You have found a house you love, put in an offer and it has been accepted – congratulations! But did you know the price you offered is not the full price of the home you are purchasing? You need to be aware that there are closing costs when buying a house in Ontario.

What Are Closing Costs?

Closing costs are generally one-time expenses associated with the purchase of your home. It is very important that when you prepare a budget to buy a home, you also include closing costs in addition to how much you want to pay for a home. Speaking in general, allotting 3% – 4% of the property’s purchase price should be enough to cover the closing costs. If you are purchasing a house for $1,000,000, for example, you will want to have anywhere between $30,000 – $40,000 saved for closing costs.

There are many factors that will affect the amount of closing costs when buying a house in Ontario. There is even a difference in closing costs when you are buying a new construction versus a resale home. Closing costs can also be affected by the type of home you are buying as well as the neighbourhood you have chosen to move into.

What Is Included In Closing Costs?

Closing costs when buying a house in Ontario cover a lot of ground. They cover the:

Property Evaluation Fee: This is when a recognized home appraiser inspects the property to confirm the market value. This is occasionally required by your lender to determine whether the selling price is reasonable for the market. Expect this to cost around $300.

Land Survey Fee: This is something that is paid for to either finalize the mortgage loan or because the seller cannot produce an up-to-date survey or certificate of location. Title insurance can be accepted in lieu of a survey. Expect this to cost anywhere between $1,000 – $2,000 depending on the size and type of the property.

Title Insurance: Title insurance is incredibly important – it protects you against from things like real estate title fraud and any other defects of the title to the property. This costs around $400.

Legal Costs: Your lawyer will conduct a title search for you, prepare your mortgage and draft the title deed. All these services will cost at least $500 plus tax.

Land Transfer Tax: This is a provincial or municipal tax that is based on the purchase price of your new home. This tax mainly applies to resale homes. The best way to find out how much this will cost for you is to ask your lawyer for the most recent calculations for your region in order to budget accordingly. In Toronto there is both the provincial land transfer tax and the municipal land transfer tax to budget for.

Property Insurance: While it is possible to get an extensive insurance on your property, at minimum you must insure you home against fire or significant damage for at least its replacement cost. This cost will vary based on who you use to insurance your home, what discounts you may be eligible for, and how much coverage you aim for. It is recommended that you also insure the contents of your home against damage, loss or theft.

Prepaid Property Taxes and Utility Bills: These are often known as adjustments. The seller of the property has paid taxes and utility costs on their property that they should have reimbursed as you will be moving into the home and you will be responsible for those costs. Your lawyer will calculate how much you should pay for this, and it will likely cost around $1,000 – $2,000.

Mortgage Default Insurance: This cost does not apply to all home buyers. If you choose to put down less than 20% as a down payment on your property, you will be required to arrange mortgage default insurance. This will cost you anywhere between 0.6% – 6.5% of the total loan amount. You will need at least 1.5% already saved on top of your down payment to qualify for mortgage default insurance. Talk to your mortgage provider for more details.

Status Certificate Fee: This is a closing cost you will have to pay if you are purchasing a condo in Ontario. Your status certificate will include the financial statements of your condo corporation and will break down your common element fees. It will tell you how much is in your condo’s reserve fund, and the status of the seller’s payments. You cannot close a sale of a condo without obtaining this document.

Moving Costs: This is a cost that does not have to break your bank account. You can opt for professional movers and spend $1,000 – $2,000 or more to move your belongings into your new home. Alternatively, you can do as much as you can by yourself and save a lot. This is a choose your own adventure closing cost.

Post-Move Costs: This is a cost that is often overlooked but can quickly add up. When you move you need to remember that mail will need to be redirected to your new address. You need to set up new accounts for utilities and services. You might also need to install new window treatments, apply a new coat of paint, buy furnishings and any other items that will help turn your new house into your new home. These prices also vary significantly, but a wise idea is to budget up to $2,000 to cover the basics.

While there are many closing costs when buying a house in Ontario, it does not mean that they are complicated! As long as you budget accordingly, you can have your dream home without any hiccups or unpleasant surprises.