Have you been looking to buy a house in Ontario? If so, there are numerous different expenses that you may need to be aware of – and today, we’ll be considering a handful of these to help you find the most effective solutions for your own buying or selling needs.
What are Closing Costs?
Closing costs are final fees paid to finalize a transaction after buying a property in Ontario.
Generally speaking, most closing costs for Ontario home purchases will fall in the region of 1.5% to 4% of the price you have paid to purchase the property; as such, if you have purchased a property valued at $700,000, you can expect to pay anywhere in the region of roughly $14,000 to $21,000 in closing costs, although this could fall either side of this range easily.
Closing Costs, You Could Incur for your Ontario Purchase
Unfortunately, buying a property in Ontario is a little more expensive than just the purchase price alone. These can represent a significant expense over the price of buying your new home outright; as such, before purchasing, you should always check that you can afford to pay the closing costs along with your mortgage deposit.
Land transfer tax is one of the most obvious and expensive closing costs, representing between 0.5% and 2.5% of the purchase price. The tax is based on a graduated scale; as such, properties up to $55,000 in value will only be liable for 0.5%. However, this jumps to 1% for properties valued between $55,001 and $250,000 and then continues to increase further with each new bracket; the maximum 2.5% is applicable for properties valued at $2,000,000 or more.
Harmonized sales tax (HST) is also applicable to new-build properties’ purchase price. Fortunately, if you are buying a resale property, you likely won’t have to pay HST on the property value itself (although you could still be liable to pay HST on transaction costs). When purchasing a property in Ontario, transaction costs may include legal fees, disbursements, appraisals, home inspections, surveying, and real estate commissions.