Buying a Home in Ontario? Average & Hidden Costs

Businessman Calculating Invoice At Office Desk

You know that excitement you get when you’re closing on a big deal? Now imagine all that getting crumbled by finding out there were more terms or charges. This is what most new homeowners go through when they’re handed papers to sign on closing day. The actual cost of buying a house goes beyond the stated purchase price. The good thing is, if you familiarize yourself with the extra costs that come with your new home, you won’t be caught unawares. You’ll even have some leverage to negotiate with your realtor, lender or broker to get some waiver or discount on some fee.

Let’s have a look at all the costs to expect when purchasing a new home.

HOME INSPECTION FEE

Average Cost: $200 – $600

One of the most overlooked fee by most buyers. Their intention? To save on the overall cost.

Getting a home inspected is one of the things you should do once you set your eyes on it even before making any offers. No matter how perfect it looks, a trained professional can point out structural flaws and end up saving you thousands of dollars.

The cost of hiring a certified home inspector is minimal compared to the damage you may end up suffering later if you decide to ignore the inspection. Keep in mind that the fee varies as per the size of the home being inspected.

APPRAISAL

Average Cost: $250 – $350

This is a fee charged by the lender to determine the home’s lending value as it may not be the same as the purchase value. It’s for mortgage purposes.

MORTGAGE INSURANCE

Average Cost: 0.6% to 4.5% of the mortgage

If you make a down payment of between 5% (Canada’s minimum down payment) to 19.99%, you will have to take mandatory mortgage insurance. This is issued by insurers such as CMHC and Genworth Canada. It’s meant to protect the lender if you’re no longer able to make your mortgage payments, or you default the issued mortgage.

In these high-ratio mortgages, the lender pays the insurance premium and adds it to your mortgage.

LAND SURVEY

Average Cost: $1,000 – $2,000

A land survey outlines in detail the properties boundaries. This may be required by most lenders when applying for a mortgage to avoid any mix-up with the immediate properties later on.

REAL ESTATE LAWYER FEE /LEGAL FEE

Average Cost: $600 – $2000

Having a real estate lawyer by your side comes in handy as they verify all the paperwork involved in the home purchase process for all legal technicalities. The real estate lawyer also drafts your mortgage contracts and checks the property’s history to ensure that there are no claims or mortgages on it.

Here are a few things that your real estate lawyer fee includes:

  • Title searches to check whether there are any liabilities associated with the property
  • Drafts of all the legal documents involved in the home purchase
  • Couriers
  • Calculation of land transfer and property taxes
  • Execution certificates
  • File storage
  • Postage of documents
  • Verification of cheques

Some real estate lawyers offer you a fixed rate fee on all their services to cut on your spending.

LAND TRANSFER TAX

Average Cost: 0.5% to 2.5% of property value

A land transfer tax (LTT) is a fee that you pay to the provincial government after purchasing a home or property. The LTT is usually a percentage of the property value. In Ontario, the LTT varies, as shown in the table below:

Property Value (In $) Land Transfer Tax(percentage of property value)
Up to 55,000 0.5
More than 55,000 to 2500,00 1
More than 250,000 to 400,000 1.5
More than 400,000 2
More than 2,000,000 (one or two single residences in the same property) 2.5

 

TITLE INSURANCE

Average Cost: $300

Although it’s not a requirement to obtain title insurance, it is the best way to protect your investment against any liabilities that may arise regarding the property. This is called ownership title insurance. It protects you from:

  • Title defects
  • Undisclosed heirs
  • Fraudsters
  • Survey errors and omissions

Your lender will most certainly require you to take title insurance that protects them against any losses associated with that property. This is called lenders title insurance.

Title insurance is essential, especially the homeowner title insurance, and you should acquire one for peace of mind.

MOVING COSTS

Moving costs vary depending on the distance from your previous residence to your new home. It also varies depending on whether you’ll move by yourself or use a moving company. If you decide to move by yourself, factor all the things you’ll require to move successfully and efficiently. Choose the best option (moving company or do it yourself) depending on convenience, preference, and costs.

HOME INSURANCE

Average Costs: $1000 – $2000 per year

Finally! You have a home. But accidents happen and you need to ensure that everything is insured to stay on the safer side. To do so, you ought to take home insurance.

Home insurance is vital and necessary. It protects your home and all the assets in it in case of any damages. No matter how safe your neighbourhood or home is, unexpected things can transpire.

The cost varies depending on the size of your property and its overall value.

HOME MAINTENANCE COSTS

Home maintenance cost varies depending on the repairs and renovations that you may require to make after moving into your new home. When you least expect it, one of the systems may malfunction, or your roof might start leaking.

These expenses also include the acquisition of repair and maintenance equipment (if you don’t have any) to keep your home in good condition. For example, a lawnmower, ladder, and other power tools and hand tools are necessary for home upkeep.

CHOOSE THE BEST REAL ESTATE LAWYER IN ONTARIO

The processes and decisions of acquiring a home are many, and they determine your future in it. Having the right real estate lawyer by your side to review and handle all your documents and transactions prevents any surprises about the property or other costs you didn’t anticipate.

GK Law offers you experienced real estate lawyers to protect your legal rights regarding the home you acquire and all the transactions you perform. GK law has been providing real estate services for over a decade and has closed over 10,000 real estate transactions. With this experience and thousands of satisfied clients (both buyers and sellers), we can help you carry out real estate transactions without being blindsided.

Contact us at 416-665-9000 now to receive a complimentary consultation and a free quote on any real estate transaction.