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  • Writer's pictureRachel Gagnon

BUYERS: How to budget for closing costs?

You're been saving for a long time, and now you're ready to make your home purchase happen. How exciting! You've set money aside for your downpayment, but what about closing costs? Though this list is not exhaustive by any means, it will break down the most frequently seen costs during the home buying process.


*These numbers are not to be relied upon, but rather used as a guide. Please confirm with your mortgage representative & lawyer regarding the costs that will be applicable to you.


BEFORE:

  1. Save your downpayment* *I recommend speaking with a mortgage broker months or years in advance to discuss the different down payment amounts, and how they may affect your interest rates & buying power. **Your downpayment is due 2-4 days before you take possession of the home, however, reference the deposit below for an additional factor to consider.


DURING THE OFFER PROCESS:

  1. Deposit: 1-2% of your offer price is recommended This is an amount that is due within 24 hours of an accepted offer, typically by way of cheque, bank draft, wire transfer or direct bank-to-bank transfer. It is typically given to the Brokerage that represents the seller, to show good faith that you will proceed with your conditions & ultimately take possession of the home. The larger the deposit, the more serious the offer tends to appear. The deposit is ultimately deducted from your downpayment. Ex: you are putting a 60k downpayment, and provide a 10k deposit, your final amount owed to the lawyer is 50k.

  2. Home inspection: $300-700 Most averaged sized townhomes & single family homes will be around $600-650)

  3. Appraisal: $400-800 Most banks are conducting appraisals on properties to ensure that they agree with the value of the offer price. They may only do this once your conditions are completed, due to scheduling delays. Please ensure you are comfortable with the risks involved by speaking to your mortgage representative BEFORE finalizing your conditions.


FINAL EXPENSES [typically paid to your lawyer 2-4 days before you get the keys]:

  1. Lawyer: ~$1,250 + 300 in disbursements

  2. Utility & tax adjustments: will vary... budget $1,500-2,500 minimum to be safe

  3. Land transfer tax: https://www.oreb.ca/tools/land-transfer-tax-calculator/

  4. Government charges/registration fees/etc: $500

  5. Title insurance: https://www.stepsonline.ca/quote/calculatorview

  6. Balance of your downpayment [downpayment total less the deposit]

  7. Bank draft for your down payment [~$7-10]


Here is a handy calculator, offered by one of our recommended legal teams Guertin Poirier: https://guertinpoirierlaw.ca/cost-calculator/

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