Now that you know what you can afford, the next step is to determine the additional costs of the home-buying process. According to CMHC and GE Capital, one should have, in addition to the down payment, at least 1.5% of the purchase price for closing costs (we say 2-2.5%, just to be on the safe side). The costs vary across provinces, and for that matter, cities.

Below you will find a brief explanation of these costs, yet it may not include all items required specific to your property, or the area in which you have purchased. This is a guideline, but your lawyer can provide a fairly close estimate, and is the best resource.

Appraisal Fee:

The appraisal provides the lenders with a professional opinion of the market value of the property. This cost is normally the borrower’s responsibility and it ranges as low as $265 + HST to as much as $400 for a full appraisal, and the average being $300, plus H.S.T. Occasionally, the costs could be slightly higher for larger, custom-built homes, or homes in remote parts. Commercial appraisals usually run about $1,500 to $4,500.

Home Inspection Fee:

A professional inspection of the home, top to bottom, is for the benefit of the buyer, therefore, that’s who absorbs the cost. A typical home inspection can cost anywhere from $350-$450, but our opinion is that they are well worth the investment. New home buyers may not worry about it, but a definite must for buyers purchasing properties older than 5 years. When hiring a home inspector, make sure the inspector has liability insurance, just in case a mistake is made.

Fire Insurance:

All mortgage lenders will require a certificate of fire insurance to be in place from the time you take possession of the home. The amount required is generally at least the amount of the mortgage or the replacement cost of the home. This cost can vary on the property size and extras being insured, as well as the insurance company and the municipality. The cost can vary anywhere from $450-$1,800 for most properties.

Land Survey Fee Or Title Insurance Fee:

A recent Survey of the property is usually required by the lender, and if one is not available, it normally costs anywhere from $600-$900 for a new survey. In lieu of the Survey, most lenders today will accept Title Insurance, at a much lower price of approximately $225.

Legal Costs and Disbursements:

A lawyer or notary 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 H.S.T.

Land Transfer Tax:

Most provinces charge a land transfer tax, payable by the purchaser, and the amount varies from province to province. This tax is based on the purchase price.

New Home Warranty:

In many provinces, new homes are covered by a new home warranty program. The cost to the purchaser for this warranty is approximately $600 and should the builder default or fail to build to an agreed-upon standard, the fund will finish or repair the deficiencies.

Mortgage Application and Processing Fee:

Multi-Residential high-ratio insured mortgage (mortgages above 75% of the purchase price), the mortgage insurer (CMHC or GE Capital) charges a fee of $165-$185 per door as a applying and processing the file, as well as appraising the property. There is always processing fees on conventional applications.

Closing Adjustments:

An estimate should be made for closing adjustments for bills that the seller has prepaid such as property taxes, utility bills, cost of filling oil tanks and other charges. Any bills after the closing date are the purchaser’s responsibility. Your lawyer/notary will let you know what they are exactly once the various searches have been completed.

HST.:

On the purchase of a newly constructed home, HST is payable, but make sure you know who pays this, you or the builder. Therefore, on the offer, the purchase price will say “Plus HST” or “HST Included”, and who gets the HST new home rebate. A lot of builders have included this cost into the purchase price so that the buyer does not have to come up with that at closing. (As well, this tax is also charged on all professional fees).

Approximate closing costs for home buyers:

Sample Closing costs on a $150,000 purchase at 95% financing, property taxes are $1,800

Lawyers Fee:	$750
Land Transfer Tax:	$1,225	This is refunded for first time home buyers
CMHC:	$3,918.75	Added to the mortgage
PST Tax on CMHC:	$274.31
6 month property tax hold back	$900
Cost to fill Oil Tank if Applicable	$1,000	If Applicable
Searches/land title/registration	$400
Your 5% Down	$7,500
Total Cost:	$12,049.31
Total for first time home buyers:	$10,824.31
* Note approximatly $1,000 less if there is no oil tanks