BUYERS' TRANSACTION COSTS

Following are the additional costs associated with buying real estate in Ontario - more particularly in Metro Toronto and surrounding areas.

DEPOSIT

The deposit is part of the Purchase Price and will be required by your Selling Agent within 24 hours of the time your offer is accepted. Generally five to ten percent is the expected amount. Not everyone has the money in an accessible account so a split deposit - part now and the rest at a later date, is often acceptable.

HOME INSPECTION

A home inspection has become almost standard in the freehold and condominium townhome purchase. The inspection costs between $250 and $350 for most homes but increases with the cost of the home over $300,000. The companies that we recommend all charge a base of $300 to $375.

SURVEY (Freehold Only)

You, your bank and your lawyer want to know exactly what it is that you are buying. A survey that shows the lot dimensions and the location of any structures is very important. If the Vendor does not have a current survey you may be required to have a new survey drawn up. Title insurance has currently been implemented in Canada and can often be used in place of a new survey. Your lawyer can best advise you on which route to go.

LEGAL FEES

You will need a lawyer to search the title and cover all the legal matters. Rates vary greatly, starting at about $450 for the lawyer's time. In addition you must pay for the disbursements which the lawyer pays on your behalf. The average total bill should run to approximately $1100 - $1200. Shop around! Call some lawyers and get quotes for comparison.

TITLE INSURANCE

Everyone who is involved in buying real estate in the US is familiar with "title insurance" but in Canada it is a new concept. In many cases it can save you money. In addition, some title insurance companies offer a mechanical and appliance warranty. Be sure to ask your lawyer about "title insurance". Approximate cost is $250.

LAND TRANSFER TAX

Click here to use the Land Transfer Tax Calculator

Payable on closing - it is a multi-tiered formula and applies to purchase price only:

Price between $ 55,000 - $250,000 ………… price x 1 % less $ 275
Price between $250,000 - $400,000 …………price x 1.5% less $1,525
Price over $400,000 ………….........................price x 2 % less $3,525

MORTGAGE LOAN INSURANCE AND APPLICATION FEE

If you get a high ratio mortgage ( a mortgage where you pay less than 25% down payment) you will have to buy mortgage loan insurance from CMHC or a private company. If you qualify for a 5% down payment, CMHC charges an insurance fee that equals 3.75% of the mortgage. If you put 10% or 15% down, your insurance fees will decrease to 2.5% and 2% respectively. The insurance premium usually gets added to your mortgage. Refer to www.cmhc-schl.gc.ca for more information.

REALTY TAXES

If the Vendor has paid the full year's taxes in advance, the Purchaser must reimburse him. This becomes part of the "Adjustment Statement" prepared by your lawyer.

OIL HEATING

If the property is heated with oil, convention dictates that the Vendor must fill the tank for closing and then the Purchaser reimburses him on closing. NB: If you are switching to gas then make sure that your lawyer and the Vendor know well in advance of closing so the tank isn't filled. This is part of the "Adjustment Statement".

HOUSEHOLD INSURANCE

The house must be insured prior to closing. The annual premium will be $400.00 plus. Many insurance companies won't insure homes with less than 100 amp service or with the old style "knob and tube" wiring, which is present in most older homes. This added cost can be determined during the inspection.

GST ON RESALE HOMES

There is NO GST payable on resale homes unless the owner has been carrying on a business in the home and applying for tax credits, in which case the GST is his responsibility.

GST ON NEW HOMES

The 7% GST applies to new housing, however, there is a rebate (to the builder) up to a maximum of 2.5% on homes which cost less than $450,000.