Costs of Purchasing a Home

Besides the actual purchase price of real estate, there are other costs that a buyer should be aware of to complete the transaction.

Legal Fees or Closing Costs

A week before possession date, the purchaser must bring into the lawyer’s office a certified check or bank draft for the balance of the monies owing on the down payment, plus the closing cost or legal fees.  These fees are as follows:

 (To get exact costs please check with your lawyer)

1. Lawyer's Fees

This fee depends on how much your lawyer charges you for his or her service.  Be sure to ascertain exactly what this will amount to in a worst-case situation. This fee usually ranges from $350 to $2,500, depending upon whether one or more mortgages are to be drafted and registered.

2. Land Transfer Tax 

This tax is paid to the provincial government when you purchase property, but not when you sell property. The tax is calculated as a percentage of the fair market value (purchase price), as different percentages are applied to each part of the fair market value.  The higher the price is, the higher the tax.  The percentages are as follows:

Price                                                    Tax

Under $30,000                                  No tax

$30,000 - $90,000                               .5%

$90,001 - $150,000                             1.0%

$150,001 - $200,000                           1.5%

$200,001 and higher                           2.0%                           

*Please check with your Realtor as to the rates applicable in your location. SUBJECT TO CHANGE

3. Registration Fees

Fees paid to the provincial government for recording a title transfer, mortgage registration, or other instruments such as an Assignment or Lien with the local authorities.

4. Zoning Memorandum

The law firm will ensure that the property being purchased complies with all municipal zoning regulations, and will obtain a Zoning Memorandum when necessary.

5. Tax Certificate

This certificate is issued by the City or Municipality.  It indicates whether or not there are any unpaid taxes. If they are not up to date, the municipality requires that the seller pay them off from the proceeds of the sale. If there are insufficient proceeds, then it may fall upon the buyer to pay them.  If so, a Tax Certificate is issued, from which any adjustments can be made, usually requiring the buyer to compensate the seller for any prepaid taxes.

6. Survey Certificate

This is the legal written and/or mapped description of the location and the dimensions of your land. The survey should also show the dimensions and placement on the lot of any structure, including additions such as pools, sheds, and fences. An up-to-date survey is often required by a lender as part of the mortgage transaction.

7. Property Tax and Prepaid Utilities Adjustments

 If the previous owner prepaid property taxes or other utilities, they will be credited the prepaid portion on closing. If they paid all their taxes by April, expect a large adjustment cost on closing!

8. Interest Adjustment (IA) 

If you arrange to make your mortgage payments monthly on the first day of the month, and your transaction closes after the first day of the month, your lender may charge you interest on closing up to the first theoretical payment date, called the Interest Adjustment Date (IAD). This can be a sizeable amount, and can often be negotiated down (or away).

9. GST & PST

GST is payable on the legal fees and most disbursements, however, not on land transfer tax or land title costs.  PST is payable on the legal fees.

10. Miscellaneous Searches and Couriers

This represents the standard cost for title searches, ordering caveats from fax charges, photocopying, couriers, and other miscellaneous charges.

Other costs

1. Home Inspection

 A report commissioned by a property owner or purchaser, usually to verify the condition of a property prior to the "firming up" of a Real Estate transaction. The scope and detail may vary, but most reports indicate the specific problem and the cost to repair. Unfortunately, no licensing is required, and this service is not specifically regulated other than by general consumer protection legislation. The best safeguard against inadequate work is to ask for the resume of the Inspector, and if possible, check references from previous customers.

2. Appraisal and Application Fees 

Typically when a borrower has a conventional mortgage (LTV less than 80%) and an appraisal needs to be ordered.  The appraisal declares what the value of the home is. These fees (a few hundred dollars each at most, unless the property is exceptional) will usually have to be covered at the time of application for a mortgage.

3. New Home Warranty Program

This is a third party (provincial) warranty program between a builder and a buyer. With the exception of Ontario and Quebec, membership in such a program is voluntary for the builder. Through these programs, your home is guaranteed against defects for at least one year. All homes with a high-ratio insured mortgage (greater than 80% loan to value) must be enrolled in such a program.

4. Connection Charges