CLOSING COSTS

Additional Costs to Consider When Purchasing Your Home

CLOSING COSTS

Your down payment and mortgage are only part of the costs of a home purchase. While the following list is not exhaustive, here are some of the many additional expenses many homebuyers need to plan for on their closing day or completion day.

Home inspection fee: An offer on a home often contains an addendum, Subject to home inspection. This is for your benefit in order to point out any potential flaws or expensive repairs in your prospective home. A home inspector will assess the condition of the house and identify major repairs or if there are fundamental flaws in the building’s structure.

Legal fees: These include the cost of hiring a real estate lawyer to negotiate the purchase agreement and close the deal, as well as out-of-pocket expenses incurred by the lawyer for such things as title searches and registrations. Mortgage Pre-Payment Penalty: If you currently have a mortgage is the mortgage portable or will you incur penalties for breaking the mortgage contract?

Appraisal Fee or Property valuation fee: Financial institutions normally require that the property be appraised if you’re arranging a new mortgage. The cost of the appraisal is normally borne by the borrower. Taxes: Some provinces levy a special charge — usually called Land Transfer Tax or Property Purchase Tax (PPT) and based on the purchase price. GST applies to New Home construction only.

Survey: It’s always wise to obtain an up-to-date survey of the property you intend to purchase. Often, lenders will also make this a requirement of lending to you. If the seller of the home doesn’t have a current survey and you aren’t obtaining title insurance, you may have to pay a land surveyor to prepare one.

Title insurance: You may wish to obtain a policy of title insurance to cover any title-related issues that may arise in connection with the property. In certain situations, lenders may even require that such a policy be put in place at your cost.

Adjustment costs: These typically involve reimbursing the original owner for any pre-paid taxes, utilities, pre-paid strata fees, etc.

Mortgage Insurance: The application for mortgage insurance occurs concurrently with your mortgage application when you have less than 20% down payment. This insurance benefits the lender to protect against mortgage default. The cost of mortgage insurance varies and depends on the percentage of down payment as well as the length of your amortization. The additional costs are normally added to the total mortgage amount or it can be paid for at time of signing with your solicitor.

Property insurance costs: These represent an ongoing expense associated with owning a home. Lenders require homeowners to invest in fire insurance to protect their investment.

Upgrades & New furnishings: Your new home may require paint, new flooring, drapery or upgraded windows to make your home more to your taste or livable. Also keep in mind that it makes sense to budget for new furnishing — inside and out. New home construction additional costs include landscaping and fencing even an automatic garage door opener may be an additional cost to the purchase of your new home.

Utility Hook Ups: Initial hook up charges may apply and are determined by the utility service provider, e.g. cable, gas and electric. Contact your service provider for details.

The key is planning ahead for these additional costs.

Prepared by: Your Mobile Mortgage Specialist Anne Vanidour 604 996 8388 anne.vanidour@td.com