When buying a home in Ontario, there are many aspects to consider. From the location and size of the property to the home improvements you might want to do, the home-buying process can be long and daunting, especially if you are a first-time buyer.
One aspect you should pay the most attention to are the finances. Besides the mortgage fees and down payment you need to pay, there are also a few closing costs you should know about before you make an offer on a house you like. These are actual expenses associated with your home purchase which you’ll need to pay at the closing of a real estate transaction.
Generally, the closing costs in Ontario vary widely based on where you decide to live, the property you buy and the type of loan you choose.
For more information, here is a list of five typical closing costs you will be faced with when buying a home in Ontario.
Property appraisal fee is one of the most common closing costs you will need to pay when purchasing a home in Ontario. This fee is the payment you make to your lender who will want to verify the value of the property you are looking to buy before they extend your loan.
Ideally, the appraised value will coincide with the purchase price. However, if you are requesting a bigger mortgage than what the home is actually worth, then the lender probably won’t agree to give you the loan. The whole purpose of the appraisal fee is to assure the lender that they aren’t handing you more money than what the property is worth.
Legal fees are another type of closing cost you need to pay when buying a home. These fees refer to the payments you make to real estate lawyers and notaries prior to closing, who provide you with various services and guidance to ensure that you are protected on the legal front of the home purchase.
In most cases, the legal fees depend on how complicated the purchase transaction is. However, there are other factors that can also have an impact on the amount such as the lawyer’s expertise and the type of home you are considering buying.
If you want to make sure you are making an informed decision about purchasing the ideal house, then ordering a home inspection is highly recommended. The inspection is typically conducted prior to placing an offer on a property to assess its condition, especially if you are looking to buy an older home, and to protect yourself from costly repairs later on.
Things that are evaluated during the inspection include structural soundness, appropriate insulation, working utilities and sound roofing, along with a standard list of additional items.
Whenever a property gets transferred from one owner to another, land transfer taxes are applied. This refers to the fees you need to pay to the provincial government upon closing when the deed is registered. The fees are often regarded as the largest closing cost you will incur in the home-buying process which vary depending on the price, size and location of the property.
However, there may be an exemption made for first-time buyers like yourself, or if you are looking for a house that is newly constructed. If you meet these criteria, you may be eligible for up to a $2,000 exemption.
Moving fees are a type of closing cost which many homebuyers often overlook in the buying process. Depending on how much stuff you have to move and how far your new home is, these moving costs can instantly add up to hundreds of dollars.
Fortunately, this is a closing expense you can easily save up on. For example, instead of hiring professional movers to take your personal belongings and furniture to your new home in Ontario, you can do the move yourself, along with the help of your family and friends.
Buying a home in Ontario is a long and daunting process which requires careful planning especially when it comes to the financial aspect of it. In addition to the mortgage fees and down payment you need to pay, it is crucial that you are aware of all the closing costs which are also included in the buying process.
While many factors can have an impact on these additional expenses, it is advised that you understand what they entail and are prepared so you can avoid unpleasant surprises down the line.
For more information, refer to our guide and learn about the most typical closing costs in Ontario.