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It’s exciting getting ready to take possession of a new home. Closing costs are estimated at 1-1.5% of the price of the property; avoid any surprises by reviewing all the final expenses before the closing date.
Mortgage Default Insurance. Also known as CMHC is mandatory If your down payment is less than 20%. The insurance premium ranges from 0.6% - 4.5% it is based on the amount of your mortgage and in most cases is added to the mortgage balance.
Land Transfer Tax. When you purchase a house, condo or land in Ontario you must pay land transfer tax. For homes under $400,000 the rate is 1.5% of the purchase price; over $400,000 it’s 2%. However, if you are a first time home buyer you are eligible for a rebate of up to $4000.
Home Inspection. A good real estate agent will recommend you make your offer conditional of a home inspection. The inspector will look for items that could affect the price and desirability of the home. The cost usually runs between $350-$700 but will depend on the size, age and time needed to complete the inspection.
Appraisal. Your mortgage provider may request an appraisal be done to confirm the market value of the home. Expect the cost to be between $350-$700, depending on the size of the property, its location and how urgently you need the report.
House Insurance. It is law in Canada that you have fire insurance on the property the day you take possession.
Title Insurance. Available through your lawyer; this insurance protects you from any unpleasant revelations regarding your property’s history that may come up in the future. The cost is approximately $250-$500.
Legal Fees. A lawyer is vital part of your team when purchasing any property. They are responsible for transferring land title, research, negotiating with seller’s attorney, handling documents and much more. Approximate costs $800-$1300.
Service Activation Fees. Once you move in plan to pay activation fees for telephone, internet, gas, electricity and/or any other utilities.
Prepaid Bills. If the previous owner has prepaid the property taxes or utilities (gas, water, hydro) you may be required to reimburse them.
Forwarding Your Mail. It is important to notify family, friends, employers, the bank, utilities and your credit card company of your new address; but if you forget someone Canada Post can forward your mail for a small fee.
These unavoidable costs are the last hurdle between you and your new home, be sure to plan for them.
Have a great weekend.
Tracey
Source: https://www.paulsarantismortgages.ca/
Photo by Towfiqu barbhuiya on Unsplash
Products or services related to investments, investment recommendations, financial planning, retirement planning, and investment reviews are provided through our mutual fund dealer Security Financial Services and Investment Corp. 4665 Yonge Street, Suite 309, Toronto, ON M2N 0B4 t 416.964.0440
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