Your mortgage isn’t your only expense when buying a
home. In fact, there are several closing costs that you must pay before you can
take possession of your house (to “take possession” means the home is now
legally yours). Many of these costs are listed below:
§ Appraisal Fee: This is the cost
for a professional to come to your property to assess its value. Your mortgage
lender or mortgage default insurer may require an appraisal to determine
whether the selling price is reasonable for that market.
§ GST: You must pay the
Goods and Service Tax (or Harmonized Sales Tax) on a newly constructed or
substantially renovated home. Resale homes do not require a GST payment. Some
of this can be recovered with the GST/HST rebate for new or substantially
renovated homes.
§ Home Inspection Fee: This
covers the cost of a professional inspection of your home. Hiring an inspector
is voluntary but recommended for resale homes, and usually costs $400-$600.
§ Property Insurance: Since
your lender has a large stake in your home, they will often require you to
purchase insurance against fire and weather-related damage. It is also a good
idea for you to purchase ‘contents’ insurance to protect your valuables.
§ Land Transfer Tax: This is
a tax charged to buyers in most provinces, usually based on the purchase price.
§ Legal Costs: This includes fees
charged by your lawyers or notary for services such as conducting a title
search, drafting a title deed and preparing the mortgage, and registration
fees. This will cost over $500.
§ Mortgage Default Insurance:
High-ratio mortgages (those with less than 20% down payment) generally require
mortgage default insurance. The cost is usually added to the mortgage and
ranges from 1%-3.25% depending on the amount of your down payment.
§ Mortgage Life Insurance: Special
insurance coverage to cover the cost of your mortgage in the event of death or
severe illness is available from most lenders.
§ Moving Expenses: Costs
will vary, depending on whether you do it yourself, rent a truck, or hire
professional movers.
§ Prepaid taxes, Utility Bills and Other
Charges:
Any previous owner may have prepaid some bills before the closing date, which
you will have to reimburse them for. All taxes, utility bills, and other
charges incurred after the closing date become your responsibility.
§ Utilities: Most utility
companies charge for hooking up your services and replacing any previous
owner’s names with your name on the bill.
(Source: Genworth Financial)
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