09 Nov 10 Common Closing Costs to Keep in Mind
No one wants surprises on closing so it is advisable to budget ahead. Here’s a brief look at 10 common closing costs when buying a home in Kingston:
Down payment: A minimum 5% is required.
Deposit: Payable when an offer is accepted and credited towards your purchase price on closing day.
Home Inspection: Most inspectors charge $350 plus HST, but that can depend on the inspector and the property.
Water/septic/fireplace: If you’re purchasing a property with a well, septic system, or fireplace, you may need to pay a professional to take a look before you waive your conditions. In most cases, we ask the seller to pay for pumping the septic system and ensuring the code compliance of any fireplaces or woodstoves, but as the buyer you should plan on paying about $225 for an hour-long pump test of the well and more for additional chemical analysis (Ministry of Health Water Testing is a free service).
Tarion: If you’re buying a new home, the cost of the Tarion warranty is paid by the buyer and usually $600 – $800, depending on the sale price of the home.
Land Transfer Tax: This amount varies depending on the purchase price. If you are a first time home buyer, you can receive a rebate of up to $2000 of this tax.
Adjustments: If you are buying a home in February, and the seller has paid their property taxes until June, they will want reimbursement for that time. Your lawyer will calculate this amount exactly. If you’re buying a property with an oil tank, the seller is to have filled the tank before closing, you will be billed for this amount. These are the most common adjustments payable on closing.
Status certificate: If you’re buying a condo, you’ll need $100-$125 for a status certificate outlining the rules of the condo and its financial standing.
Commission: Although rare, there are some scenarios where the buyer will be responsible for real estate commissions. We will advise you before writing an offer if this will be an issue.
Legal fees: Real estate lawyers have many hard costs when they process a purchase. This includes searching title, transferring the deed, title insurance and more. The lawyer’s fee varies from firm to firm. Budget for around $1200 to $1500 for this. If there are complications, the lawyer may charge a higher fee and will advise you accordingly.
CMHC and other mortgage fees: These will often be included in the amount you borrow. Your mortgage broker or bank representative will advise you of this.
Moving costs: This will depend on whether you rent a truck or hire movers and also how much stuff you have!
The rule of thumb is to plan for 2% of the purchase price for closing costs.