Important Note: This outline and costs are for Residential Re-Sale/Single Family only. Different rates may apply to New Homes & ICI properties. Please check with your professional advisors for specific amounts as this is only a guideline.
Don’t Be Surprised!
Buyers and Sellers are sometimes surprised on closing day with extra costs they had not anticipated, or been advised about. The following is an outline of normal costs. We hope you find it helpful.
Vendor’s Closing Costs
Discharge of Mortgage/Charge
Check with your mortgage, but a standard procedure with some financial institutions (unless an open mortgage, or specifically written in the mortgage document) is to charge a 3 month interest penalty, or the interest differential (whichever is greater). Check this out.
Real Estate Commission + GST on the Commission.
Moving costs vary. Rates are usually from about $65.00 to $95.00 per hour, depending on the company and the number of people. It will also depend on the size of the vehicle and the time of the month you are moving. (The days around the middle and end of the month are busier and more costly) If they participate in the packing, the cost increases.
This varies according to the lawyer. Most lawyers charge a flat fee, plus disbursements. It is a good idea to get a couple of quotes. Make sure you ask what the fee includes (i.e. title insurance/disbursements etc.)
There is usually an extra fee if the lawyer is also acting for the mortgagee. Fees probably will range from about $600.00 and up depending on the Sale Price. Some Title Insurance companies are now doing a closing package.
Note: Some purchasers like to involve their lawyer prior to signing an offer.
Purchaser’s Closing Costs
At the time of presenting an Agreement of Purchase and Sale, you will have an option to submit a deposit cheque payable to the listing broker, or deliver on acceptance. This will be held in trust until closing. The cheque is usually certified and deposited on the day after acceptance. (If you are in a competition situation, it is a good idea to have a certified cheque on presentation.).
The amount of the cheque is usually from about 5% – 6% of the offering price, or more depending on the circumstances and closing date. If you have a home to sell or your money is tied up in a term deposit etc., you can often make arrangements with your financial institution for a short term loan or line of credit.
If there is not a survey showing the current location of fences, buildings, and structures, (and the agreement of purchase and sale does not state that the vendor will provide one) then it may be necessary to arrange for one. The mortgagee will either require a new survey or title insurance. This will vary with financial institutions.
Even if the mortgagee doesn’t require one, you may wish one. (especially if you are planning to do any extensions etc. in the future).
Costs vary from about $700 to $1000.
This is becoming more popular, especially when there is no up-to-date survey. (As mentioned) or where there may be potential problems, such as encroachments etc. It is often used with mortgage refinancing or assurance for a minor title problem. The fee is in the area of $200 to $300 but could vary with more expensive homes.
The fee is in the area of $200 to $300 but could vary with more expensive homes.
This varies according to the lawyer. Most lawyers charge a flat fee, plus disbursements. It is a good idea to get a couple of quotes. Make sure you ask what the fee includes (i.e. title insurance/disbursements etc.).
There is usually an extra fee if the lawyer is also acting for the mortgagee. Fees probably will range from about $600.00 and up depending on the Sale Price. Some Title Insurance companies are now doing a closing package. Note: Some purchasers like to involve their lawyer prior to signing an offer.
These are costs that your lawyer will have to pay on your behalf. They include things like the following: Photocopies, Tax Certificates, Zoning clearances and Work Orders, Couriers, Registration of Deeds/Mortgages, Postage, Long Distance Calls, Mortgage Schedules, Sheriff’s Certificate, Condominium Estoppel Certificate, etc. These will vary on different properties, but probably in the area of $600.00 and up.
Statement of Adjustments
The balance due on closing is the difference between the sale price and the amount of your deposit which was presented with the offer. However, there are a few things that get adjusted at the time of closing. The vendor is responsible for everything up to closing date and the purchaser is responsible from then on.
This would include things like Realty Taxes and fuel oil (if heated by oil).
The normal procedure is for the vendor to fill the fuel oil tank (200 gallons is standard) on closing and charge for a full tank. (Unless the purchaser is converting to gas, at which time other arrangements will be made.)
Utilities and Gas (which is metered) will be read on closing.
There may be other adjustments if the purchaser is assuming a mortgage. (Or if purchasing a new home)
Usually done within 2-3 days from acceptance, although if thought to be in competition, some purchasers will do a pre-inspection. Usually between $300 to $400, plus GST. There may be additional charges if inspecting something specific, such as termites.
From about $400 and up. Call for quotes. All mortgages must be noted on the policy. There is also an 8% insurance tax.
Note: If purchasing an older home with the old “knob and tube” wiring, you may have to shop around, as some companies will not insure the home unless it is replaced.
Most residential resales are exempt from GST, however, most of the services involved with the transaction will be subject to GST (e.g.- real estate commissions, lawyer’s fees, appraisals, processing fees, homes inspections, insurance, moving costs, etc.) Financial services are exempt (mortgage, brokerage, etc.)
Substantially renovated houses – are subject to GST if purchased from the Builder/Renovator.
Note: GST is a Tax and will not be added to the value of the home for finance purposes.
Land Transfer Tax
This tax is payable at the time of closing and these rates apply to residential resale only. See our post on Land Transfer Tax for rate estimates.
Arranging the First Mortgage
For a conventional mortgage, (75% of the Sale price) there could be a processing fee (from $200 to $300), and/or an appraisal fee (about $200) for arranging the first mortgage. If you choose to pay realty taxes with your mortgage payment, there could be a tax hold back from about 1/3 to 1/2 of the annual taxes or more. This would be for the purpose of building up a reserve to pay taxes in the following year.
Note: If arranging a mortgage over 75% of the Sale price (i.e. high ratio) the processing fees could be about $275 or more (an insurance premium on the principal amount of the mortgage would also apply, but this is usually added to the mortgage and not a closing cost.. from 0.5% to 3.75% depending on the down payment. There is also an 8% insurance tax)
Second Mortgage costs
If arranging a second mortgage rather than a high ratio mortgage, there would be additional legal fees and Appraisal and brokerage fees. Approximately $500.00 and up PLUS Brokerage of about $475.00 and up.
Just a reminder at this point as to the procedure on the closing date. It will be necessary for your lawyer to obtain the money from you and the mortgagee, either the day prior to/ or the morning of the closing. They then have to arrange a time to close the transaction with the lawyer on the other side of the transaction. It is advisable not to order the moving truck too early in the day, as you are not entitled to the key/ and possession until the deal is closed. You then have to obtain the keys from your lawyer. Don’t pay for a mover to sit outside your new home.