These are some of the standard closing costs when purchasing property:
Appraisal: Sometimes requested to confirm the market value of a property. If applicable, the lender will order the report but the client is responsible for the cost which is approximately $300. Appraisals are normally requested for conventional mortgages (20% down or more), rentals, private sales, foreclosures, private sales…
Inspection report: An inspection report is a thorough evaluation of the property. The inspection report addresses the condition of, but not limited to: foundations, electrical, plumbing, heating, water heaters, appliances, fireplaces… While this report is not mandatory with most lenders, it is in your own best interests to understand the condition of the home you are purchasing. This report costs approximately $600.
Insurance Premium (CMHC, GE, Canada Guaranty): If a purchaser puts less than a 20% down-payment, they are required in Canada to purchase Mortgage Loan Insurance. The cost of insuring the loan depends on the size of the down payment. This amount is added to your mortgage.
Legal Fees: A lawyer is required to handle your property transaction. Legal fees should be discussed with your lawyer but an approximation would be $1,500 (lawyer fee PLUS disbursements, courier fees, land title charges, title insurance).
*NOTE: The closer your possession date is to JUNE, the higher your property tax adjustments can be.
There are 2 ways property taxes can create an upfront cost: Property Tax Adjustment (with the seller) and Property Tax Account Catch Up (can occur when the lender collects the property taxes with your mortgage payment).
Houses: The property must have sufficient fire insurance. Condominiums: the Condo Board is responsible for adequate Fire Insurance. For both you are responsible for your own Contents Insurance.
Life and Disability Insurance: You do not want to leave your largest asset and debt unsecured in case of death, illness or disability. All are equally important and will be offered to you with your approval. The amount will depend on age, amount, health and policy.
Purchasing a House:
Real Property Report/Survey: The lender will request your lawyer review this survey and confirm that the house and/or any outbuildings do not encroach or cross the property lines. The seller will often already have this report and you can request this in the Offer to Purchase. Otherwise, a new report will be required which will cost approximately $1,000. Alternatively, most lenders will accept title insurance in lieu of this report which costs approx. $350. This report is required for all properties except condominiums.
Purchasing a Condo:
The condo documents are very important as it is the key to how the complex has been managed. Items you want to pay specific attention to:
a) all common expenses are paid to the date of advance;
b) fire insurance is in place;
c) the condominium is not a party to any legal action;
d) the condominium has reasonable reserve funds;
e) there are no special assessments levied, pending increases or major repairs…
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