There are few things in life that require more budgeting skills than buying a house. This is as true for your first purchase as it is when you’ve been in the market multiple times before. In some ways, it’s like being at a retail shop trying to mentally calculate how much a new outfit will cost after tax. The difference is that an impulse purchase is usually minor whereas a house is one of the biggest investments you will ever make. Plus, there are numerous hidden expenses and other costs associated with the purchase. If you’re caught unaware, the actual price may come as a shock. Since we only like positive surprises (like unexpected birthday parties and cake), let’s take a closer look at how to estimate your closing costs when buying a house in Ontario.
Does Uxbridge sound like a great place to start searching for your next home? You just might find your perfect dream house here in our featured listings.
What Are Closing Costs in Ontario?
The closing period is what we call the time between when a seller accepts your offer on their home and when you actually take possession. Closing costs are all of the fees, taxes, and expenses you must cover before this transfer of ownership can take place.
Land transfer taxes are by far the most significant, so this is a good place to start our closing cost calculations. Whenever a property changes hands, the provincial government requires a land tax to transfer the registration to the new owner. The amount owing is calculated on a tiered percentage of the purchase price.
How does this work in real life? Imagine buying a mid-range home priced at $1.5 million. Add up all of the amounts based on the chart above ($275 + $1950 + $2250 + $22,000). That’s an additional $26,475, over and above your down payment and deposit to close on your home.
Land transfer taxes are not your only closing cost. Fortunately, no other expenditure will be quite this steep. In addition, first-time buyers can take advantage of an instant rebate to save $4,000 when buying a qualifying home.
Do you want an accurate estimate on closing costs when buying a house in Uxbridge? Find out here with our closing cost calculator.
Why buy a home in Uxbridge? The posts below will highlight a few of the reasons:
How Much Are Lawyer Fees When Buying a House?
Next to land transfer taxes, lawyer fees for buying a house are your next biggest closing costs when buying a house. The actual price will vary depending on the property itself and whether or not any issues are found during the title search.
Presuming everything goes smoothly (which it usually does), lawyer fees typically range from $1,500 to $3,000, plus taxes and any disbursements. (A disbursement is a repayment of any expenses your lawyer incurs on your behalf. For example, if you move in on October 15 and the current homeowner has already paid the property taxes for the quarter, you’ll owe the seller for the balance from when you occupy the home.)
Lawyer fees also cover the cost to conduct a title search, register the property in your name, and miscellaneous administrative costs.
Your lender will almost certainly require title insurance if you are getting a mortgage. We also recommend that you add a homeowner’s policy to protect you as long as you own your house. Either your lender or lawyer will determine which insurer to use. You can estimate the cost by using a title insurance calculator based on the amount of your mortgage.
If any liens or encumbrances are found during the title search, lawyer fees can become significantly more expensive. A comprehensive quote from your lawyer can help you know what to expect.
More Closing Costs When Buying a House in Ontario
Lawyer fees and land transfer taxes make up the bulk of your extra expenses. Still, there are other incidentals to expect, such as:
- – Appraisal fees once your offer is accepted
- – Lawyer disbursements for property taxes and municipal fees as outlined by the Statement of Adjustments
- – Home inspection costs, if applicable
- – Mortgage insurance when the down payment is under 20%
Looking for more advice to find and secure the right home for you? Check out the posts below for some insider tips:
- A Homeowner’s Guide to Uxbridge Real Estate
- Steps to Buying a House in Uxbridge
- 4 Must-Know Tips Before You Buy A Home In Uxbridge
What to Expect When Buying Your Next Home
Average closing costs in Ontario will range substantially based on the size of the property and the complexity of the transaction. Larger, higher-priced homes tend to come with greater costs initially.
Less expensive homes may have lower closing costs. However, you’ll want to perform your due diligence to ensure you don’t exchange a lower price for unexpected repairs later. This is where arranging for a home inspection comes in.
Some sellers will have a pre-listing inspection report available to indicate the condition of a home’s major systems. If in doubt, you may be able to include a home inspection of your own as a condition of your offer. This is one tangible cost that delivers real value, peace of mind knowing that your new house is as structurally sound as it is beautiful.
Fees to hook up your new Internet connection and utilities aren’t technically closing costs, but they are part of your overall moving expenses, along with hiring professional movers and buying packing materials. There’s no denying that your transition can be expensive. However, it will all be worth it in the end, once you get the keys and begin exploring your new neighbourhood.
Do you want personalized guidance for your home buying journey? Our Uxbridge real estate agents are here for you every step of the way. Contact us at Cindy@Cindywood.ca or call 905.852.6143 to get started.
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