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Transaction Costs
The additional costs associated with buying real estate in Ontario and more particularly in Toronto.
DEPOSIT
The deposit is part of the Purchase Price but you need it the day your offer is accepted. In Toronto, five to ten percent is the expected amount. Not everyone has the money in an accessible account so a split deposit - part now and the rest at a later date is often acceptable.
HOME INSPECTION
A home inspection has become almost standard in the freehold and condominium townhouse purchase. The inspection costs between $250 and $350 for most houses but increases with the cost of the house over $300,000. The companies that we recommend all charge a base of $300 to $375.
SURVEY
You, your bank and your lawyer want to know exactly what it is that you are buying. A survey that shows the lot dimensions and the location of any structures is very important. If the Vendor does not have a current survey you will be required to have one done right after the deal is firm, at a cost of $800 to $1,200 (occasionally more). Convention in Toronto is that the Purchaser pays for the new survey.
MORTGAGE COSTS
There may be an application or appraisal fee of about $150.
There is usually an interest adjustment calculation to adjust for the time between your closing date and the date that the mortgage company wants you to make your regular payments, usually the 1st of the month. If you were to close on the 5th, the mortgage company would advance you the amount agreed upon less 25 days interest.
With most second mortgages and some firsts there is a brokerage fee. The amount depends on the size of the mortgage. Get a firm quote.
LEGAL FEES
You need a lawyer to search the title and cover all the legal matters. Rates vary greatly, starting at about $450.00. This amount is for the lawyer's time. In addition you must pay for the disbursements that the lawyer pays on your behalf. The disbursements are often equal to or greater than the lawyer's fee. Call your lawyer and get a quote. While you are talking to your lawyer ask about TITLE INSURANCE.
TITLE INSURANCE
Everyone who is involved in buying real estate in the US is familiar with title Insurance but in Canada it is a new concept. In many cases it can save you money. In addition, some title insurance companies offer a mechanical and appliance warranty. Be sure to ask your lawyer about Title Insurance.
LAND TRANSFER TAX
Payable on closing. It is a multi-tiered formula.
- $5 per thousand for the first $55,000
- $10 per thousand from $55,000 - $250,000
- $15 per thousand from $250,000 - $400,000
- $20 per thousand over $400,000
REALTY TAXES
If the Vendor has paid the taxes in advance, you must reimburse him. This is part of the "adjustments".
OIL
If the property is heated with oil, convention dictates that the Vendor must fill the tank for closing and then you reimburse him on closing. NB: If you are switching to gas then make sure that your lawyer and the Vendor know well in advance of closing so the tank isn't filled. This is part of the "adjustments".
HOUSEHOLD INSURANCE
The house must be insured prior to closing. The annual premium will be $400 PLUS. Many insurance companies won't insure houses with less than 100 amp service or with the old style "knob and tube" wiring, which is present in most older homes. This added cost can be determined during the inspection.
GST
Good news!! There is no GST payable on resale homes unless the owner has been carrying on a business in the home and applying for tax credits, in which case the GST is his responsibility.
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