Buying a home is an exciting milestone, whether you’re a first-time buyer or moving into your forever home. However, amidst the thrill of house hunting and packing, there is one financial hurdle that often catches buyers off guard: closing costs.
To help you prepare your budget and avoid any last-minute surprises, we’ve broken down the typical closing costs you can expect when purchasing both resale and brand-new homes.
Closing Costs for Resale Homes
When buying a home that has been previously owned, the closing costs are generally more straightforward but still require careful budgeting. Here is what you should anticipate:
● Land Transfer Tax (LTT): This is often the largest closing cost. Depending on where you buy, you might even be subject to both a provincial and a municipal land transfer tax.
● Legal Fees and Disbursements: You will need a real estate lawyer to handle the transfer of title, draft documents, and facilitate the financial transaction. Disbursements are the out-of-pocket expenses your lawyer incurs on your behalf.
● Title Insurance: This protects you and your lender against losses related to property ownership or title defects. It’s a one-time premium and highly recommended.
● Mortgage Costs: These can include appraisal fees (often required by the lender) and mortgage default insurance if your down payment is less than 20%.
● Home Inspection Cost: A critical step to uncover any hidden issues before you finalize the purchase.
● Property Tax and Utility Adjustments: If the seller has prepaid property taxes or utilities past the closing date, you will need to reimburse them for your share of the year.
● Home Insurance: Your lender will require proof of home insurance before advancing the mortgage funds.
● Moving Expenses: Don’t forget to budget for movers, packing supplies, or truck rentals!
Closing Costs for New Homes (Pre-Construction)
Purchasing a newly built home or condo comes with a unique set of closing costs that you won’t typically see in the resale market. Be sure to review your Agreement of Purchase and Sale carefully for these builder adjustments:
● HST: Unlike resale homes, new builds are subject to HST. While often included in the purchase price, it’s crucial to confirm this, especially regarding new housing rebates.
● Tarion Warranty Fee: In Ontario, new homes come with a warranty provided by the builder and backed by Tarion. The enrollment fee is typically passed on to the buyer.
● Development Costs and Builder Levies: These are fees charged by the municipality to the builder for infrastructure (like schools and roads), which are often passed down to you.
● Utility Hook-up and Meter Installation Fees: You will be responsible for the costs associated with connecting hydro, water, and gas meters.
● Deposits: Builders often require refundable deposits to ensure the neighborhood’s aesthetic is maintained. These can include Tree Planting/Landscaping Deposits,
Driveway Paving Deposits, Grading Deposits, and Fence Deposits.
● Builder Adjustment Charges: Miscellaneous fees the builder may charge, which should be capped in your contract.
● Assignment Fees: If you are taking over a contract from an original purchaser before the building is finished, assignment fees may apply.
Condo-Specific New Build Costs
● Occupancy Fees (Phantom Rent): When you move into a new condo before the building is officially registered, you pay a monthly fee to the builder. This does not go toward your mortgage principal.
● Status Certificate Fee: A fee for the document that outlines the financial and legal health of the condo corporation.
Final Thoughts
The best way to navigate these fees is to assemble a great team—your real estate agent, mortgage broker, and real estate lawyer—early in the process. They will help you estimate these costs accurately so that on closing day, all you have to do is turn the key and celebrate!
Any content, resident submissions, guest columns, advertisements, and advertorials are not necessarily endorsed by or represent the views of Best Version Media LLC (BVM) or any municipality, homeowners associations, businesses, or organizations that this publication serves. BVM is not responsible for the reliability, suitability, or timeliness of any content submitted, inclusive of materials generated or composed through artificial intelligence (AI). All content submitted is done so at the sole discretion of the submitting party.
