You save for a down payment and assume this can all be applied to the house you’re purchasing. Wrong! You may be surprised at the variety of other costs that must be paid upfront.
Fees usually range from $600 to $650. If a law firm quotes a fee of $300 to $350, it may not have included the cost of executing the mortgage through the financial institution that will hold your mortgage. If this is the case, expect to pay another $250 to $300 for this service.
Land Transfer Taxes
The amount paid is based on the home’s purchase price. Click here to access the calculator that will estimate your Land Transfer Taxes. Please keep in mind that certain jurisdiction offer rebates for first time homeowners. Your lawyer will advise you if you qualify for any rebates.
Check with city hall to see how the taxes are paid within the municipality. Some communities or cities charge quarterly, some annually and some bill eight times a year.
For example: If you close on October 1st, the annual taxes are $2,500 and the vendor has already paid the taxes for that year, you would be responsible for paying the vendor the taxes for October, November and December: $2,500 / 12 months = $208.33 / month. Multiply by three months and you owe $624.99
Some cities charge a flat rate which others charge for usage and houses have meters. Let’s assume October 1st is your closing date and the city has a flat rate you are responsible for water charges for the three months.
If you purchase a condominium, you will be responsible for paying the vendor the monthly fee for a portion of the month after you take possession.
Foe example: If you close on October 15th, the monthly condo fees are $500 and the vendor has already paid the fees for the month, you would be responsible for paying the vendor the condominium fees from October 15th to October 31st. $500 / 31 days = $16.13/ day. Multiply by seventeen days and you owe $274.20
Search of Title
There are two types of search of title:
- Land Registry – usually for older homes entails conducting a 40 year search on the property.
- Land Title – simply registers the title back to the vendor. The registry system is more expensive. Budget approximately $100.
Title Insurance should also be obtained. You can find more information and associated rates by clicking here.
There are various municipal disbursements that must be paid on closing. Some approximate costs are:
- Tax Certificate $25
- Building Clearance $70
- Water $20
- Hydro $ 20
- Enbridge (local gas company) $10
If you lawyer finds that there are outstanding balances for hydro and water, it is considered to be a lien against the property. The amounts will be deducted from the monies the vendor receives from the sale of the house. Outstanding Enbridge (or local gas company) bills will not result in a lien being placed against the property. Enbridge (or local gas company) will pursue the previous tenant or owner.
Please contact your local utility a week or two before closing to advise them of the change of ownership. You should also enquire if they can perform a meter reading on your move in day. This should ensure that only your consumption appears on your next invoice.
Registration of the deed and mortgage(s)
Each of these costs $50 per document. If the property you purchase has two mortgages, you pay $50 for the deed and $100 for the mortgages.
These charges include all additional costs that the lawyer incurs while working on your behalf. Example: you are charged for faxes, courier services, photocopies and long distance phone bills. Budget approximately $50
Let’s assume a home, purchased in Toronto, is closing on October 1st: Purchase price is $350,000 with annual taxes of $2,500.
|Land Transfer Tax *:
|Toronto Land Transfer Tax *:
|Search of Title:
|Total Closing Costs:
* Please note that you may be eligible for a rebate. Your lawyer can provide you with the latest information.
Article written by Ellen Mackay with updates by Yannick Picard