Additional Costs When Buying a Home:
The purchase price of your home is only one of the costs you’ll encounter. Here are other possible costs you need to consider:
- Mortgage loan insurance: If you are putting less than 20 per cent of the house value down, you’re going to need mortgage loan insurance. Depending on the lender, the premium can be added to mortgage payments. High ratio mortgages require mandatory insurance against borrowers’ defaults. The total insurance cost from CMHC is between 1.00% and 2.75% of your mortgage amount.
| Loan-to-Value | Premium on Total Loan | Premium on Increase to Loan Amount for Portability and Refinance | ||
| Standard Premium | Self-Employed without 3rd Party Income Validation | Standard Premium | Self-Employed without 3rd Party Income Validation** | |
| Up to and including 65% | 0.50% | 0.80% | 0.50% | 1.50% |
| Up to and including 75% | 0.65% | 1.00% | 2.25% | 2.60% |
| Up to and including 80% | 1.00% | 1.64% | 2.75% | 3.85% |
| Up to and including 85% | 1.75% | 2.90% | 3.50% | 5.50% |
| Up to and including 90% | 2.00% | 4.75% | 4.25% | 7.00%* |
| Up to and including 95% | 2.75% | N/A | 4.25%* | * |
| 90.01% to 95% — Non-Traditional Down Payment*** |
2.90% | N/A | * | N/A |
| Extended Amortization Surcharges | ||||
| Greater than 25 years, up to and including 30 years: 0.20% Greater than 30 years, up to and including 35 years: 0.40% |
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- Appraisal fee: Lenders typically loan a percentage of the home’s purchase price or the market appraisal of the property. An appraisal fee is around $300 – $500. You will pay more if a house is larger than average or located in an area with no comparable properties.
- Land survey: Lenders may ask for an up-to-date survey prior to finalizing the mortgage. In many cases surveys are paid for by sellers to facilitate the transaction. If the seller doesn’t have one or doesn’t agree to pay for it, you will have to spend between $1,000 and $2,000.
- Deposit: A deposit normally payable when your offer of purchase is accepted and it will be held in the listing brokerage trust account. Usually 5% of purchase price required as a deposit by seller and listing brokerage.
- Financing fee (mortgage broker’s fee): Most lenders waive mortgage application fees. If you are using a mortgage broker to find financing they usually pay a finder’s fee to the broker as well. However, clients with poor credit records may be asked to pay the broker’s fee themselves, which is 2% (or more) of the mortgage amount.
- Insurance: Lenders require property insurance against typical perils, including damage from fire. Your insurance has to start on the closing date, and you should be prepared for an annual expense of $700 to $900 for basic coverage.
- Title insurance: Provides coverage in case of problems with the property title among other things. A title insurance policy can eliminate the requirement for a new survey. Title insurance is an insured statement of the condition of title or ownership of real property, at the time the policy is issued. Approximate cost: $250-275 (residential).
- Home inspection fee: Prior to buying a home, you should have a home inspection performed to identify any significant structural, electrical or plumbing problems with the home. Some lending institutions require that you have a home inspection completed before approving financing. Approximate cost: $300 – $500 tax.
- Legal fees: You can save some of the legal fees usually charged by the lender if your lawyer draws up the mortgage. You’ll also pay for disbursements which are the costs involved in drawing up the title deed, conducting a title search, and preparing and registering the mortgage. Legal services cost on average between $500 and $1000 across Canada. Ask your lawyer to clarify all expenses and get them listed in writing.
- Land Transfer Tax: To calculate both your Ontario and city of Toronto (if applicable) land transfer taxes, please use the calculator at the right side of the page (Land Transfer Tax Calculator). First time home buyers qualify for a maximum $2,000 (LTT on a $227,500 home) provincial rebate and a maximum $3,725 (LTT on a $400,000 home) City of Toronto rebate.
- Other costs: These include moving costs, fees charged by utilities for service hook-ups, property tax and other adjustments (an adjustment takes place when the seller has already paid for something in advance and wants to be credited for the unused portion on the date the house becomes yours), and ongoing maintenance (condo fees etc) and utility costs.
- Goods and Services Tax: Resale (used) homes are exempt from GST but it does apply to newly constructed homes and may qualify for a partial rebate depending on the sales price and if the home is going to be your primary place of residence.
- For new homes costing $350,000 or less, you will receive a GST rebate of 36% of the GST paid to a maximum of $8,750. The rebate for new homes costing between $350,000 and $450,000 declines to zero on a proportional basis. GST also applies to most of the services provided in completing the real estate transaction.
