How Much Are Closing Costs?

By ClosingCosts.ca

As you can tell, Hussein is a passionate mortgage agent. He wants his clients to understand each part of the home buying process, including how mortgage rates are calculated and how your property taxes will work. But there’s one aspect of the home buying process that surprises far too many buyers and that is their closing costs.

Hussein has spoken before about the importance of budgeting for closing costs, on his blog. As a rule of thumb, you should assume that your closing costs could add up to between 1.5 and 4% of the home’s purchase price. Windsor is one of Canada’s most affordable cities, where the average home price is $164,123. If you bought a home at that price, you’d have to set aside between $2,462 (1.5 per cent) and $6,565 (4 per cent) for your closing costs – and that’s on top of your down payment.

Let’s take a look at the most common closing costs buyers in Windsor will face.

Home Inspection

Home inspections are one of the most common conditions buyers include in their offers, and it’s easy to see why. Your home is likely the biggest investment you’ll ever make, so it’s not surprising that Hussein suggests all buyers get a home inspection done first. An Ontario home inspector’s job is to examine the interior and exterior of your potential home and give you a written report on the condition of it at the end. Not only does this help you make a decision on whether or not you really want to buy the home, it gives you peace of mind if you do. You should expect to pay $250-500 for a home inspection in Windsor, depending on the size of your home.

Legal Fees

Whether you’re buying, selling or refinancing a property, you should look for an experienced real estate lawyer to work with. An Ontario real estate lawyer’s job is to protect your rights throughout the entire home purchase transaction. It’s their responsibility to conduct a title search, register all documents in your name, get title insurance in place, and facilitate the transaction on closing day – making sure all of your payments are made. You should expect to pay at least $1,500 for legal fees and disbursements.

Land Transfer Tax

Whenever you buy property in Ontario, you have to pay a land transfer tax. The Ontario land transfer tax is calculated based on the purchase price of your home (not the value), and the amount you owe must be paid for with cash on closing day. This is often one of the most expensive closing costs a buyer will face, aside from their down payment. Fortunately, if you’re a first-time buyer, you may qualify for a full or partial refund of the tax.

PST on CMHC Insurance

If you make a down payment of less than 20%, you will have to purchase mortgage default insurance – also known as CMHC insurance. The premium for it is added to your mortgage loan and is paid out over the life of your mortgage. However, in Ontario, buyers must also pay PST on that premium. For example, if your premium cost $5,000, you’d have to pay $400 in PST ($5,000 x 0.08 = $400). That amount is due on closing day.

ClosingCosts.ca

If the idea of having to calculate all of these closing costs stresses you out, we’re happy to say that we’ve built a calculator to do it for you. All you have to do is enter the asking price of a home you’re looking at, how much you can afford to put down and the postal code, and we’ll help you calculate what your total costs will be on closing day. Our site also helps you connect with Ontario home inspectors and Ontario real estate lawyers, so you don’t have to worry about seeking out referrals.

At the end, you can download and print off a PDF report outlining your closing costs, as well as a way to contact your potential service providers. Our goal for the site is simple: to help homebuyers better prepare themselves for closing day. We hope we can help you!