There’s a lot more that goes into buying a home than a deposit and your monthly mortgage payments. Here are some of the typical one-time closing costs that you should be sure to set some of your finances aside for:
Legal Fees – You’ll need to have a lawyer to act on your behalf in the purchasing of a home, which you’ll be responsible for paying for all related fees. These fees can range greatly, depending on how complicated the purchase agreement is.
Land Transfer Tax – Buyers are responsible for paying a land transfer tax, which is based on the percentage of the purchase price of the home. There is a specific calculation involved in such a tax payment, which your realtor can help you determine. In Toronto, there is an additional Municipal Land Transfer Tax on top of the provincial one. On a home purchased for $300,000 in the city of Toronto, for example, the total land transfer tax payable would be $5,700 in total.
Property Tax/Utility Bill Adjustments – The purchase of a home is always subject to adjustments of property taxes and utility bills already paid by the seller. Any amount that the seller has already paid will have to be adjusted so that any excess is given back to the seller.
Title Insurance – This is a type of insurance policy that protects buyers against any challenges to the ownership of the property purchased in relation to title. Your lawyer will help you determine if this type of policy is beneficial in your case.
Other typical closing costs you may encounter include:
▪ Credit report fees
▪ Loan origination fees
▪ Inspection fees
▪ Appraisal fees
▪ Survey fees
▪ Escrow deposit fees
How Much Will You Have to Pay in Closing Costs?
Typically, home buyers will probably pay somewhere between 2% to 5% of the entire purchase price of the home in closing costs. If, for example, you paid $300,000 for your new property, you can expect to pay anywhere between $6,000 to $15,000.
Your trusted realtor will run through all these costs, and calculate roughly how much you’ll have to pay, ultimately helping you stay within your overall budget.
Try this closing costs calculator: