Buying a home costs more than the offer you make. There are numerous other expenses that will add to the amount that you'll need to spend.
This purchase price checklist outlines all the costs you can expect. Please note that they can vary by province and are subject to change.
Purchase Price
The starting point in your calculation... if you're like most first-time home buyers, you'll need a mortgage for the majority of this!
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Lawyer's Fees
Although fees vary across Canada, it can cost you up to $2,500 depending upon whether you are re-mortgaging your existing home or buying new. As prices do vary, make sure to get at least 3 quotes.
Land Transfer Tax
A tax payable to the Provincial Government by the purchaser upon the transfer of title from a seller. This amount is usually not expected by most homeowners. It can be sizeable. The amount varies from province to province and is generally a percentage of your purchase price. Your Lawyer can advise you.
Registration Fees
Fees paid to the provincial government for recording a title transfer, mortgage registration or other instrument such as an Assignment or Lien with the local authorities.
High Ratio Insurance
Must be purchased if you are buying a home for less than 25% down. A sliding fee scale applies, depending on the percentage of the purchase price required in a first mortgage (some minor exceptions). For example, as of May 1997 Canada Mortgage and Housing Corporation (CMHC) and its competitor GE Capital charge a 2.5% one-time fee — which can be added to the mortgage — for any mortgage over 85% — 90% of the purchase price. See also Mortgage Insurance for a definition.
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Compliance Letter
Obtained by your lawyer and required in many municipalities throughout Canada before a property transfer can take place. This is an acknowledgement from the building department that the property either has, or is clear of outstanding work-orders. Work-orders are specific clean-up or fix-up requirements that the owner is legally required to do, and which must be completed before ownership can be transferred.
Tax Certificate
Obtained by your lawyer at the time of sale to confirm that local taxes have been paid up to date. If they are not up to date, the seller is required to pay them from the proceeds of the sale. If there are insufficient proceeds, then you may be legally required to pay the outstanding taxes. If, on the other hand, taxes have been prepaid, you may have to compensate the seller for them.
Provincial "New Home Warranty Program" premiums — New Homes Only!
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 75% loan to value) must be enrolled in such a program.
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Mortgage Appraisal and Application Fees
Application fees apply on high ratio mortgages only while appraisal fees are common to most mortgages. Generally $150 — $235 each would apply.
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 purchase agreement. The scope and detail may vary, but most reports outline any particular problems and associated repair costs. 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, or select a name firm, who stand by their work.
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Land Survey
The legal written and/or mapped description of the location and 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.
Title Insurance
New to Canadian consumers over the last few years is the introduction of title insurance into the home buying process. Title insurance can be purchased by home buyers to protect against potential deficiencies in a number of areas, such as the land survey. There are numerous benefits to this product, and you should consult your lawyer.
Connection Charges
Some local utility companies (hydro, gas, oil) charge a fee on closing to connect new buyers up to their service. More common, however, is an extra charge on the first billing.
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!
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 will charge you interest on closing to the next interest date, called the Interest Adjustment Date (IAD), when your payment cycle will commence. This can be a sizeable amount, but it is the correct interest you should pay. For example, close on June 15th, pay 15 days interest on closing and start payments on August 1st.
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