Be prepared for ALL costs when buying a home!
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If you are considering beginning your exciting journey of house-hunting or are already in motion, please STOP and review this information to avoid any startling figures.
CIBC offers this information to Canadians:
“While your down payment and mortgage will cover the purchase price of your home, it's wise to consider the other expenses involved in buying a home.
You'll pay some costs at the beginning of the home-buying process and others, known as closing costs or disbursements, when your home purchase is finalized."
ING Direct Canada has created this closing cost checklist that you can use to keep track of your expenses.
Additional costs that could add up when you buy your first home
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Property Valuation Fee
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Approximate Cost: $150 - $200
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This is the fee for determining the property lending value for
mortgage purposes. This value may or may not be the same as the purchase
price of the home.
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Home Inspection Fees
(may not apply if you are
purchasing a new home)
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Approximate Cost: $ 500
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The home inspector evaluates the structures and systems that make up
your home and provides you with a written report. While not mandatory, many
people make a professional home inspection a condition of their Offer to
Purchase.
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Property Survey
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Approximate Cost: $750 - $1,000
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A survey indicates the boundaries and measurements of the land and
positions of major structures, and any registered or visible easements (such
as a driveway) or encroachments (such as a neighbour's fence) on the
property.
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Land transfer tax (if applicable)
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Varies based on Province
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This is charged whenever a property changes hands and is based on the
purchase price. Most provinces in Canada charge a provincial land transfer
tax and some cities also charge an additional municipal land transfer tax. In
some cases, first time homebuyers may be exempt from a portion of this cost.
You can obtain further details about land transfer tax on provincial or
municipal websites to help you estimate the cost.
As an example, if you are thinking about purchasing a home in
Toronto, Ontario for $300,000, the provincial land transfer tax is $2,975 and
the municipal land transfer tax is $2,725 for a total cost of $5,700.
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Legal fees and related expenses
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Approximate Cost: $1,300 - $2,500
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These fees vary by province and are subject to GST or HST where applicable.
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 or notary prior to signing.
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GST/HST where applicable (sometimes included in sale price)
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Varies based on Province
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Some properties are GST and/or PST sales tax exempt and some are not.
Generally, GST or HST where applicable is charged on new homes, but not on
resale properties. Always ask before signing an Offer.
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Title insurance
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Approximate Cost: $250
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Title insurance is optional and covers problems that may arise due to
encroachment issues (for example, a structure on your property is actually part
of your neighbour's property and needs to be removed), existing liens against
the property's title, title fraud, undischarged mortgages and other issues
relating to the property's previous owners.
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Insurance costs for high-ratio mortgages
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Variable
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Usually, mortgage default insurance premiums range between 0.5% and
2.75% of the principal plus applicable fees (may be subject to
provincial sales tax which cannot be added to mortgage amount)
If your down payment is less than 20% of the purchase price of your
home, you must pay a one-time insurance premium on your mortgage amount. You
can make arrangements to pay the premium to CIBC before closing, or it can be
added to the principal amount of your mortgage. If it is added to the
principal amount of your mortgage, you will pay interest on it at the same
interest rate you pay on the principal amount of your mortgage.
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Interest adjustments
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Approximate Cost: $100 - $1,000
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You will need to pay interest on any gap between the closing date of the
purchase and the first payment date of the mortgage. You can avoid an
interest adjustment by arranging to make your first mortgage payment exactly
one payment period after your closing date.
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Prepaid property tax and utility adjustments
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Approximate Cost: $400 - $500
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You will be required to reimburse the vendor for any prepaid property
taxes or utility bills.
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Home insurance
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Approximate Cost: $450/year Variable
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Protection for your home and contents.
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Mortgage life insurance
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Variable
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Costs vary but can be conveniently included in your regular mortgage
payment.
Mortgage life insurance is optional and provides peace of mind. It
protects your family’s financial security by paying off all or a portion of
your mortgage (up to a maximum of $500,000) in the event of the premature
death of you or your spouse.
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Any questions contact
705-324-6153
Visit our website at www.darolynjones.com
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