The Real Estate Blog

If you are preparing to buy your first home, there are additional pre-closing, closing, and post-closing costs above the down payment that you may need to include in your budget. At Dewar Realty, we can help you through the home buying process so you don’t get hit with unexpected fees. Check out our guide below.

Pre-Closing Costs

Home Inspection

While this isn't mandatory, a home inspection can help you avoid potentially expensive problems later. A home inspection is a visual examination by a certified home inspector of a home's major structure and systems. A home inspection report identifies necessary repairs or improvements, when they should be done, and the approximate cost involved. The cost of a home inspection depends on the age, location and square footage of the house, and range from $300 - $500.

Property Appraisal

Your mortgage lender may require you to have this type of inspection that results in an unbiased estimate of your home's value. The goal of an appraisal is to assure the lender that the house is worth what they may be lending to you. While the lender requests the appraisal, the borrower is responsible for the cost of which ranges from $250 - $500.   

Closing Costs

Real Estate Legal Fees

You will need to hire a real estate lawyer to handle the various documents and contracts including conducting a title search to ensure there are no liens on your property, registering the deed, and arranging the transfer of funds. You can expect to pay a minimum of $700 (legal fee) and $400+ (disbursements).

Land Transfer Tax (LTT)

Ontario's LTT is a provincial tax payable by the purchaser by the purchaser's lawyer at closing. The tax is calculated as a percentage of the purchase price of your home (Toronto also has a Municipal LTT). First time home-buyers may be eligible to receive a rebate equal to the full value of the LTT to a maximum of $4,000. LTT in Ontario (not including the Toronto Municipal LTT) are based on the following:

Up to $55,000 X 0.5% of total property value

From $55,000 to $250,000 X 1% of total property value

From $250,000 to 400,000 X 1.5% of total property value

From $400,000 up X 2% of total property value.

Other Adjustments

Depending on your closing date, you may need to reimburse the seller for any pre-paid property taxes, utility payments or condo maintenance fees. This is done at closing by your lawyer on your behalf and may range from $400 - $700.

Insurance Policies

Home insurance must be in place before closing. Rates vary depending on the value of your home. You can expect to pay approximately $800+/year. Title insurance, which protects you against title fraud, encroachment issues and survey errors, is optional and is approximately $325 for the average home.

Mortgage Loan Insurance

If your down payment is less than 20% of your home, you may be required to pay an insurance premium based on a sliding scale which is part of your mortgage agreement. The premium can be paid up front in a lump sum or added on to your monthly mortgage payment.

13% HST on New Homes

If you are purchasing a new home, it is subject to 13% HST. This is not applicable to re-sale homes. This is payment at closing, although you may be eligible for provincial and federal rebates.

Post-Closing Costs

Other expenses to consider once you’ve purchased your home include: moving costs, home renovations and decorating, utility hook-up fees, and the possible purchase of appliances, general tools, gardening and snow clearing equipment. As you can see, there’s several additional costs on top of the purchasing price that you need to consider when purchasing your home. A good realtor can guide you through the home buying process so you can focus on other details. Contact Dewar Realty today for help in your next real estate decision.