What You Need To Know About Closing Costs

When completely finalized the purchase of a property, closing costs are the last step in the transaction process. They are due before the keys are handed over, just before the title is transferred. In my experience, closing costs seem to be a concern of many purchasers. Yes, they aren’t inexpensive but not to the degree that most people assume they are. The cost also depends on the type of property you’re looking at as well, a resale has a few different things to consider over a new build. We recommend preparing to spend 5% of the purchase price for all of your closing costs. This is generally higher than necessary, but it’s better to remain safe rather than sorry.

Both Types Of Properties

Resale and new builds have much of the same fees and taxes. You need to budget for legal fees and disbursements (this covers all of the lawyer’s costs), this one-time fee is typically around $18,000. If you’re purchasing in Ontario there is the Ontario Land Transfer Tax and also the Toronto Land Transfer Tax, if it’s a unit within the city (it’s generally 4% of the purchase price for both). If you are a first time home buyer, there are rebates on each of them. Your appraisal fee is the cost that comes from the institution ensuring you can afford the mortgage. 

Resale Property

A resale property is a residence that has already been completed, being sold by the previous owner. The HST is already covered in the purchase price. Closing adjustments are the rest of the deposit, fees, taxes or down payment that the previous owner has already paid which you may be required to reimburse; this generally includes property taxes, utility bills and condominium fees.

New Build Property

New builds are soon-to-be or recently completed properties in which it will have its first resident. The first month’s condo fees (which will also be paid out at the first of each month) contributes to the general upkeep of the complex. If you’re renting out the unit, you get a rebate. For new houses, you will need completely new appliances and to get a fence, which will result in an additional $15,000. For condos, development levies are a government charge, essentially an additional tax, which is used to add funds to the community in which the property is being built in; this generally amounts to 7.2% of the purchase price.