Closing Costs: What to Expect When You Make the Home Yours

Few feelings in the world compare to being handed the keys to your new home. For most buyers, it’s a moment of pure joy—but you won’t experience it until those pesky closing costs have been paid! While nobody enjoys covering these expenses, it’s possible to do so without encountering any last-minute panic. The key is knowing what to expect, and budgeting accordingly.

If you’re buying a home and want to ensure that your purchase goes smoothly, here are the closing costs you should plan for…

Home inspection

Most buyers opt to get an inspection before purchasing a home, and this service comes with a fee. In Toronto, you can expect to pay somewhere in the neighbourhood of $300 to $500. Keep in mind that a qualified professional will look at everything from a home’s plumbing and electrical systems to its foundation. The resulting peace of mind is priceless!

Deposit

Your deposit is the money you’ll submit when you make your offer. While it will ultimately form part of your down payment, it has to paid upfront. The good news is, you decide how big your deposit is. Just remember that 5 per cent is pretty typical in Toronto, and a higher sum will make your offer more attractive to sellers!

Land transfer tax

In this city, home buyers have to pay both a provincial and municipal land transfer tax. These taxes exist on a sliding scale, from 0.5 to 2.5 per cent (depending on the purchase price of your property). When they’re combined, the sum can be significant—which is why budgeting for them from the outset is crucial.

Title insurance

Your lender will likely require you to purchase title insurance, which is a form of protection in case of a costly property-ownership dispute. You can get yours from your lawyer, and it will usually cost somewhere between $100 and $300.

Legal fees

When you buy a home, your lawyer will prepare and review relevant documents, make sure all property taxes are up-to-date, and perform legal due diligence related to your purchase. While the amount you’re charged will depend on the professional you choose, you can expect the fees to set you back at least $500.

Utility and property tax reimbursement

Some homeowners prepay their property taxes and utility bills, which can create confusion when someone new takes ownership. When you’re the buyer in this scenario, you must reimburse the seller. The lawyers involved in the transaction will perform the necessary adjustments.

Appraisal fee

The appraised value of the home you hope to buy will play a role in how much financing you receive. For this reason, your lender will have a professional appraisal done—and they may pass the cost on to you. Typically, the amount will be somewhere around $300.

Buying a home can be costly, and not just because of the sticker price. Fortunately, by planning for your expenses and keeping up with your lender’s requests, you can help ensure that the closing process—and your home purchase—go off without a hitch!

Ready to start the search for your next home? Get in touch to learn how we can help ensure your purchase is a success!