Below is a list of possible fees you could have to pay upon closing:
• Appraisal Fee
The appraisal fee is the cost for a professional appraiser's opinion of the value of the property. Mortgage lender may require an appraisal to determine whether the selling price is reasonable for that market. This cost is normally the borrower's responsibility and is approximately $300. Occasionally, the costs could be slightly higher for larger, custom-built homes, or homes in remote parts.
• Fire Insurance
You are required by the mortgage lender to have fire insurance, effective at the time you legally take possession of your new home. The insurance must be at least equal to the amount of the mortgage. Make sure that you enlist your insurance agent early. The cost can vary anywhere from $250 for a condo to $600 plus for most properties.
• G.S.T.
On the purchase of a newly constructed home, GST is payable, but make sure you know who pays this, you or the builder. Therefore, on the offer, the purchase price will say "Plus GST" or "GST Included". Also who gets the GST new home rebate? A lot of builders have included this cost into the purchase price so that the buyer does not have to come up with that at closing. (As well, this tax is also charged on all professional fees).
• Home Inspection Fee
The home inspection fee covers the cost of a professional inspection of your home. A typical home inspection can cost anywhere from $300-$400. New home buyers may not worry about it, but a definite must for buyers purchasing properties older than 5 years. When hiring a home inspector, make sure the inspector has liability insurance, just in case a mistake is made.
• Land Transfer Taxes
Most provinces levy a one-time tax when you buy a home (subject to change). The tax is based on a percentage of the purchase price of the property, and varies from province to province.
The Ontario Land Transfer Tax is charged by the province when ownership
of property is changed. It is normally paid by the purchaser when property is
bought. It applies everywhere in the province. Currently, the land transfer tax in ONTARIO is as follows:
0.5% - on the first $55,000
1.0% - on portion between $55,000 - $250,000
1.5% - on balance over $250,000
2.0% - on anything over $400,000
First time buyers get up to $2,000 rebate.
In 2007, the City of Toronto introduced a second land transfer tax which is also paid by the purchaser when the property is bought. It applies to any property purchased in the City of Toronto municipality.
The TORONTO land transfer tax in is as follows:
0.5% - on the first $55,000
1.0% - on portion between $55,000 - $400,000
2.0% - on anything over $400,000
First time buyers are exempt on the first $400,000.
• Legal/Notary Fees
Legal costs include fees for the professional services provided by your lawyer or notary; costs involved in conducting a title search, drafting the title deed and preparing the mortgage, as well as registration fees and other disbursements.
• Mortgage Insurance Fee
Any purchase where the down payment is between 5% and 19% is considered a high-ratio mortgage, and the mortgage must be insured by a mortgage insurance provider. The insurer will charge a fee for this insurance. The amount of the fee will depend on the amount you are borrowing and the percentage of your own down payment. Typical fees range from 1.00% to 3.25% of the principal amount of your mortgage. This amount can be paid up front or added to the principal portion of your mortgage.
• Provincial Sales Tax (in Ontario 8%)
If your mortgage is insured (less than 20% down payment), there is P.S.T. of 8% in Ontario, payable at closing, on the mortgage insurance fee. While the insurance premium can be added to the mortgage amount, the P.S.T. must be paid at closing.
• Prepaid taxes, utility bills and other charges
The seller may have prepaid some bills before the closing date which you will have to reimburse. All taxes, utility bills, and other charges incurred up to the closing date are the seller's responsibility. After that date, they are yours.
