Closing Cost When Buying a House May Be More Than You Thought

Closing cost when buying a resales house

Home cost

You provided your deposit (usually 5% of home purchase price), prepared your down payment (usually 20% of home price), and arranged the mortgage from the lenders. However, it is not finished. You are expecting some other expenses, before closing and on closing day.

Those hidden costs include the home inspection cost, home appraisal cost, home survey cost, legal cost, insurance premium, land transfer tax, closing adjustment, and moving expense, etc.

How much does a home inspection cost?

• A buyer may hire a home inspector to inspect the condition of a property before the deadline specified in the contract. 
• The inspection covers the mechanical systems and the physical structure, such as the heating, ventilation, electrical, plumbing, roof, attic, walls, floors, ceiling, windows, doors, insulation, etc.
• This home inspection cost varies on the square foot, the home inspector, age,  property condition, location with an average range of $300~$500 for a typical single family home.

Home appraisal cost

If you apply for a mortgage, the lender may request a property appraisal to ensure that the value of the property is sufficient to cover the buyer's defaults if it happens. 

An appraiser is hired to estimate the value and create a report. This home inspection cost varies with an average range of $350~$700 for a typical single family home.

SURVEYOR FEE

A survey helps you identify any encroachments, improvement locations, and property boundaries. The surveyor’s fee may vary depending on a few conditions such as the property’s size, land shape, and terrain with an average cost of $600.

Real estate lawyer cost

A buyer hires a lawyer to review the agreement of purchase and sale, to perform a title search to ensure a clear title of the seller, to register the transfer/deed and charge/mortgage if any. These fees typically range from $1,000 to $1,500, depending on the size and complexity of the transaction.

Status Certificate

If you are buying a condo, you probably need to order a status certificate at a cost of $100. An additional charge is applied if you need to expedite it.

LAND TRANSFER TAX

A buyer is required to pay land transfer tax when buying a home in Ontario. In addition to the provincial land transfer tax, Toronto city levies an additional land transfer tax equal in value to that of Ontario. Land transfer tax is based on the home purchase price. 

COMMISSION

Commission to the buyer realtor is most commonly paid by the seller through the seller's listing brokerage or lawyer, commonly at 2.5% of the home purchase price in GTA. HST is applicable. 

Under certain situations, the buyer may be obligated to pay commission to the brokerage that is representing them under the terms of a buyer representation agreement.

Home Insurance Rate

You need to apply for home insurance in advance. The policy would start from the closing day. The cost is around $120 per month on an average home in Ontario.

You may need to add title insurance, with an additional $250 if it is not included in the legal fee.

Mortgage insurance

It applies only to the buyers whose down payment is lower than 20%. The mortgage insurance cost is counted into your monthly mortgage.

Moving cost

The moving cost varies largely, which could go low as you DIY by renting a truck or cost you like $1000 by hiring professional movers. 

Other expenses

Include opening new utility accounts such as electricity, telephone, and internet services.

Closing adjustment

• The day of closing is the day the ownership of the property is transferred to the buyer from the seller.
• Under the agreement of sale and purchase, the buyer is responsible for the costs that are incurred on the day of closing.
• Those items include utilities, property tax, condo fees, etc.

Possible immediate repairs and fix up and Renovations

Variable upon personal situations

Pre Construction condos Closing cost

The total closing fee on most pre-construction condos may range around 5.5% of the original sale price. Take an example of an average one-bedroom condo in Toronto with break down as follows

• Maintenance Fees: around $600

• Reserve Fund: two months of condo fees, around $1200.

• Property Taxes: varies with around 0.75% of a condo price.

• HST on new home appliances and other administrative fees

• Development Levies: variable, increasing significantly over years. It is better to be capped during the original contract with the builder 

• Utility Connection Fee etc: $500-2000

• Tarion Fee: varies with condo price, around $1300

• Real estate lawyer cost: $1500~$2000.

• Land Transfer Tax: Both Municipal Provincial Taxes are applied, variable on home price.