The government may charge land transfer tax when you buy a property. The tax is based on the home’s purchase price, and sometimes other factors. Most provinces charge provincial land transfer tax, but some cities charge their own municipal land transfer tax, too. Taxes vary by province and first-time home buyers may sometimes receive a rebate for part of the cost.
In the GTA, it’s customary for real estate lawyers to be involved in real estate deals. There is quite a bit of paperwork that will need to be signed in the lawyer’s office, which your attorney will look over to make sure you’re entering into a sound agreement. And the lawyer is the one who usually hands over the keys when the deal is done. The fee charged varies quite a bit from one deal to the next, but you will probably pay between $2,000 to $3,000 on average in legal fees.
Your lawyer may encourage you to buy an owner's title insurance policy. In some cases, your lender may require a lender's title insurance policy, which is generally at your expense. These title insurance policies protect you and the lender from title fraud, municipal work orders, zoning violations and other property defects. The lawyer usually adds title insurance costs to your legal bill.
Before lenders agree to extend a loan, they’ll want to verify the value of the property being purchased. Ideally, the appraised value will match the purchase price. If the buyer is requesting more money for a mortgage than what the home is actually worth, the lender probably won’t agree to the loan unless the buyer is able to bridge the gap themselves. Buyers are responsible for paying for appraisals, which run in the price range of $400 to $500.
Property insurance protects you in case of fire and certain other disasters. Your lender requires you arrange property insurance for your home's replacement value. The insurance must be in place before your lender advances the mortgage funds.
It’s highly recommended that buyers have a home inspection conducted on the home they agree to purchase. Including a home inspection clause in their contract will give buyers a chance to have the home scoped out by a professional to uncover any major, minor and latent problems that may not have been noticed during the initial walk-through. Home inspections can cost anywhere between $400 to $700, depending on the size and condition of the home.
The seller may have prepaid property taxes, utility bills or condo fees before you take ownership of the property. You reimburse the seller for the portion of the costs from the closing date forward.
On top of those fees, as a homeowner, you will also have to pay the yearly property and school taxes, electric and utility bills, home and fire insurance and any debt that you may have (such as car or furniture loans). On top of that, you should also consider maintenance costs. Your roof will eventually have to be replaced, things might break down, you might want to repaint, etc. All of these things constitute homeownership fees.