The Costs of Buying a Home
Closing costs generally refer to legal fees, property tax and utility adjustment costs and, in some provinces, land transfer taxes.
Legal costs go to cover lawyer (notary in Quebec) fees and legal transactions such as reviewing the terms of the offer, preparing and signing a mortgage, conducting a title search on the property, registering a new title, obtaining relevant documentation and determining appropriate adjustment costs.You should consider hiring a real estate lawyer to handle your transaction. If you don’t have or know of a lawyer, your best referral source is family or friends, or through the law society in your area.
Land transfer tax
In some provinces this tax is levied when property changes hands. It varies with the purchase price of the property.
When it comes to real estate transactions, there are two ways HST will have an impact: Firstly, on the price of a new, from the builder, home, secondly, on commission payable on resale homes.
For new homes purchased from a builder, HST will be applicable on the purchase price of the home, albeit new homes purchased as primary residences across all price ranges will qualify for a rebate of up to $24,000 of the 8% provincial component of the HST. The HST on new builds is quite often built into the price of the new home and the builder applies directly for any rebates.
For resale homes, GST and, now, HST apply to real estate commissions only, as it is a service being provided to the consumer, not to the price of the home.
Costs other than closing costs can include but are not limited to the following:
- Property Survey. This is undertaken to verify the location of property’s boundaries, measurements and structures and identify any easements, rights of way or encroachments on your, or adjacent properties. Title insurance is often an alternative to a property survey.
- Interest Adjustments. This covers any interest accrued between the closing date of the purchase and the first regular payment date of the mortgage.
- Goods and Services and Sales Taxes. GST and sales taxes will depend on the type of property being purchased. Always ask if either or both of these taxes apply before signing an offer to purchase.
- Service Charges. These are charges to hook up utilities such as electricity, gas, and telephone service.
- Home Inspection. It can be a good idea to have an inspection done before completing the purchase to evaluate the structural and mechanical condition of the property. This could save you lots of money in future repairs.
- Appraisal fees. Some purchasers want to ensure they are paying a reasonable market price for the home they are purchasing. You may want to condition your offer subject to a satisfactory appraisal by a member of the Appraisal Institute of Canada.
- Mortgage Life Insurance. Special insurance coverage to cover the cost of discharging your mortgage in the event of death or severe illness is available from most lenders.
- Moving costs. Although it may sound obvious, purchasers may not consider moving as a cost of buying a home. Moving costs will depend on the distance of the move and the amount of furniture and goods to be transported. Get several movers in to give you an estimate before choosing one.
- Appliances. Check to see whether appliances are included in the purchase agreement. If not, you will need to go out and buy them.
- Landscaping, Fencing, Decks, etc. If purchasing a newly constructed home, keep in mind that there will likely be a need to landscape and fence the yard in the first year.
|Term||Our Rate||Bank Rate|
|5 YEAR variable||5.80%*||6.45%|