the same day.

5. Title Insurance: More and more lawyers are including title insurance as part of their fee. Once considered optional, Title Insurance is always a good idea, as it protects you against identity theft and much more, for as long as you own the home. Cost: approx. $250.00.

6. Land Transfer Tax: Is the tax that must be paid to the Province of Ontario on registration of a Deed. The rate of tax is based on the price of the home purchased. The calculation is as follows:

• Under $250,000: Purchase price x 1% less $275.00
• Over $250,000: Purchase price x 1.5% less $1525.00
• Over $400,000: Purchase price x 2% less $3525.00
• Note: If you are a first time home buyer in Ontario you are eligible for a refund of the provincial land transfer tax up to $2,000. Any tax amount due over $2000.00 you must still pay
• If you are purchasing a home in the City of Toronto, there is a second, additional tax! Amounts are similar to the provincial tax, and you are exempt from this tax if you are a first time buyer, and the purchase price is less than $400,000

7. Prepaid Expenses: (Utilities, gas, taxes, condo maintenance fees).  These are expenses that the seller may have prepaid and which they get reimbursed for.  This amount will be reflected in the statement of adjustments that you receive from your lawyer. For example, if the Seller has prepaid their municipal taxes through to the end of the year, and you are closing 90 days before the end of the year, then the Seller must be reimbursed...and you, the Buyer, are required to pay them this money back in full, at closing.

8. Mortgage Insurance: (CMHC - Canadian Mortage and Housing Corporation).  When you need a loan that is more than 75% of the purchase price of the home, mortgage loan insurance is required to protect the lender.  This allows you to buy a home for as little as 5% downpayment, but adds to the monthly carrying cost. These fees can be prepaid, but are usually added to the mortage loan amount.

9. PST on CMHC premium: Even though the CMHC Mortgage Insurance mentioned in #8 can be rolled into your monthly mortgage payment, there is PST tax which is assessed on the CMHC premium, and this PST amount must be paid in full at closing.

10. CMHC application fee: an application fee for the CMHC mortgage insurance which ranges from $75.00 to $235.00.

11. Interest adjustment: Monthly mortgage payments are due on the 1st of the month.  Unless the closing date is the 1st, you must repay the amount of interest accruing up to the 1st day of the following month, which is the Interest Adjustment Date.  For example if the closing date is March 15th but, the IAD is April 1st, interest from March 15th to the 31st must be paid.

12. Home Insurance: all lenders require you to have home insurance on your property, before they will advance your mortgage loan funds (needed for closing).

13. Life Insurance: many lenders will require that you have a Life Insurance policy in effect before they will advance your mortgage loan funds (needed for closing).

These are typical real estate closing costs which you need to factor in when you buying a house or condo in the Province of Ontario. Question? Just email us via the chat function on the main page, and we will be there for you!