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  • Rachael Ancheril

Closing Costs – First Time Home Buyers

Buying a house has a number of costs attached to it. The buyer has to pay a number of fees, legal costs, and other expenses. The following information will give you an idea of what a buyer should expect in terms of closing costs. Many of these fees take place at different points in the transaction. I have summarized them all below. Of course, you should always talk to your Real Estate Lawyer and Mortgage Broker to confirm and get any additional costs.

Your Mortgage Broker should have a first time home buyer’s package that they can give to you to help you in this process.

Closing Costs refer to fees that are due the day of completion (also known as moving day). That is when the transfer of title takes place. Closing costs can be anywhere from 2-5% of the purchase price of the home. 3% of $400,000 is $12,000, to give you an idea. The good news is that you are eligible for certain incentives as first-time homebuyers!

Financing Costs:

Downpayment - You should have the amount ready. Your mortgage broker will advise you on when this is paid.

Mortgage Default Insurance Premium - Normally if you want the best interest rate and you are putting less than 20% in your down payment, you have to pay the mortgage default insurance premium. It is usually added to the mortgage.

Property Appraisal - If you are applying for a refinance then it is mostly mandatory to get an appraisal report for the property. Some lenders may ask for one even for first-time buyers if they are not sure of the cost of the property. This varies depending on the company and type of appraisal requested. It is usually less than $500.00 + tax. Some lenders also offer free appraisals upon funding, so you should check with your mortgage broker.

Costs Your Lawyer will collect and pay:

Lawyer Fees - The lawyer who helps the buyers with their home purchase transaction charges some fees for his/her services. The cost may vary. On average they are approx. $1500-4000, depending on the size and location of the home.

Registration - When the titles are registered with the land registration office and municipal offices there are some fees. Usually, it is close to $100 + tax. Contact your lawyer for an estimate.

Miscellaneous Lawyer Fees - Lawyer charges for mailing, photocopies and faxing. Those altogether should be under $200 to $300 + tax. Your Lawyer can let you know if these are included in their fees.

Title Insurance – Title Insurance protects the buyer and the lender against many problems, which may arise (related to property title) after the purchase. It costs about $250-$300 + tax for an average home. The Lawyer will collect this for your lender.

Statement of Adjustments - If you buy a home in the middle of the month or in the middle of a billing cycle then the utility and other bills have to be distributed proportionally to the buyer and seller. The lawyer will work out your portion of the payment and prepare a statement of adjustment. Varies depending on the type of property (condo vs. freehold) and time of year.

Land Transfer Tax (LTT) - A buyer has to pay the Land Transfer Tax upon purchase of a property. In Ontario, a first-time homebuyer gets a break from this tax. You should consult your lawyer on this process.

“Beginning January 1, 2017, no land transfer tax would be payable by qualifying first‑time purchasers on the first $368,000 of the value of the consideration for eligible homes. First‑time purchasers of homes greater than $368,000 would receive a maximum refund of $4,000.” *

* If you purchased a home for over $368,000, you would pay the Land Transfer Tax and then get a refund of up to $4,000 max. The Land Transfer Tax on a $400,000 home is $4475. You would end up paying $475. These amounts are all approximate and you should confirm with your lawyer.

Costs that you will need to Organize:

Homeowner’s Insurance - Normally most of the lenders will demand proof of insurance before they forward you the funds. It is a legal requirement in some jurisdictions. In normal cases, it is under $100.00 + tax a month. If you have aluminum wiring then you may have to take special measures.

Home Inspection – Our Team strongly suggests that you have a Home Inspection done and we have some amazing inspectors that we can recommend to you. An inspection will identify any structural, plumbing or heating and ventilation flaws the house may have. You should ensure that a “Licensed” Home Inspector does the Inspection. Some lenders ask for an inspection too. The cost of this varies but usually runs about $400 – $500 + GST or HST.

Moving Expenses - This is can be a major cost. Approx. $2000-4000 for an average house. If you do not have much to move, some friends and a smaller moving truck rental can significantly cut down on these costs.

In Summary, the following are the main expenses that will directly affect you on closing day:

Lawyer’s Fees – Approx. $1500-2000

Ontario Land Transfer Tax - Confirm with your Lawyer (First Time Homebuyer)

Title Insurance – Approx. $250-300

Registration – Approx. $100

Moving Costs – Approx. $2000-3000

Written By: Angelik Jones (

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