Purchase Costs

You will need to plan ahead to cover the many up-front costs of buying a home. Timing is important to help make sure things go smoothly.

·         Mortgage Loan Insurance Premium. If yours is a high-ratio mortgage (less than 20% down payment), your lender may need mortgage loan insurance. Your lender may add the mortgage insurance premium to your mortgage or ask you to pay it in full upon closing. PST on this premium must be paid on closing to your lawyer.

·         Appraisal Fee. Your mortgage lender may require that the property be appraised at your expense. An appraisal is an estimate of the value of the home. The cost is usually between $250 and $350 and must be paid when you contract for those services.

·         Deposit. This is part of your down payment and must be paid when you make an Offer to Purchase. The cost varies depending on the area and market conditions, but it may be up to 5% of the purchase price. If you wish to make a down payment of 5% and you give a deposit of 5%, then your down payment is considered to be made. Remember, never directly give the seller a deposit, they may not be the real owner.

·         Down Payment. With mortgage loan insurance from CMHC you can own your home with as little as a 5% down payment. At least 20% of the purchase price is usually required for a conventional mortgage.

·         Status (Estoppel) Certificate Fee (does not apply in Quebec). This applies if you are buying a condominium or strata unit and could cost up to $100. Sometimes you can negotiate the seller to pay this fee depending on market conditions. Your lawyer should review the certificate and give an opinion on the condominium reserve fund and status.

·         Home Inspection Fee. CMHC recommends that you make a home inspection a condition of your Offer to Purchase. A home inspection is a report on the condition of the home and generally costs around $500, depending on the complexities of the inspection. For example, it may be more costly to inspect a large home or one where issues such as moisture problems, pyrite, radon gas or urea-formaldehyde are suspected.

·         Land Registration Fees (sometimes called a Land Transfer Tax, Deed Registration Fee, Tariff or Property Purchases Tax). You may have to pay this provincial or municipal (Toronto) charge upon closing in some provinces and territories. The cost is a percentage of the property’s purchase price and may vary. Check with your lawyer/notary to see what the current rates are.

·         Prepaid Property Taxes and/or Utility Bills. To reimburse the vendor for prepaid costs such as property taxes, filling the oil tank and so on. Some lenders will require that they pay the property tax on your behalf and may request a few months prepaid up front.

·         Property Insurance. The mortgage lender requires this because the home is security for the mortgage. This insurance covers the cost of replacing your home and its contents. Property insurance must be in place on closing day. The cost will vary depending on your property value, the insurance company and the municipality.

·         Survey or Certificate of Location Cost. The mortgage lender may ask for an up-to-date survey or certificate of location prior to finalizing the mortgage loan (ask your lawyer if title insurance will cover this instead). If the seller does not have one or does not agree to get one, you will have to pay for it yourself. It can cost in the $1,000 to $2,000 range. A survey of the property must be done by an accredited land surveyor. This will establish whether the building is located within the specified legal boundaries and complies with local building bylaws.

·         Water Tests. If the home has a well, you will want to have the quality of the water tested to ensure that the water supply is adequate and the water is potable. You can negotiate these costs with the vendor and list them in your Offer to Purchase.

·         Septic tank. If the house has a septic tank, it should be checked to make sure it is in good working order. You can negotiate the cost with the vendor and list it in your Offer to Purchase.

·         Legal Fees and Disbursements. Must be paid upon closing and cost a minimum of $500 (plus GST/HST).Your lawyer/notary will also bill you direct costs to check on the legal status of your property.

·         Title Insurance. Your lender or lawyer/notary may suggest or require title insurance to cover loss caused by defects of title to the property.

·         Lenders Fess. Some lenders will charge an application or service fee to process your loan request. Usually B lenders will do this and deduct this fee from the loan before sending the money to your lawyer.

Other Costs

Besides up-front costs, there are other expenses to consider:

Appliances. Check to see what comes with the house, if anything.

Gardening and Snow-clearing equipment.

Window treatments. (eg. Blinds and drapes) Check to see what comes with the house.

Decorating materials. Paint, wallpaper, flooring and tools for redecorating.

Hand tools. You will need some basic hand tools for your new home.

Dehumidifier. May be required to control moisture levels, especially in older homes.

Moving Expenses.

Renovations or Repairs.

Service connection fees. Charged for utilities — telephone, gas, electricity, cable TV, satellite TV, Internet and so on. You may be asked to mnake a deposit for some utilities.

Condominium Fees. You may have to make the initial payment for these monthly fees.

New Home Contracts. You may be asked to pay for things like GST/HST (usually included in price), Ontario home warranty plan fees, utility meters and hook up, grass, driveways, fences, and trees before or after you move in. Some contracts include them.