Closing Costs For Home Buyers & Sellers In Ontario, Canada
Important! HST in Ontario applies to many of your closing costs and services associated with buying a house. So pay extra attention and ask any questions you may have!
There are fees associated with the buying or selling of a home and these are called closing costs. Certain fees are automatically assigned to either the buyer or the seller; other costs are either negotiable or dictated by local custom. In Dufferin, Peel and Wellington regions, in towns and cities like Shelburne, Orangeville, Brampton, Newmarket, Erin, Caledon, and surrounding rural areas, the fees are commonly broken down as below. I would still suggest speaking with your trusted professionals first though. Lawyers, mortgage brokers, insurance brokers and real estate agents are all apart of your professional team to ensure everything goes according to plan and I am here to help you every step of the way. Call/text/email me anytime! 1-519-216-1791
Buyer Closing Costs:
When a buyer goes for a mortgage pre-approval, lenders and brokers are required to provide them with a good-faith estimate of their closing costs. The fees vary according to several factors, including the type of loan they applied for and the terms of the purchase agreement. Likewise, some of the closing costs, especially those associated with the loan application, are actually paid in advance. Some typical buyer closing costs include:
- The down payment - at least 5% (This goes towards your down payment as well!)
*The new regulations will increase the minimum down payment from five to 10 per cent on the portion of the home's price that's greater than $500,000. With 20% still requried for homes over 1 million. The minimum down payment on the first $500,000 of the home's price will remain at five per cent. More details here
- Lawyer fees: usually totalling $1200-$1900
- Home Inspection fees: $300-$500
- Appraisal fee, Loan fees (points, application fee, credit report) sometimes paid by the bank, if not $300-$500
- Insurances, home and life: DO NOT MORTGAGE INSURANCE!!!!!!!!!!!!! (ASK ME WHY or google CBC MORTGAGE INSURANCE)
- Land Transfer Tax: First time buyers get a rebate of $4,000***NEW AS OF JAN 1st 2017*** More details on how to qualify
*ALSO NOTE: Toronto has additional land tax. Budget about 1.75% of sale price
- PST on CMHC Mortgages Only (less than 20% downpayment): Ontarians now pay
8% tax on insurances, and this is applicable on CMHC insured mortgages. Budget
approximately - $300-$500
- Interest, property tax and other adjustments: Based on closing dates and the time of
year, you will have to pay for various adjustments and other expenses. If the current
owner has paid up two months of property taxes, for example, you will have to
reimburse them on the closing dates. Other adjustment costs may be propane tanks
etc. Budget approximately $500-$1000
A good rule of thumb to estimate closing costs would be to budget about 2% of the sale price. $200,000 = $5,000.
REMEMBER: Some things you'll need to set up and organize before your move-in date are:
- Home Insurance - most people go with their auto provider which gives them a discount. I can assist with all the unique questions they ask about the house.
- Utility set-up - call Hydro, phone and your gas company and make sure they know your move-in date so your services aren't disrupted
- Canada post - Ensure you put in an address change so all your mail is forwarded to your new house
- A moving truck! Most are busy on weekends and booked solid at the end of the month, so if you can try and make your closing date mid-week and mid-month you'll save some money
- Within 10 business days of moving you must go to the ministry and have your address changed on your license and insurance
****Print this checklist to help with who to remember to notify when moving! ****
Seller Closing Costs:
If the seller has not yet paid for the house in full, the seller's most important closing cost is satisfying the remaining balance of their loan. Before the date of closing, the mortgage broker will contact the seller's lender to verify the amount needed to close out the loan. Then, along with any other fees, the original loan will be paid for at the closing before the seller receives any proceeds from the sale. Other seller closing costs can include:
- Real estate commission
- Transfer taxes
- Documentary Stamps on the Deed + Legal Fees $1000-$1600
- Title insurance
- Property taxes (prorated)
- Mortgage dischage fees if not porting
Negotiating Closing Costs:
This is very common for Americans to do so we see it on TV all the time. It is not a common practice North of the border though. Negotiations can be made after a qualified home inspection is completed on the home though. If there were hidden defects and unforseen costs that the buyer was not aware of when negotiating the offer and the costs are astinomical, we may agree to split the difference, have the seller repair or the buyer can walk away from the offer and get their deposit back.
At closing, certain costs are often adjusted (or distributed) between buyer and seller. There are time adjustments made to fairly and evenly divide costs such as: utilities or oil tanks. The most common prorations are for property taxes. This is because property taxes are typically paid at the end of the year for which they were assessed.
Thus, if a house is sold in June, the sellers will have lived in the house for half the year, but the bill for the taxes won't come due until the following year! To make this situation more equitable, the taxes are prorated. In this example, the sellers will credit the buyers for half the taxes at closing.
Luckily, you have a team of professionals working hard for you every step of the way. It's our job! If you would like any assistance or have any questions give me a call anytime. I would love to help make your move easier!
For more information check out this site. Or contact a mortgage broker.
Also take a look at my mortgage calculator and calculate your land transfer tax.
Call me today and "Let's Get Moving!"
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