Costs to Consider for Home Buyers


There are expenses associated with buying a home that buyers may overlook or forget to consider when embarking on their journey to purchase a home. I’ve compiled this list of common expenses buyers may face, to help you prepare and budget for the buying process:

  1. Home Inspection. A home inspection is paramount to a buyer’s due diligence to ensure you are aware of the condition of the home you are purchasing. While an inspection cannot reveal 100% of issues, it will give you a good picture of the state of the home and may aid in the negotiating process if any issues arise. A home inspection is paid for by the buyer and the cost can vary depending on the location, size and type of property.
  2. Appraisal. An appraisal is almost always required by lenders before a mortgage is approved. While most banks will pay to have an appraisal conducted, some smaller lenders will require the buyer to pay for the cost of the appraisal. Be sure to ask your lender who will pay for the appraisal when deciding which lender to work with.
  3. Surveyor. A buyer may require a survey to identify boundaries, encroachments, easements or other issues that may be present. Also, if a buyer plans to make future improvements or changes to the property that would require a building permit, minor variance or a severance, then a survey would likely be required.
  4. Statement of Adjustments. The statement of adjustments is prepared by the seller’s lawyer and sets out the purchase price, credits the deposit to the buyer, and pro-rates any unpaid items(e.g., property tax, unmetered utilities such as an oil or propane tank, condominium fees, etc.). The day of closing as it pertains to the adjustments is always apportioned to the buyer. The statement of adjustments will identify the final amount payable by the buyer when the sale of the property closes after adjustments are made. Due to the adjustments made, the final price will most often differ from the sale price indicated in the agreement of purchase and sale.
  5. Title Insurance. Title insurance protects a buyer against various title related problems that may arise during, at, or after closing. An owner’s policy is not mandatory but provides great value for buyers and will likely be recommended by your lawyer. In addition to an owner’s policy, lenders may require a buyer to purchase a separate policy to protect the lender’s interest in the property should a problem with title arise.
  6. Legal Fees. Your lawyer will review the agreement of purchase and sale, perform title and non-title searches, review and make changes to the statement of adjustments as required, liaise with the seller’s lawyer regarding any issues as a result of title and non-title searches, and fulfill any other requirements of the transaction. Legal fees will range in price depending on the complexity of the transaction. Additional fees may apply such as the cost of registering the deed, and other miscellaneous disbursements.
  7. Moving and Personal Expenses. The cost of moving will vary, depending on whether you decide to pack and move on your own or hire professionals. Which moving company is selected and the distance of your move will also impact the cost involved. Other moving expenses can include incidentals such as mail forwarding, transferring utility and service contracts, etc. The cost to furnish your new home should be taken into account as well, especially if you are a first-time homebuyer.
  8. Provincial Land Transfer Tax. When a buyer purchases a property in Ontario, the transaction is subject to provincial land transfer tax. First-time buyers may be eligible for a full or partial refund on the land transfer tax, depending on the purchase price of the property. A great way to calculate the expected land transfer tax fee is with the Canadian Mortgage App.
  9. Municipal Land Transfer Tax. A municipal land transfer tax is charged on properties located in the City of Toronto. The tax amount levied through the municipal land transfer tax is the same amount as the provincial land transfer tax, therefore doubling the tax owed if the home being purchased is located in the City of Toronto.
  10. Non-Resident Speculation Tax. The Non-Resident Speculation Tax is applicable for buyers who are not citizens or permanent residents of Canada. The 15% tax applies to the purchase or acquisition of real estate located in the Great Golden Horseshoe region of Ontario and is in addition to land transfer taxes.
  11. HST. HST is only applicable if the property you are purchasing is new construction, has been substantially renovated, is vacant land or is a commercial property (including farms). If you’re unsure whether or not your purchase will be subject to HST, it is best to consult your accountant.
  12. Monthly Expenses. It’s important to estimate your monthly expenses and ensure you have enough funds to cover these expenses for the first few months of homeownership. Insurance, utility and mortgage payments should be prepared for.

Due to adjustments and other costs associated with closing, you may require additional funds in excess of several thousand dollars to complete the purchase of a new home. These costs are in addition to your deposit and should be prepared for.

Thank you for taking the time to read this article. I hope you found it helpful. If there is anything I can do to help you find your next home, please get in touch. I would love to help!

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Michelle Stevens
Email: michelle@jewelhouserealestate.com
Phone: 705-970-6137
RE/MAX Hallmark Chay Realty Inc. Brokerage

1 Comment

  1. HST on Property in Ontario - Jewel House Real Estate Author

    […] The information in this article is not to be substituted for advice from your accounting professional. The government routinely changes their policies and each individual’s circumstances are different. There are exemptions that may apply to you or the property you are purchasing or selling. It is important to seek the advice of your accountant before making any important financial decisions. If you would more information about the costs associated with purchasing real estate, please read Costs to Consider for Home Buyers. […]

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