Closing Costs
Title Search
Ensures that clear title can be transferred.
$250 – $400
Title Insurance
Protects the buyer against losses that occur when title to a property is not free and clear of defects
$500
Land Transfer Tax
A tax imposed by the Ontario government when title is passed
Calculating Land Transfer Tax: Ontario Ministry of Finance
Home Inspection
helps to identify any issues with the property being purchased
$500 – $600
Survey
Completed by an Ontario Land Surveyor that outlines the boundaries, structures and measurements of the property.
$2500 – $4000
Lawyers Fees
The fee your lawyer charges for closing the Real Estate transaction
$1500 – $2000
Home Energy Audit
Legislation imposed when selling a home to ensure the home is “energy efficient”. (Rebates are granted for improvements made)
HomePerformance
$350 – $500
Residential Appraisal Fee
Appraisals to the purchased property are often required by the lender to ensure that the purchaser paid fair market value.
$350 – $500
Registration Fees
$160 – $200
Commercial (AACI) Appraisal Fee
Appraisals to the purchased property are often required by the lender to ensure that the purchaser paid fair market value.
$2500 – $5000
Disbursements
Out of pocket expenses that your lawyer charges you for expenses that are incurred. E.g. registrations, hydro, water and gas.
$200 – $250
Status Certificate Condominium
Condo documents that outline the rules and regulations, budgets, reserve funds and any past or pending litigation’s affecting the condo corp.
$100 – $200
Legal Terms
What is a Latent Defect?
A latent defect is a potentially hidden fault in the property that may not have been discovered through a typical property inspection. In other words it would have been hidden in a way that may have only been found through more investigative means which most sellers may not allow. (for example tearing down or removing parts of walls). Being that these defects are hidden the Seller may not be aware of the existence of the defect and therefore may not be liable for an unknown latent defect that developed after closing. If However the Seller or their representative had knowledge of the latent defect and failed to disclose to the buyer, the buyer may have a claim against the Seller or Representative for failing to disclose. In Ontario a buyer has 2 yrs from the day which the defect was discovered to file a claim
What is a Patent Defect?
A patent defect is an obvious fault that may have easily been identified through a thorough property inspection and should have been discovered however not found until after closing. These types of defects may be much more difficult to make a successful claim unless the seller/representative took steps to hide the defect from a normal inspection.
CMHC Premiums
Canada Mortgage Housing Corporation requires all home purchases with less than 20% to be insured against default of payment.
- Up to and Including 80% Loan to Value (LTV) = 2.4% on the total loan amount
- Up to and Including 85% Loan to Value (LTV) = 2.8% on the total loan amount
- Up to and Including 90% Loan to Value (LTV) = 3.1% on the total loan amount
- Up to and Including 95% Loan to Value (LTV) = 4.0% on the total loan amount
- Up to and Including 90.01 – 95% Loan to Value (LTV) = 4.5% on the total loan amount (for Non Traditional Down Payments)
Qualifying
It is important for buyers to understand how to qualify to buy a property when arranging for a mortgage. Lenders first look at the Buyer’s credit score and credit worthiness to pay back the mortgage. The higher the credit score the more secure a lender is that the debt will be repaid. A credit score of 650 and above will help a buyer obtain the best rates. Secondly the lender requires that the amount borrowed does not exceed the GDS and TDS ratios.
GDS RATIO (Gross Debt Service Ratio):
The percentage of gross annual income required to cover payments associated with housing. Payments include mortgage principal, interest, property taxes and sometimes include secondary financing, heating, condominium fees or pad rent. (Usually calculated at 32% of gross income)
TDS RATIO (Total Debt service ratio):
The percentage of gross annual income required to cover all payments associated with housing (Principle, Interest, Property Taxes) including all other debt obligations, such as car loan payments, credit card payments, support payments. (Usually calculated at 42% of gross income)
First Time Home Buyer Incentives
Land Transfer Tax Refund
The amount of the refund claimed (once qualified) will offset the land transfer tax payable. The maximum amount refundable is $4,000.
There is no interest paid on this refund and it will cover the full LTT for homes up to $368,333.
| Cost of Home | Tax Payable | Tax Refund | Net Tax Payable |
|---|---|---|---|
| $300,000 | $2975 | $2975 | $0 |
| $600,000 | $8475 | $4,000 | $4475 |
| $1000,000 | $16475 | $4000 | $12,475 |
RRSP Contributions
For First time Home Buyers the government has raised the amount that can be withdrawn from an RRSP to $25,000 for a down payment tax free.
Closing Cost Credits
First time home buyers can obtain a credit of $750 towards the closing costs of their first home purchase.
GOVERNMENT SHARED-EQUITY INCENTIVE
Allows First Time Home Buyers to share part of the ownership and costs of buying the home with the government. The government will contribute an additional 5%-10% of the homes price towards your downpayment in exchange for the same equity in your home. Your combined annual household Income cannot exceed $120,000.00
HST
On July 1, 2010, the federal Government administered the Harmonized Sales Tax (HST) that applies to most purchases and transactions.
The HST applies to newly constructed homes and will not apply to resale homes. Buyers of new homes will receive a rebate of up to $24,000 regardless of the price of the new home. (typically the New Home builder will include the HST in the purchase in exchange for the buyer agreeing to assign the HST rebate back to the New Home builder.
Although the HST is not applicable directly to the Purchase Price of Resale homes it does apply to all the service fees associated to the Sale of the property. This includes Real Estate fees, Lawyer Fees, Home Inspection fees, Home Audit fees, Appraisal Fees etc.