We are thinking of buying a home in the next few months. What costs should we be prepared for over and above the cost of the home?
Larry and Ann
Dear Larry and Ann;
Thank you very much for your question! There are a few things you have to be prepared for and take into consideration when you are purchasing a home, such as:
Land Transfer Tax. Anyone purchasing a property in Ontario must pay this. It is based on a sliding scale as follows:
.5% on first $55,000. = $250.00
1.0% on portion between
$55,000. - $250,000. = $1,950.00
1.5% on balance over $250,000.
If land falls under the definition of single-family and duplex residences, an additional tax of .05% applies to consideration over $400,000.
Next, since a Solicitor is an essential part of your home-buying team, the work provided, of course, involves fees. Most legal fees include searching the title of the property, ensuring there is a survey, or purchasing Title Insurance, and handling other disbursements as required. It should be remembered that GST applies to legal fees as well.
Closing Adjustments may be necessary on closing and your Solicitor will make these adjustments. This may be for things such as paying the cost of heating oil in the tank if the home is heated by oil, or perhaps some prepaid property taxes. These amounts will always be different for each home. Speak to your Solicitor about this.
Mortgage Insurance & Application - For any high-ratio mortgage, which is any mortgage in which 75 or more percent of the house purchase price is covered by the mortgage, the lender requires mortgage insurance. This, too, is on a sliding scale and you will want to speak to your Lender about this when you apply for your pre-approval.
Property Insurance - This insurance covers the replacement value of your home and its contents. Most mortgage lenders will require proof that you have this insurance in place before processing a mortgage.
Hook-Ups - There may be hook-up charges involved for telephone, cable, hydro, appliances, etc.
Moving Costs - Don't forget the basic costs involved in moving from your old to your new home, especially if you use a professional moving company. It is best to get a few different quotes, and ask your friends and relatives if they can recommend a Company.
Just remember to add all of these "closing costs" to your financial plan when you get ready to make a move!