Your total closing costs will be a combination of your down payment, inspection fee, mortgage fee, legal cost and adjustments to your purchase price. Below is an explanation of usual costs you can expect.
Your down payment will usually be between 5% to as much as 25% of the original purchase price. Note: If you do not put down at least 20%, your mortgage will be subject to a mortgage insurance premium charge based on the value of the mortgage.
Your bank lender will typically charge you an appraisal and application fee for processing your mortgage; appraisals are typically $350.
It is a good idea to get have an inspection done of the property so that you can discover problems with the home at an early stage. This way, you can address the defects through negotiations with the seller or make an informed decision to walk away from the deal. A home inspection will typically cost $500.
Legal costs will vary, and usually include title searches, registration of the mortgage, title insurance, deed registration, and anything else that may be required to complete your transaction. You will also be billed for disbursements like printing, faxes, and courier charges etc.
- Lawyer Legal Fee: $695.00 – $1,000.00
- Title Search: $180.00 – $240.00
- Registration of Deed: $71.30
- Registration of Mortgage: $71.30
- Execution Certificates: $22.00 – $44.00
- Title Insurance: $250.00 – $432.00
- Office Expenses: $40.00 – $50.00
- Land Transfer Tax: Fees based on purchase price – you can use this Land Transfer Tax Calculator to estimate this cost.
As a rule of thumb, you can expect to budget 1.5% of the purchase price to pay for associated closing costs, excluding your down payment.
Typically, final adjustments to your purchase price will include the deposit you made to the seller, property taxes paid by the seller (part of which you will be responsible for paying), and the buyer’s share of the condo fees owing, if applicable. If your buying a new home, your HST rebate will also be calculated as an adjustment on closing. Below is a sample statement of adjustments listing the applicable credits and debits for a typical purchase.
Statement of Adjustments
|Prepaid Property Taxes
2015 taxes paid to date
Seller’s share for 201 days
ADD: Credit Owed to seller
|Balance Due on Closing
Payable to seller:
Title insurance protects you, the homeowner, against losses associated with title fraud, survey and title issues/ defects, as well as challenges against your ownership (title to the property). Title insurance not only provided coverage for problems that may occur in the future (e.g. title fraud), but also, provides coverage for problems that already occurred in the past, prior to your home purchase. It is a one-time premium and you are protected for as long as you own your property. A title insurance policy will usually cover title risks associated with the below listed items:
- solicitor error, omission or fraud
- unpaid property taxes or local improvement charges by a prior owner
- defects that would have been revealed by an up-to-date survey
- survey errors or illegibility of survey
- encroachments (before or after closing)
- contravention of municipal zoning by-laws
- unmarketability of title
- defects in the title
- invalidity or unenforceability of the mortgage on title
- easements (other than usual easements for utilities, etc.)
- contravention of subdivision, development and other agreements
- priority of certain construction liens
- priority of unregistered easements and rights of way
- fraud or forgery (prior to and after closing)
Lastly, if you are obtaining a mortgage to finance your home purchase, it is inevitable that your lender will require the lawyer to conduct certain due diligence searches and certify to the lender that the property is in compliance with things like the building code, planning act, and zoning by-laws, among other things. It is often most economical to secure a lender’s title insurance policy in lieu of conducting these off-title searches that will likely result in higher legal costs for the home purchaser.
If either you or your spouse plan to be away on or before the closing date, you should advise your lawyer at the earliest opportunity. Your lawyer can draft for you a power of attorney to allow your spouse or a third party sign the necessary closing documents in your absence. It is also advisable that you confirm with your mortgage lender that they will accept documents signed by power of attorney.
Your lawyer cannot release the keys to you until all closing documents have been exchanged, monies received and the deed has been registered. By the time these conditions are satisfied, it is likely to be 2-5pm in the afternoon. If you plan to move in the same day as closing, please budget your move in time accordingly.
The Transfer of the title to the property that you will receive on closing will convey to you only the land described in the Transfer and any buildings on that land. A survey shows the location of the buildings in relation to the land being purchased and apparent property boundaries. As part of the purchase process, our lawyers will often review with you an existing reference plan or plan of subdivision to verify the lot location and size. However, it is important to note that these are NOT surveys – the only way to determine the actual property line and building locations is through an up-to-date survey. Even if a seller has an old survey, it is not up-to-date and will not reflect changes made subsequent to the date of the survey. If you are getting a mortgage, it is likely that your lender will require a survey OR title insurance. The cost of title insurance is usually the least expensive option.
Among other things, a survey could show that part of the building you intend to purchase is on land belonging to someone else or that a neighbor has occupied part of the land described in your property Transfer, and by possession for a period of years, has become the owner of the occupied lands. A survey could show that the buildings or additions have not been located on the property in accordance with municipal by-laws and regulations. If an existing survey is accepted, it is your responsibility to make sure that it still accurately describes the buildings, apparent property boundaries and any improvements to the property. The cost of a new survey varies with the complexity of the property description. The average cost for a residential survey is between $1000.00 to $2500.00.
DISCLAIMER: Our website contains general legal information only and is not a substitute for legal advice from a lawyer. This information is provided to you without any representations or warranties, express or implied concerning the accuracy or completeness of the information.