Buyers Closing Costs
You should allow at least 3% of the purchase price for closing costs although you may want to budget approximately 4% to be on the safe side.
Below is a list of typical closings costs that you might incur, but remember that they are estimates only and should be used as a guideline as of course they may vary depending on your own specific purchase.
Legal Fee and Disbursements
- A lawyer will charge a fee for their professional services involved in drafting the title deed, preparing the mortgage, and conducting the various searches.
- The disbursements, on the other hand, are out-of-pocket expenses incurred, such as registrations, searches, supplies, etc., plus G.S.T.
- The actual fee that the lawyer will charge will depend entirely upon the deal between you and your lawyer. Be sure to ascertain exactly what this will amount to in a worst-case situation.
- We recommend you call one or two lawyers and obtain a quote directly from them including both their fee and estimates of disbursements before choosing which one you’d like to use.
Land Transfer Tax
There is usually a land transfer tax that is charged on closing when the property is transferred to your name and it can vary depending on the price of the home, whether or not you are a first time home buyer and which city you live in Ontario, Canada.
Please see below to access the Ontario Land Transfer Tax Calculator for our area. A home in Toronto will also be subject to a municipal land transfer tax.
Property Tax and Prepaid Utilities Adjustments
- If they are not up to date, the municipality requires that the seller pay them off from the proceeds of the sale. If they paid all their taxes by April, expect a large adjustment cost on closing!
Therefore, remember that if the previous owner has prepaid property taxes or other utilities for the year, they will be credited the prepaid portion on closing. Again, your lawyer will confirm all this for you. Also, remember utility providers may require a deposit for setting up a new account for your new home.
Ontario Land Transfer Tax Calculator
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