Closing costs when purchasing a home
January 22, 2025 | Posted by: Sherry Corbitt
Besides the actual purchase price, you should budget for closing and post-closing costs when purchasing a home.
Common Closing Costs:
Land Transfer Tax
All provinces charge this tax every time a property changes hands and is based on the property's purchase price. The amount varies by province.
For Ontario, budget about 1% to 2% of the purchase price. In addition, some municipalities (e.g., Toronto) also charge a separate Land Transfer Tax.
Title Insurance
Lenders often require title insurance to protect against losses in the event of a property ownership dispute such as encroachment issues, existing liens on the property, an undischarged mortgage, and other issues related to the property's previous owner.
This is purchased through your lawyer and will cost around $300.
Property Valuation / Appraisal
A recognized home appraiser provides a professional opinion confirming the market value of the property. This may be required by the lender funding the mortgage to determine whether the selling price is reasonable for the market.
An appraisal will usually cost between $350 to $400.
Home Inspection
A home inspector evaluates the structures and systems that make up the home and provide a written report. While not mandatory, most people will make a satisfactory home inspection a condition of purchasing a resale home. A home inspection would not be required on a newly built home.
A home inspection will cost around $500, depending on the complexity of the inspections.
Legal Fees
A lawyer is required when purchasing a home to provide services such as preparing a title deed, conducting various services, preparing documents to secure mortgage funding, and disbursing funds. Ensure your lawyer's quote includes all related expenses and disbursements, not just legal fees. Make sure your interests are protected by discussing your Offer to Purchase with your lawyer before signing. Budget around $2000 for legal fees.
Common Post Closing Costs:
Changing the locks
When you move into your new home, you'll want to change the exterior door locks for security. After all, you want only the people you choose to have the key to your new home. You can change the locks yourself or call a locksmith to do the job.
Cleaning
Both your old home and your new home should be given a thorough cleaning at moving time. Whether you're buying cleaning supplies and doing it yourself or hiring someone to clean for you, the costs can add up.
Decorating
You might want to re-paint, replace some light fixtures, refinish the floors, re-carpet, or do any number of other decorating tasks. Plan your budget and time frame for your decorating projects.
Appliances
If your offer to purchase didn't include appliances and if you don't have your own, you will have to buy them when you move into your new home. Some appliances might have installation charges.
Tools and Equipment
When you own your own home, you can no longer call the landlord to do repairs. Instead, you'll need to own some essential hand tools and possibly some gardening, lawn maintenance, and snow clearing equipment.
These are a few examples of the most common closing costs involved in a home purchase.
If you have any questions regarding closing costs or mortgages, please contact me!
Sherry Corbitt, Mortgage Broker
