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Closing Costs

Buying a home can come with unexpected costs

You’ve qualified for your mortgage and made your down payment - the only thing left to do is move in, right? Wrong. There are several ‘closing costs’ that you’ll need to pay before you take ownership. Know what they are, so you won’t be caught off guard when you have to pay:

Legal fees - The process of buying your home and transferring ownership to you can cost several thousand dollars in legal fees. It is a necessary step, but you may be grateful for your lawyer’s help. Discuss the terms of purchase with them in detail to make sure your best interests are protected. Fortunately, you can ‘shop around’ for a lawyer that meets your budget.

Home Inspection fees - If you’re purchasing a previously-owned house, it’s a good idea to call a home inspector to come take a look before closing. This will cost several hundred dollars, but the inspector will be able to tell you the exact condition of the home and provide detail in writing. You may be able to get the seller to do repairs identified by the inspector before closing and this could save you money in the end. It’s not mandatory and may not be necessary on new homes.

Property Appraisal - Your lender may want you to get your property officially appraised before your mortgage is finalized. This will normally cost a couple hundred dollars, and the result may turn out to be the same as the price you paid for your home.

Property Transfer Tax - This one depends on where you live. Some provinces and individual cities charge a tax when transferring ownership of property. It’s based on the amount you’re buying the house for and varies considerably, but be prepared to pay a few thousand dollars. First time homebuyers may be exempt from this tax.

GST/HST - You may have to pay sales tax on your new house too. GST or HST is generally charged on new homes, but not on resale properties. Some of the tax may be refundable as well. If you’re buying a new (or substantially-renovated) home, you may be able to get some of the sales tax back through the Canadian government’s GST/HST New Housing Rebate.

Mortgage Default Insurance - If you’re buying your home with a down payment less than 20 per cent, your lender will likely charge you a premium to pay for ‘mortgage default insurance.' That amount is added to your overall mortgage and as a result you’ll pay more every month. Wondering how much extra you’ll have to pay? Give us a call and find out.

Mortgage Life Insurance - Mortgage Life Insurance protects you if you die (or in some cases go on longterm disability). If that happens, this insurance pays some or all of your remaining mortgage. It’s totally optional and costs vary, but it’s often wrapped into your monthly mortgage payment; an extra cost for increased peace of mind.


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