Apart from the down payment and other expenses, you’ll be required to pay for the closing costs as well. These can easily go up to 4 percent of the total purchase price of the house. While the Closing costs vary depending on the type of property, the location and type of loan you apply for, a general outline of the involved costs can be summarised as follows –
- Application fee – This is the fee charged by the lender to process your mortgage application. Not all lenders ask for application fees, and it is always a good idea to ask for details (amount and what is included) from your lender before applying for the loan.
- Property Appraisal Fee – Some lenders pay for the appraisal, but you need to discuss it with your lender. ($200-$500).
- Title Insurance – Most lenders ask for title insurance to protect against losses that may arise because of ownership disputes. It is optional.
- Home Inspection Fee – It is wise to have a professional examine the house for any defects or safety issues that may exist. An inspection report may even be used for negotiation. (around $500, depending on a few factors)
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- Land Transfer Tax – All provinces require you to pay LTT on closing. ( costs vary depending on the province)
- Legal Fee – A real estate lawyer will ensure that the paperwork is filled correctly and the preparation and recording of the official documents are done. (expect to pay a minimum $500)
- Property Tax – Expect to pay yearly (or monthly) tax on the property you own. You may need to reimburse your seller if he has already paid for the year. (costs vary depending on the value of the home)
- Property Insurance – At the very least, it should insure your house against fire or other damage. (Depends on factors like value of item insured, coverage type, etc).
- Adjustment Costs – These may include utility bills, maintenance fees, property taxes that you will need to reimburse your seller for.
- Survey Fee – Your lender may ask for it or you may just want one to keep your mind at ease. A survey shows the boundaries of the land, indicates the major structures, or points out any encroachments on the property. (Anywhere between $1000-$2000)
There may be additional costs you may need to cover like water tests, Septic tanks, PST Insurance, and moving charges. While some are required only in special cases, some are optional, some would need to be paid and the buyer should educate themselves beforehand.