Whether you are buying your first home, your retirement home or an investment property you have to provide a down payment as well as put money aside for closing costs.
Closing costs are in addition to your deposit or down payment and your bank will likely ask for proof of these funds to ensure you can close.
Closing costs will vary from one purchase to the next. As a guideline, you will need approximately 2% of the purchase price to cover closing costs.
Below is a list of some of the closing expenses you will incur.
Legal fees & disbursements:
You will need a lawyer to close the deal, to search title, register the deed and much more.
Land transfer tax:
The Province of Ontario charges a fee to transfer ownership of a property. For example: Land Transfer Tax on the purchase of a $150,000 home is $1225.
Some banks charge application and appraisal fees.
If your mortgage is being insured, you will also have to pay PST on the Insurance Premium.
Pre-paid or unpaid taxes or condo fees fall into this category as well as oil left in the oil tank. Your lawyer will advise you of the total adjustments prior to closing.