Understanding Closing Costs
When you make an offer on a home, there are several fees that need to be payed by the buyer
The following costs will be your responsibility upon closing:
- Property Transfer Tax (PTT): For properties over $450,000 or for investment properties, the PTT is 1% on the first $200,000 of the purchase price and 2% on the balance of the purchase price.
- Legal fees and Disbursements: typically these costs are between $750 and $1,000.
- Inspection fees: these fees vary based on property type; but typically run between $350 and $500.
- Site survey: for detached properties, some lenders may require a site survey. If required, this will be ordered by the lawyer and will cost approximately $300-$350.
- Title insurance: some lenders may require this, and if so, it will be ordered by the lawyer and will cost approximately $150-$200.
- Appraisal fee (depending on the lender): $165-$250
- Mortgage Application fee: in some cases, the lender will require a mortgage application fee. This can be discussed with your mortgage lender.
- Don’t forget about moving costs including cable hook-up, movers, packing supplies, etc.
- GST: if you are purchasing a brand new property, you will be required to pay 5% GST plus a 2% Transition Tax.
When calculating how much money you'll need up front on the purchase of your new home, you'll also need to consider the down payment.
The down payment on a home purchase typically ranges from 5% to 25% of the total value of the home. The obvious source of money for your down payment is either your savings or the proceeds from the sale of a home you already own.
While it is possible to buy a home with as little as 5% down, the amount of your down payment plays a factor in determing the type of mortgage will be able to secure. You may want to consider whether your mortgage will be conventional, or high-ratio.
What's the difference between a conventional and high-ratio mortgage?
- Conventional mortgage: Your down payment is at least 20% of the purchase price.
- High-ratio mortgage: Your down payment is less than 20% of the purchase price and must be insured by CMHC or GEMI. An insurance premium will apply.