Closing costs to consider when purchasing a home
When purchasing a home there are additional costs known as closing costs, which you need to consider.
Some example closing costs are:
- Title insurance
- Fire insurance
- Legal fees
- Land Transfer Tax
Here is a description of each:
Title insurance protects homeowners against any issue that might arise on their home’s title, including defects and fraud. This will cost you around $150 and is a one-time fee. Your lawyer or notary assists you with obtaining title insurance.
Your mortgage lender will require that you have fire insurance in place on your home when you take possession. The amount of coverage you are required to have is generally no less than the amount of your mortgage or the cost to replace the home. The cost of the policy will depend on the size of your property. Plus, any extras you include and the location of the home, as well as the insurance company.
You are responsible for paying the legal fees associated with the purchase of your home. Your lawyer (or notary) fees will likely be in the range of $700 to $1000. Also, you will be charged fees for registering your title with the municipality. In total, you will have to pay anywhere from $1,000 to $1,300 in legal fees, after taxes.
Land Transfer Tax:
Land Transfer Tax is a fee that the province charges. However, first time home buyers are eligible for a rebate of the land transfer tax of up to $4000.
Adjusted costs cover repaying the seller for their prepayment of any condo fees or property taxes on your behalf. If you take possession of your home mid-month, the seller will have already paid these costs for the entire month. You will need to reimburse the seller for these costs.