The following is a list of the typical costs associated with buying a residential property. A prospective homeowner should budget for these expenses.

Survey: a survey describes a property, setting out its dimensions and the existence of any encroachments. Surveyors in Ontario are regulated by the Association of Ontario Land Surveyors. The average price of a survey is between $600 and $700. It is not uncommon for the seller to provide an old survey of the property being sold. A buyer should be wary of an old survey if improvements or modifications have been made after the survey was completed. If a transaction is title insured, a survey is usually not required.

Home Inspection: a home inspection consists of an examination of a property's structure and amenities, including the heating, air conditioning, electrical, plumbing, roof, insulation, walls, ceilings, floors, doors, windows and rainwater drainage. Typically, a home inspection will cost between $250 and $400. Home inspectors should be members of the Ontario Association of Home Inspectors (OAHI).

: the lender in a mortgage will typically require that the property be appraised by an independent appraiser or an in-house appraiser (who works for the lender). The cost of an appraisal will typically be paid by the borrower and depends on the size of the home. The average cost is between $200 and $400.

Mortgage Loan Insurance: provides protection to the lender in the event that a borrower defaults on their mortgage. Mortgage loan insurance is required by law for high-ratio mortgages (mortgages in which the borrower makes a down payment of less than 20% of the purchase price or property value (whichever is less). The premiums for mortgage loan insurance are paid by the lender (bank) and are typically passed on to the borrower. The cost of mortgage loan insurance varies according to the property value/purchase price and the size of the down payment that you make. Canada Mortgage and Housing Corporation provides a table of premiums.

Property Insurance: depending on the policy, property insurance provides protection from fire, water damage, natural disaster, theft of contents, etc. It can also protect the owner from liability from third parties who are injured on your property (i.e. someone is injured after slipping inside your home). The cost of property insurance varies with the provider, your history of claims, property value, etc. Average cost is about $50 to $150 per month.

Deposit Amount: although the deposit amount is typically paid when an offer is made or accepted (not at closing), this necessary expense should be budgeted for. There is no set amount for the deposit, but a 5% deposit is probably the average in Toronto. A larger deposit typically reflects the seriousness of the buyer. The deposit must be placed in a real estate broker’s trust account (usually of the listing broker) within two days of receiving it. In a private transaction (not involving real estate agents), the deposit is usually held the the trust account of the seller's lawyer.

Mortgage Application Fee: reflects the cost of processing your mortgage application. Some lenders will absorb this cost, while others will pass it on to the borrower directly. The amount of the fee can differ widely.

Mortgage Broker’s Fee: some mortgage brokers charge a fee for arranging a mortgage on behalf of a borrower and lender. This charge can be in addition to the mortgage application fee. Most institutional lenders absorb the mortgage broker fee. Most private lenders will require the borrower to pay the brokers' commission.

Land Transfer Tax (Ontario): the purchaser of a home must pay land transfer tax. The land transfer tax rate is graduated so that a buyer pays a greater proportion of tax for a more expensive home. Currently, the land transfer tax rates are as follows: The first $55,000 is taxed at 0.5%. Anything between $55,00.01 and $250,000 is taxed at 1.0%. Anything between $250,000.01 and $400,000 is taxed at 1.5%. Anything over $400,000 is taxed at 2%. For example, if a buyer purchased a home for $500,000, they would pay $6,475 in Ontario land transfer tax ($275 + $1950 + $2,250 + $2,000). Note that there is a rebate of up to $2,000 for first-time purchasers (of either new or resale homes). Land transfer tax can be calculated here and is deducted out of your lawyer's bank account on closing. The first-time homeowner rebate, if applicable, is applied at the time of closing.

Land Transfer Tax (Toronto): if the property being purchased is located in Toronto, the buyer will have to pay the Municipal Land Transfer Tax (MLTT) on the transaction. The value of the tax is as follows for most residential properties: The first $55,000 is taxed at 0.5%, then anything between $55,000.01 and $400,000 is taxed at 1.0%. Finally, anything over $400,000 is taxed at 2.0%. This means that if a buyer purchased a home in Toronto for $500,000.01, they would pay $5,725 in MLTT ($275 + $3,450 + $2,000). Note that there is a rebate of up to $3,725 for first-time purchasers. This means that a first-time purchaser will get a full rebate where they purchase a home for $400,000 or less.

Legal Fees: there are usually at least two parts to the invoice that a lawyer prepares. The first is the lawyer's legal fees for performing services (searching for liens, charges and other encumbrances on title to the property, as well as arranging title insurance, preparing a statement of adjustments and transferring title). The legal fees are usually calculated as a flat-rate or hourly-rate. The second part of a lawyer's invoice will include "disbursements", which are out of pocket expenses that a lawyer must pay on your behalf in order to provide the legal services. These itemized expenses may include the costs of registering documents with the Land Registry Office (typically, registering the transfer and mortgage), photocopying documents, software, courier, postal and other fees, as well as any other user fees that a lawyer must pay while searching title. A lawyer's legal fee can range from $600 to over $2,000. Disbursements can range from $250 to over $1,000. Be sure to ask about whether a lawyer's legal fees and disbursements include courier fees, the cost of arranging title insurance as well as the title insurance premium.

Harmonized Sales Tax (HST): HST is only payable on new homes (not resale). Eligible buyers of new homes may receive a rebate of up to $24,000, regardless of the price of the new home. New and resale commercial real estate is also subject to HST.

Adjustments: reimbursements to the seller for goods or services that are paid for in the past but are consumed after the buyer obtains possession of the property. For example, if the seller of a home pays property taxes on an annual basis and is selling a home half-way through the year, the buyer would compensate the seller for any property tax paid for the part of the year following transfer of title. Adjustments are included in a document called the Statement of Adjustments and usually include expenses such as property taxes and condominium common expenses, if applicable.

Title Insurance: protects the buyer (and lender) against unknown defects in title or zoning. It also protects against title fraud. See the glossary for more information. Title insurance is not required in Ontario, but is usually recommended. Title insurance is typically valid for as long as you own the property and is purchased by paying a one-time premium. The cost of title insurance depends on the insurance company, type of property (house or condo) and purchase price of the home.

Additional Optional Expenses:

Mortgage Life Insurance
: a form of insurance that pays off your mortgage in the event of death. This ensures that the unpaid balance of a borrower’s mortgage is not a burden on his/her estate.

Mortgage Disability Insurance: a form of insurance that pays off your mortgage in the event of disability or illness.

Costs Associated with Selling a Home

Mortgage Discharge
: a mortgage agreement will specify that the lender has the right to charge the borrower a number of fees, including a mortgage discharge fee. This fee is usually paid in one of three circumstances: a) if a mortgage is paid off in full, b) if a borrower switches mortgage companies (refinances), c) if a borrower sells the property and switches banks. The typical mortgage discharge fee for a large bank is between $200 and $500. While some provincial governments have imposed a limit on the amount that a bank can charge to discharge a mortgage, Ontario has not done so.

Removal of Liens: sometimes, liens are registered on title for such things as unpaid property taxes, unpaid condominium common expenses, furnace purchases, etc. The seller will be responsible for removing liens at these expense. The cost of removing a lien varies, but will typically require that the debt or arrears be paid out in full.

Utility Disconnection Fees
: occasionally, utility companies charge fees to disconnect a client from the system and close the respective account. Your service agreement with the utility company may state whether such fees apply, or you can contact the company directly.

Real Estate Commission
: typically, the fees paid to the listing and buyer's real estate agents/brokers are paid by the seller out of the proceeds of the sale. Although real estate commissions are negotiable, the average commission is between 3% and 5% of the purchase price.

Prepayment Penalty on Mortgage
: if an outstanding mortgage is being paid off and the borrower does not have an open mortgage (the ability to pay down the mortgage at any time outside of normal monthly fees), then he/she will usually have to pay a penalty fee to the mortgage company. In most cases, the prepayment penalty will be waived if the seller is getting a new mortgage with the same institution for the purchase of another property around the same time that they are selling.

Mortgage Assignment Penalty
: if an outstanding mortgage is being assumed by the buyer, the lender will typically apply a penalty to the original borrower. This penalty can be avoided by having an assumable mortgage.

Legal Fees: as in purchases, there are usually at least two parts to the invoice that a lawyer prepares. On a sale, disbursements can range from $150 to over $500. Be sure to ask about whether a lawyer's legal fees and disbursements include the cost of discharging your mortgage.

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