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The price of the home is only one part of the story!


Blog by Rebecca Permack | November 11th, 2016


UNDERSTANDING REAL ESTATE CLOSING COSTS

When you make an offer on a home, there are several expenses that you may need to pay.

In addition to the agreed upon purchase price of the home, you'll need to consider the following costs, which will be your responsibility upon closing:

  • Property Transfer Tax (PTT): For properties over $450,000 or for investment properties, the PTT is 1% on the first $200,000 of the purchase price and 2% on the balance of the purchase price.

  • Legal fees and Disbursements: typically these costs are between $750 and $1,000.

  • Inspection fees: these fees vary based on property type; but typically run between $350 and $500.

  • Site survey: for detached properties, some lenders may require a site survey. If required, this will be ordered by the lawyer and will cost approximately $300-$350.

  • Title insurance: some lenders may require this, and if so, it will be ordered by the lawyer and will cost approximately $150-$200.

  • Appraisal fee (depending on the lender): $165-$250

  • Mortgage Application fee: in some cases, the lender will require a mortgage application fee. This can be discussed with your mortgage lender.

  • Don’t forget about moving costs including cable hook-up, movers, packing supplies, etc.

  • GST: if you are purchasing a brand new property, you will be required to pay GST.

When calculating how much money you'll need up front on the purchase of your new home, you'll also need to consider the down payment.

The down payment on a home purchase typically ranges from 5% to 25% of the total value of the home. The obvious source of money for your down payment is either your savings or the proceeds from the sale of a home you already own.

While it is possible to buy a home with as little as 5% down, the amount of your down payment plays a factor in determing the type of mortgage will be able to secure.  You may want to consider whether your mortgage will be conventional, or high-ratio.


What's the difference between a conventional and high-ratio mortgage?

  • Conventional mortgage: Your down payment is at least 20% of the purchase price.

  • High-ratio mortgage: Your down payment is less than 20% of the purchase price and must be insured by CMHC or GEMI. An insurance premium will apply.

For more detailed information about your mortgage and your closing costs, you should consider working with a certified independant Mortgage Broker.