The actual sold price on a house is only part of the final cost of buying or selling it. Whenever a house changes hands, there are a number of associated fees. Below is a rundown of what extra fees to expect.
Land Transfer Tax
Buyer need to pay the Land Transfer Tax. It is a levy calculated as a percentage of the purchase price.
Adjustment costs are any prepaid costs paid by the vendor that are to be reimbursed when the buyer takes possession of the home. These can include property taxes; condo management fees, prepaid water, hydro or gas charges; lawn care services, security monitoring, etc. Some vendors may be overdue on property taxes, then that amount will be adjusted by crediting the buyer. The lawyer will figure out how much the adjustment costs are.
The exception is heating oil; it is standard for the seller to top up the tank of heating oil at the time of the sale, and have the buyer pay for one full tank.
Most banks do not charge a fee for mortgage setup or mortgage-related appraisals, but it is worthwhile to verify this when you are shopping for your mortgage.
If due to credit reasons you have to arrange your mortgage through a mortgage broker, you may be charged a finders's fee. But if you are considered a high-risk mortgagee, it is still good to have a mortgage than nothing.
If you are borrowing more than 80% of the purchase price of the home, you will need to obtain mortgage insurance from the Canada Mortgage and Housing Corporation.
If you apply for a mortgage (not buying home with full cash), the mortgage company requires you to carry home insurance. The cost varies depending on your coverage and the company you insure with, it's worth shopping around to get the best price. Some companies offer discounts if you insure both your home and car with them.
You have to close the transaction, which can only be processed by a lawyer. The lawyer will generate a title search, which verifies that the vendor legally owns the property and can sell it; searches with the utilities, tax departments and building department to verify that there are no liens on the property; register the title deed and mortgage. If it is a rural property, your lawyer will also do septic tank and potable water searches.
Title insurance is not mandatory, but most lawyers highly recommend it to protect you against mortgage fraud, identity theft and title errors, etc. The cost on a $500,000 home is a few hundred dollars.
The big fee sellers are required to pay is the commission fee, for both your own and the buyer's realtors. Typically in Toronto, the total cost is 5% (2.5% for each agent), but you can sometimes negotiate a lower rate. Realbate is a full service provider and charge a low commission, and you even don't have to pay GST if you work with us. Please contact us to get more details.
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