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Closing Costs


When buying a new property, it is important to be aware of all the closing costs associated with your new purchase. Closings costs are a list of chargers for differentness purposes that your lawyer represents to you on the closing date of your home. Make sure to get familiar with all the closing costs as stated in your purchase agreement so you are not surprised on the closing date with the additional charges. According to the CMHC and Genworth Financial you should have at least 1.5% of the purchase price for closing costs in addition to the down payment (have around 2.5% to be on the safe side). The costs vary among provinces and cities.

Below is a guideline for closing costs, but doesn’t cover all costs specific to certain properties. Your lawyer typically provides you with more detailed explanation based on your purchase.

Home Inspection Fee ( Generally Required with Resale Homes):
A professional inspection of the home, top to bottom, is usually beneficial for the buyer for it will outline in defects in the home that the visible eye cannot see. This inspection can cost between $300-$400. When you come to hire an home inspector, make sure that they have liability insurance just incase they overlook something.

Appraisal Fee (Generally Associated with new Homes):
An appraisal provides the lender with a professional opinion of the market value of your new property. This will usually cost between $100-$300.

Fire Insurance
In order to get a mortgage, lenders typically require a certificate of fire insurance to be in place from the time you take possession of your new home. The fire insurance amount that is typically required is equivalent to the amount of the mortgage or the replacement cost of the home.This cost can vary any where between $250-$600 annually for most property.

Provincial Sales tax on Mortgage Insurance
If your mortgage is insured, (CMHC or Genworth Financial), you will be required to pay the applicable taxes on the insurance premium on closing. While the insurance premium can be added to the mortgage amount, the tax must be paid at closing.

Land Survey Fee or Title Insurance Fee
A recent survey of the property is usually required by lenders. If one is not available the cost can range between $600 – $900 for a new survey. Most lenders today will accept title insurance which can cost considerably less.

Legal Costs and Disbursements
Lawyers and notaries will charge fees for their services involved in drafting the title deed, preparing the mortgage, and conducting various different research on your behalf. This cost will vary depending on the law firm you choose.

Land Transfer Tax
In most of the provinces, there is a charge for land transfer tax payable by the purchaser. This amount varies depending on the province in which the property is bought.The land transfer tax is generally based on the purchase price of your new home. In most provinces, first time home buyers maybe eligible for a refund on this land transfer tax.

New Home Warranty
In most provinces, new homes are covered by a new home warranty program. The core to purchase this warranty is approximately $600 and should the builder default or fail to build to an agreed-upon standard, the fund will finish or repair the deficiencies to a maximum amount. For more details information about new home warranty visit:

GST is payable on the purchase of newly constructed homes only. When purchasing a new home, be aware of who is responsible for paying the GST, you or the builder. On the offer the purchase price will say “Plus GST” or “GST Included” and who gets any GST rebates. Many builders have included this cost into the purchase price so the buyer does not have to come up with it at closing.

Closing Adjustments
An estimate should be made for closing adjustments for bills the seller has prepaid such as property taxes, utility bills, and other charges. Any bills after the closing date are the responsibility of the purchaser. A lawyer will let you know what they are once the various searches have been completed.

Get to know the property that you are buying and familiarize yourself with all related closing costs. Make sure you get your lawyer to go over your purchase agreement before the deal becomes firm.



Sam Elgohary

Sam Elgohary is a Real Estate Broker with Century 21 servicing his clients in the Greater Toronto Area (GTA). He has a wide range of experience in Pre-construction Development and resale and is always looking to give his clients the most up-to-date knowledge about the market to help them in making new investments or selling their homes. His close connections with builders and a wide network of agents give him a competitive edge on everything to do with Toronto Real Estate. Connect with Sam: Cell 416-565-5925.


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