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1 Mar

6 HOME PURCHASE CLOSING COSTS

General

Posted by: Derek Vandall

There are at least 6 additional costs to account for when purchasing a home. These are called closing costs. They include:

  • House Insurance
  • Title Insurance
  • Legal Fees
  • Adjustments
  • Land Transfer Tax
  • GST

Here’s an overview of what you can expect.

House Insurance. Mortgage lenders will require a certificate of house insurance to be in place by the time you take possession of your home. The minimum amount required is usually the amount of the mortgage or the replacement cost of the home. This cost can vary based on the property size, location, and other factors. House insurance can vary anywhere from $200 per year for some condos to $2,000 for large homes.

Title Insurance. This is a one-time fee of about $150 in most cases and it protects you against any issues, defects or fraud on your title. Your lawyer or notary helps you purchase this.

Legal Fees. Thirdly, you are required to pay legal fees. Your lawyer or notary will charge you anywhere from $700 to $1,000 to help with your purchase. There are also fees to register your title with the municipalities. All told, you’re looking at around $1,000 to $1,300 after tax.

Adjustments. When someone sells a home, they likely already prepaid for at least a portion of their property taxes or condo fees for the year. An adjustment is what you pay to the seller to cover your cost of those prepaid taxes and fees. Simply put, if you take possession in the middle of a month, the seller has already paid for the whole month and you must pay the seller back for what they’re not using.

Land transfer tax. Land transfer tax is a fee that is charged to you by the province. This is usually the most significant closing cost. The cost is usually 2% of the purchase price of the property.

GST. GST is only paid on new construction purchases. GST is 5% of the purchase price. However, there may be a partial GST rebate. Many builders will require that you sign off on relinquishing this rebate to them.

Please don’t hesitate to contact a Dominion Lending Centres mortgage professional for your home financing and mortgage needs.

EITAN PINSKY

Dominion Lending Centres – Accredited Mortgage Professional