| Buying



When buying property, it can sometimes come as a shock (especially for first-time homebuyers) the additional costs that creep up on closing day and thereafter. Like most things, being aware and prepared can be extremely helpful in making the transaction a seamless and happy occasion.


To get you started, we’ve outlined 10 hidden costs of buying to help you financially prepare for the big purchase.


1. APPRAISAL  (approx. $200-500)


If your lender requires that an appraisal report be completed, it will have to be done before the lender finalizes your mortgage approval and/or lend you any mortgage funds. This is because they want assurance that your property is worth what you are paying for it. The cost will vary and may be covered by the lender or mortgage specialist, however not always.  


2. HOME INSPECTION ($350-$600)


Whether or not this step is completed prior to the offer being submitted or after, a home inspection is a diligent step that every homebuyer should not miss as it may help you uncover some of the house’s secrets that may not be readily known. An inspection can be completed for every home, no matter the size, condition or location – and can helped be arranged by your agent.  


In the condo market, home inspections are less common as buyer’s tend to focus on the Status Certificate that outlines: details of the unit, common building expenses, any special assessments that may have been levied by the condominium board, copies of the condominium declaration, by-laws and rules, a current budget and copy of the most recent reserve fund study. That being said, if you want the peace of mind that comes with having a licensed professional OK your property – it may be worth the cost.


3. Deposit (5% + of purchase price)


When buying property, you are required to put a deposit to secure the unit and show the seller you are committing to closing on the property. If for whatever reason you don’t – the seller keeps the deposit.


There is no set amount required and the general rule of thumb is 5% of the purchase price. Some buyers will put forth a higher deposit – this can demonstrate you are very serious and may be an attractive component of the offer to a seller.


The good thing about a higher deposit is, since it will become part of the downpayment, ultimately it can save you money on interest moving forward.


4. LEGAL FEES ($500-1500)


A lawyer is going to be the person who helps make the sale happen and assist with the “close” of the home – checking that there are no liens/charges against the property, drafting mortgage contracts and working on your behalf to ensure a seamless transaction. Their fees will vary based on their services and location, and may or may not include disbursements (out of pocket expenses incurred by the lawyer such as registrations, searches, couriers etc.). When financial planning, estimate $1500 for legal fees – and clarify with your lawyer what those legal fees include prior to committing to the relationship.


5. MORTGAGE INSURANCE: 1.75% to 2.95% of the Mortgage Value


If you do not put a 20% down payment on your home purchase, you will be required to pay a mortgage insurance premium. The rates will vary, and your mortgage specialist or lender will assist you explaining this concept in detail.


6. Tax


  • PROVINCIAL LAND TRANSFER TAX: 0.5 to 2% of Property Value


When you purchase land, a home or even a condo – you cannot escape paying land transfer tax to the province, paid once the transaction has closed or up to 30 days after closing.


The amount of tax will vary, based on the amount paid for the land (or piece of the land if you are buying a condo/loft), in addition to the amount remaining on any mortgage or debt assumed as part of the arrangement.


Your lawyer will be happy to help discuss this tax in extensive detail and Provincial Land Transfer Tax is calculated using a multi-tiered system. For example, if the purchase price is $250,000, 0.5% is paid on the first $55,000, 1% on the remaining $195,000. Therefore, for a $250,000 the buyer pays $275 + $1,950 totalling $2,2225 in land transfer tax.




When purchasing in Toronto, you will incur an additional tax hit. See calculations below:

Purchase Price of Home  


Marginal Tax Rate


First $55,000
$55,000.01 to $250,000.00 1.0%
$250,000.01 to $400,000.00 1.5%
$400,000.01 to $2,000,000.00 2.0%


Therefore, if your new home cost $500,000, $5,725 is attributed to the Municipal Tax. At $800,000, the tax bill will amount to $11,725.


7. Title Insurance (approx. $300)


Title insurance isn’t required, however since the cost is relatively low it can be a great tool to create peace of mind when purchasing a new property. In houses, title insurance is obtained for survey coverage, should a current survey be unavailable. In condos, it covers a bunch of items including:


    • Construction Liens
    • Failure to Disclose Items in the Status Certificate (that can result in a special assessment or increase in common expenses)
    • Lack of permits: if a previous owner renovates without permits and the condominium corporation decides to go after the new owner to fix it
    • Tax and utility arrears: if any taxes/utilities of the previous owner are not up-to-date, the insurance would cover these payments
    • Mortgage Fraud
    • Work orders: if any unknown and outstanding work orders exist before the date of the policy.


8. Home Insurance:


Home insurance is a valuable tool, protecting a homeowner from unexpected costs such as severe weather, replacement value, living expenses during a possible displacement, personal liability if there is an accident on your property, damage to third parties property and accidental injury.  

Costs can vary and depend on size, age, property type etc.


9. Utilities and Taxes: If Applicable


If the seller has paid any utilities or taxes beyond the closing date, the buyer will likely have to reimburse for these costs as ‘adjustments’ on closing.


10. Moving Costs


Boxes, Rental Trucks, Movers, Time off Work – there are a variety of costs associated with the move itself to keep in mind.


Although it can start to look like buying and maintaining home ownership is an unneccesarily costly endeavor, it is important to keep in mind the longevity of the investment and opportunities and potential tax advantages once you are a homeowner.


Written by: Sarah Miskelly – Lead Sales Representative


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