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.
