Closing Costs when Buying a Home



Buying a Home:   What Expenses to Expect   


Budgeting for a new home can be tricky. Not only are there mortgage instalments and thedown payment to consider, there are a host of other—sometimes unexpected— expenses

to add to the equation. The last thing you want is to be caught financially unprepared, blindsided by taxes and other hidden costs on closing day. These expenses vary…


Some of them are one-time costs, while others will take the form of monthly or yearly instalments. Some may not even apply to your particular case. But it’s best to educate yourself about all the possibilities, so you will be prepared for any situation, armed with the knowledge to budget accordingly for your move. 


Use the following list to determine which costs will apply to your situation prior to structuring your budget: 

1.Purchase offer deposit.

An offer deposit is typically between 2% and 5% of the offer price, typically due upon acceptance and is 

credited towards the purchase price on closing. 

2.Inspection by certified building inspector. 

Budget between $400 and $700 depending upon the size & scope of the inspection. 

Additions such as Septic Inspection & WETT Inspection add to the cost but are invaluable.

3.Appraisal fee:
Your lending institution may request an appraisal of the property. The cost of this appraisal is your responsibility. Often the cost of an appraisal is rolled into the mortgage costs.

4.Survey fee:
Although not common, your lending institution may request an updated property survey if the home you’re purchasing is a resale (as opposed to a newly built home). The cost for this survey will be your responsibility and will range from $700 to $1000. 

5.Mortgage application at your lending institution.
The costs associated with mortgage applications tend to be rolled into the mortgage costs.

6.HST (13%):
This tax typically only applies to newly built homes only, or existing homes that have recently undergone “extensive” renovations. 

7.Legal fees:
A lawyer should be involved in every real estate transaction to review all paperwork. Experience and rates offered by lawyers range quite a bit, so shop around before you hire. Budget between $1,000 and $2000.

8.Homeowner’s insurance:
Your home will serve as security against your loan for your financial institution. You will be required to buy insurance in an amount equal to or greater than the mortgage loan. 

9.Land transfer (purchase) tax:
This tax applies in any situation in which a property changes owners and can vary greatly.

For more information and a Land Transfer Tax Calculator click Here.

10.Moving expenses.
Whether you hire professional movers or renting a moving truck, consider putting some cash aside. 

11.Service charges:
Any utilities you arrange for at your new home, such as cable or telephone, may come with an installation fee. 

12.Fuel Oil / Propane adjustments:
If the property you are purchasing has an oil or propane furnace, it is typical to have the tank filled on closing. This can be a $500 to $800 expense. Likewise, if wood is used as a primary source and there is a lot of wood on site then there ‘could’ be an adjustment. Typically wood costs about $100+/- per face cord.

13.Renovation of new home:
In order to “make it their own,” many new homeowners like to paint or invest in other renovations prior to or upon moving in to their new home. If this is your plan, budget accordingly. 

14.Maintenance fees:
If you are moving to a new condominium, you will likely be charged a monthly condo fee which covers the costs of common area maintenance.  

Not all of these expenses will apply to each situation and though a lot of thought has been put into it, this may not be a complete list of expenses. Either way be prudent and do your research. Good luck in your search..

Cheers, Chuck.

 ** Information provided by Chuck Murney, Sales Representative @ RE/MAX Parry Sound Muskoka. **

** All information is for assistance only and will vary subject to property area & specifics.**

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