Closing Costs
Closing costs are a list of charges your lawyer presents to you on the closing date of your home. Many people are surprised at the additional costs over and above the price of the home. According to the CMHC and GE Capital you should have at least 1.5% of the purchase price for closing costs in addition to the down payment (I suggest around 2%-2.5% to be on the safe side). The costs vary among provinces and cities.
Below you’ll find an example and a brief explanation of these costs. Please note these are some of the closing costs you may encounter depending on your specific situation. Use this as a guideline then talk with your lawyer who can provide a more realistic estimate for you.
Closing Costs Example
Purchase Price: $275 000.00
Down Payment: 13 750.00
CMHC Premium: 9 796.88
Principle: 271 046.88
CMHC Premium is based on 5% down.The rates may vary depending on when you decide to purchase.
Summary of Closing Costs
PST on CMHC Premium: $ 783.75
Land Transfer Tax: 2 600.00
CMHC Application: 165.00
Home Inspection: 250.00
Appraisal Fee: 300.00
Legal Costs: 1 070.00
Title Insurance: 250.00
Closing Adjustments: 250.00+
Home & Fire Insurance: 40/ mo. or $480/ yr.
Interest Adjustments* $Depends on closing date
Hydro New Account: 300.00
Estoppel Certificate Fee*** : 100.00
Est. Total: $6148.75
*** Only applies to condos
This does not include other costs such as cable, phone set-up fees or your moving costs. This is why I would recommend having at least 2-2.5% cash in your bank to cover closing costs. You will notice the numbers shown here work out to just under 2.5% of the purchase price.
Also, if the seller paid their taxes for the year in one lump payment in February and you move in June then you will have to pay the seller the remaining taxes for the year because they pre-paid.
*Most mortgage companies make your monthly payments due on the 1st of the month or the 1st and 15th if you’re on bi-weekly payments. If you move in on the 20th of the month, the bank will calculate the interest from the 20th of the month to the end of the month and either bill you on closing or include it in your first mortgage payment.
**If you’ve never had to pay hydro to Embridge directly they will expect a deposit of approximately $200 which they hold for one year then apply it as a credit to your account.
