In Ontario, closing costs when buying a house typically range between 3-5% of the purchase price. These costs include a variety of fees and taxes that need to be paid upon finalizing the home purchase. Below are some of the key closing costs in Ontario:
1. Land Transfer Tax (LTT)
Cost: Varies based on property value.
In Ontario, you must pay Land Transfer Tax when you purchase property. First-time homebuyers can receive a rebate of up to $4,000.
LTT Calculation:
0.5% on the first $55,000
1.0% on the next $195,000
1.5% on the next $150,000
2.0% on the remaining amount above $400,000
If you're purchasing in Toronto, there's an additional Municipal Land Transfer Tax which follows the same structure as the provincial LTT.
2. Legal Fees
Cost: Around $1,500 to $3,000.
A real estate lawyer is required to handle the paperwork, including title searches and mortgage registration.
3. Title Insurance
Cost: Typically between $250 and $500.
This insurance protects you against title fraud or issues related to the ownership of the property.
4. Home Inspection Fee
Cost: Around $300 to $600.
While optional, a home inspection is recommended to identify potential issues with the property.
5. Property Tax Adjustment
If the seller has pre-paid property taxes, you’ll need to reimburse them for the portion of the year that you’ll own the home.
6. Mortgage Default Insurance (if applicable)
Cost: If your down payment is less than 20%, you’ll need to purchase mortgage default insurance (CMHC insurance). This cost can be rolled into your mortgage but is technically part of closing costs.
The premium ranges from 2.8% to 4.0% of the mortgage amount.
7. Other Potential Costs
Moving costs
Utility setup costs
Property appraisal fee (if required by the lender)
Status certificate fee (if buying a condo, usually $100)
Overall, you should budget about 3-5% of the home's purchase price for closing costs.
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