Costs Associated With Buying a Home

The actual purchase price of a home is only part of the ultimate cost of buying it. Whenever a house changes hands, there are a number of associated fees.

 Appraisal – $250 – $350

This is the fee for determining the property’s lending value for mortgage purposes. This value may or may not be the same as the purchase price of the home.

Home Inspection Fees – $350 – $750

The home inspector evaluates the structures & systems that make-up the home and provides you with a written report.

Insurance Costs for High-Ratio Mortgages – 1.80% to 3.15%

A high-ratio mortgage applies to home buyers that have less than 20% of a down payment to put towards the purchase of a home. In these cases, you must qualify for mortgage insurance through one of three insurers – Genworth, CMHC or Canada Guaranty

You can qualify for up to 95% of your home’s value based on the following criteria:

  • Employment
  • Credit score
  • Amortization (25 years)

The CMHC Mortgage Loan Insurance premium is calculated as a percentage of the loan and is based on the size of your down payment.  The insurance premium is also subject to HST and must be paid at time of closing

Land Transfer Tax

These fees are paid to the government whenever a property changes ownership. First-time homebuyers of an eligible home may be eligible for a refund of all or part of the tax. The maximum amount of the refund is $2,000.

You can calculate your Land Transfer Tax here:

Legal Fees/Disbursements – $800 (fee) plus $400 – $500 (disbursements)

There are a slew of miscellaneous but necessary legal documents that a house sale generates, which can only be processed by a lawyer. The lawyer will generate the following searches and documents for you:

  • Title Search, which verifies that the vendor legally owns the property and can sell it;
  • Searches with the utilities, tax departments and building department to verify that there are no liens on the property;
  • Registering the title deed and mortgage;
  • In the case of a rural property, septic tank and potable water searches.

On top of the lawyer’s fee, there are also disbursement costs, which are the miscellaneous fees of doing the search, such as office faxes, phone calls and mail costs, and other costs of doing business.

Ensure your lawyers quote includes all related expenses.

Title Insurance

The word “title” refers to a person’s ownership interest in their property. By purchasing title insurance, homeowners are protecting their ownership to their property. Title insurance is not mandatory, but most lawyers highly recommend it these days to protect you against mortgage fraud, survey irregularities, liens, identity theft and forgery, a growing crime especially in large urban areas.

 Property Survey – $1,000 – $2,000

A document that illustrates the property boundaries and measurements, specifies the location of buildings on the property, and indicates any easements or encroachments. This may not be required if Title Insurance is obtained.

Adjustment Costs – $400 – $700

Adjustment costs are any prepaid costs that were paid by the seller and that are to be reimbursed when the buyer takes possession of the home. These can include property taxes, prepaid utility bills (water, hydro, gas), and so on.

Moving Costs – $1500 – $5,000

The cost of the services of a professional mover or a rental truck, if you move yourself.

Home Insurance – $1,000 – $2,000/yr

Protection of your home and contents.

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