The following is courtesy of the Bowes and Cocks Limited, Brokerage Buyers and Seller guide. Even people who like surprises don’t like to be surprised by unexpected costs on closing. The best way to avoid surprises us to be educated about your closing costs. Here is a quick overview of expenses you should budget for:
If you would like a checklist or a worksheet to help you budget properly, I can send you one via mail or e-mail.
Down payment: A minimum 5% is required. Speak with a mortgage professional about the potential to borrow your down payment. Not a great option, it does leave you with a mortgage payment, property taxes and a loan payment – and that’s before you’ve paid any of the other bills.
Deposit: Payable when an offer is accepted and credited towards your purchase price on closing day.
Home Inspection: Recommended before finalizing offer to purchase because it may reveal areas where repairs are required. The inspection may range between $150-$500 depending on the inspector and the property.
Water/Septic/Fireplace: If you’re purchasing a property with a well, septic system, or fireplace, you may need to pay a professional to take a look before you waive your conditions. In most cases, we ask the seller to pay for pumping the septic system and ensuring the code compliance of any fireplaces or woodstove. But, as the buyer you should plan on paying $225 for an hour-long pump test of the well and more for additional chemical analysis (Ministry of Health Water Testing is a free service).
CMHC and the other mortgage fees: These will often be included in the amount you borrow. Your mortgage broker or bank representative will advise you of this.
Tarion: If you’re buying a new home, the cost of the Tarion warranty is paid by and usually $600-$800, depending on the sale price of the home.
Land Transfer Tax: This amount varies depending on the purchase price. If you are a first time home buyer, you can receive a rebate up to $2,000 of this tax.
Commission: Although rare, there are some scenarios where the buyer will be responsible for real estate commissions. We will advise you before writing an offer if this will be an issue. Generally only in a private sale scenario or as a buyer strategy you offer the REALTOR to get them to work at finding a house that isn’t on the market or a choice location.
Adjustments: If you are buying a home in February, and the seller has paid their property taxes until June, they will want reimbursement for that time. Your lawyer will calculate this amount exactly. If you’re buying a property with an oil tank, the seller is to have filled the tank before closing, you will be billed for this amount. These are the common adjustments payable on closing.
Property/Fire insurance: Proof of insurance is required by your closing date and it must at least cover replacement value of home and contents.
Status certificate: If you’re buying a condo, you’ll need $100-$125 for a status certificate outlining the rules of the condo and its financial standing.
Legal fees: Real estate lawyers have many hard costs when they process a purchase. This includes searching title, transferring the deed, title insurance and more. The lawyer’s fee varies from firm to firm. Legal fees vary widely, and the total cost depends on the extent of services provided. You will also be responsible for disbursements (any costs related to handling your file, such as long distance calls and travel).
Moving costs: This will depend on whether you rent a truck or hire movers, the time of year you are moving and also how much stuff you have!
Mark Million is a Realtor with Bowes and Cocks Limited, Brokerage in Peterborough. If you would like a free opinion of value or ways to market your home differently contact me. If you want free advice on any real estate question or scenario you may have, by all means contact me. All information or conversation disseminated through WordPress or any other means of correspondence between myself and you is not intended to solicit those currently under contract.