Closing Cost

Before making an offer on a home, the buyer must hire a home inspector to assess the property’s condition. This includes a standard detailed list of additional items such as structural soundness, appropriate insulation, working utilities, and sound roofing. Sellers who want a quick and clean sale often make sure their home is in good shape before putting it on the market. If the home inspection reveals significant items that will need to be repaired, the buyer’s offer on the property may be affected.

A buyer’s minimum deposit is 5% of the property purchase price; however, in today’s competitive real estate market, buyers frequently offer a significantly higher deposit to the seller as a goodwill gesture in order to close the deal quickly. If the property is the subject of a bidding war, sellers are more likely to accept offers from those who offer a deposit that is significantly higher than the 5 percent minimum. Payment is usually made within 24 hours of the acceptance of an offer.

This appraisal is a monetary valuation of the home that is used to determine the property’s fair market value. It’s usually done by the lender after the offer is accepted but before the mortgage is advanced and the buyer takes possession. The cost of a property appraisal is usually covered by most large banks in Canada; however, if a buyer works with a smaller lender, the buyer may be required to pay for the appraisal themselves.

After deducting the deposit you made on your purchase, this fee is the balance owing. In most cases, your lender/bank will cover this balance, which is your mortgage.

A buyer must retain the services of a real estate lawyer prior to closing to ensure that they are legally protected. For their client, an attorney will review the Offer to Purchase, register the deed and mortgage, conduct a title search, organise the closing documents, and settle any outstanding disbursements.

When a property changes hands, a title insurance policy is purchased. This insurance shields the buyer from an undiscovered flaw in the property’s title. The buyer’s real estate lawyer is usually in charge of arranging title insurance. Although title insurance is not required, we strongly advise you to purchase it because it protects you from a variety of risks such as fraud, forgery, and title defects, to name a few. Furthermore, having Title Insurance eliminates steps such as obtaining an up-to-date land survey (approximately $1000) and a Compliance letter (approximately $100).

A land transfer tax is imposed on all homes purchased in Ontario. When the deed is registered, this tax is paid to the government at the time of closing. There is an additional land transfer tax that must be paid to the government by buyers who purchase property in Toronto. The land transfer tax is frequently the most expensive closing cost for buyers. The cost of land transfer varies depending on the property’s price, size, and location.
Exemptions may be granted to first-time homebuyers and those who purchase newly constructed homes. Homeowners who meet these requirements may be eligible for a $2,000 tax break.
Land Transfer Tax in Toronto: An additional Municipal Land Transfer Tax is imposed on residents of Toronto. Only first-time homebuyers and those purchasing newly constructed homes may be exempt. Homeowners who meet these requirements may receive a $2,000 tax break.
A breakdown of the Ontario Land Transfer Tax: This information was obtained from a different source. This content cannot be reworded to make it unique.
0.5 percent of the first $55,000 is taxed
1% – on amounts ranging from $55,000 to $250,000
On a balance of more than $250,000, 1.5 percent is applied.
2.0% – on all transactions exceeding $400,000
An explanation of the Toronto Land Transfer Tax
0.5 percent of the first $55,000 is taxed
1% – on amounts ranging from $55,000 to $400,000
2.0% – on all transactions exceeding $400,000

Adjustments are made if a seller has paid their property tax, utility fees, condo fees, and special assessments for the year or any period of time beyond the selling date, and the buyer reimburses the seller for any overpayment.

A high-ratio mortgage is one in which the buyer’s down payment is less than 20% of the property’s purchase price. Mortgage default insurance is usually required by most financial institutions and lenders. The insurance premium is calculated using a sliding scale that ranges from.5% to 2.75 percent of the total mortgage amount. It is possible for buyers to add it to their mortgage balance.

This fee is only applicable to condominium purchasers. The condominium corporation’s financial and legal affairs are detailed in the status certificate, as are any outstanding special assessment fees.
Purchases of new homes are subject to the Harmonised Sales Tax (HST). New home purchases began to be subject to HST on July 1, 2010, but new homeowners can qualify for a deduction by lowering the provincial sales tax applied to the first $400,000 of the purchase price to 2%. It’s possible that a builder will include HST in the purchase price, so it’s crucial to know who will pay the HST before the closing date.

In Ontario, new home builders are required to purchase warranty coverage through Tarion Corporation for each home they construct. This warranty is in effect for a period of 365 days. Builders frequently include the cost of this coverage in the purchase price, but some builders can charge the premium back to the buyer after the sale as part of the closing disbursements. It’s critical to understand the warranty’s scope and how it will be reflected at the point of purchase.