 Costs
to Consider
Buying
a home costs more than the offer you make. There are numerous other expenses
that will add to the amount that you'll need to consider. This purchase
price checklist outlines all the costs you can expect. Please note that
they can vary by province and are subject to change.
Purchase
Price
The starting
point in your calculation... if you're like most first-time home buyers,
you'll need a mortgage for the majority of this!
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Legal
Fees and Registration Costs
Although
fees vary across the nation, it can cost you up to $1200-$1500 on a purchase,
and $500-800 for a refinance.
Land
Transfer Tax
A tax
payable to the Provincial Government by the purchaser upon the transfer
of title from a seller. This amount is usually not anticipated by most
homeowners and can be sizeable (click here
for the Ontario Land Transfer Tax calculator and here for the Ontario New
Home Buyer Land Transfer Tax Refund). The amount varies from
province to province and is generally a percentage of your purchase price.
We can advise you on this matter.
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Registration
Fees
Fees paid
to the provincial government for recording a title transfer, mortgage registration
or other instrument such as an Assignment or Lien with the local authorities.
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Home
Inspection
A report
commissioned by a property owner or purchaser, usually to verify the condition
of a property prior to the "firming up" of a purchase agreement. The scope
and detail may vary, but most reports outline any particular problems and
associated repair costs.
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Land
Survey
The legal
written and/or mapped description of the location and dimensions of your
land. The survey should also show the dimensions and placement on the lot
of any structure, including additions such as pools, sheds and fences.
An up-to-date survey is often required by a lender as part of the mortgage
transaction.
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Survey
or Title Insurance
New to
Canadian consumers over the last few years is the introduction of title
insurance into the home buying process. Title insurance can be purchased
by home buyers to protect against potential deficiencies in a number of
areas, such as the land survey. There are numerous benefits to this product,
and you should consult your lawyer.
Charges
Some local
utility companies (hydro, gas, oil) charge a fee on closing to connect
new buyers up to their service. More common, however, is an extra charge
on the first billing.
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Property
Tax Adjustments
If the
previous owner prepaid property taxes or other utilities, they will be
credited the portion on closing. If they paid all their taxes by April,
expect a large adjustment cost on closing!
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Interest
Adjustment (IA)
If you
arrange to make your mortgage payments monthly on the first day of the
month, and your transaction closes after the first day of the month, your
lender will charge you interest on closing to the next interest date, called
the Interest Adjustment Date (IAD), when your payment cycle will commence.
This can be a sizeable amount, but it is the correct interest you should
pay. For example, close on June 15th, pay 15 days interest on closing and
start payments on August 1st.
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