Closing costs can be confusing and overwhelming for first-time homebuyers in Ontario. Closing costs are the fees associated with finalizing a real estate transaction. In Ontario, these fees usually total between 1.5% and 4% of the purchase price.
The most common closing costs are the following:
- Land Transfer Tax: In Ontario, land transfer tax is calculated based on the purchase price of the property. The rate you pay depends on which region you're buying in. Generally, the land transfer tax for Ontario is calculated using the following formula: 0.5% on the first $55,000 of the purchase price, 1% on the portion of the purchase price between $55,000 and $250,000, 1.5% on the portion of the purchase price between $250,000 and $400,000, and 2% on the portion of the purchase price above $400,000. LINK TO A CALCULATOR
- Legal Fees: When buying a home in Ontario, you'll need to hire a lawyer or notary to handle the title transfer and other legal matters. Legal fees typically range between $1,500 and $2,000.
- Home Inspection Fee: A home inspection is an important part of the home buying process. It is a good idea to hire a professional home inspector to check for any potential issues before you buy the property. Home inspection fees typically range between $500 and $700.
- Appraisal Fee: An appraisal is a report that assesses the value of a property. Appraisals are usually required for mortgages and can cost between $200 and $400.
- Mortgage Default Insurance: Mortgage default insurance is required if you have a down payment of less than 20% of the purchase price. The cost of mortgage insurance varies depending on the size of your down payment. LINK OUT HERE TO CMHC
- Property Taxes: Property taxes in Ontario are calculated based on the municipal tax rate. The rate varies depending on the region.
It is important to note that these are just the most common closing costs. There may be other fees associated with the purchase, such as moving costs and utility hook-up fees. It is important to research all the costs associated with buying a home to ensure you are prepared for everything.