Closing Costs For The Buyer

When you are buying or selling real estate, there are costs to be paid when the transaction is completed and the title is transferred. To help buyers and sellers to budget properly and avoid unexpected bills, I have outlined some of the possible expenses that might be involved.
 

The costs are approximate only, as all lawyers, surveyors, lenders and appraisers may charge differently. Their fees may also vary based on the size and nature of the transaction.

Legal Fees

The Lawyer’s fee, covers his cost, the cost for executing the title transfer and attending to all the legal details regarding the purchase. These fees typically range from $400 to $600, depending on the size and complexity of the transaction.
 

In the course of handling the purchase, the lawyer will incur miscellaneous expenses on behalf of the buyer, for which they will have to be reimbursed. These miscellaneous items are called “disbursements” and may include courier costs, long distance charges, and Land Titles charges (the biggest expense is usually the fee paid to the Land Titles Office to register the title in your name). Total disbursements for buying may range from $100 to $150.
 

The buyer’s lawyer will prepare mortgage documents and ensure that the mortgage is registered against the title before the lender will advance the money. These fees may vary from $600 to $800 depending on the size and complexity of the transaction.
 

Appraisal

Occasionally, the lender will require an appraisal report to ensure that the property is worth what the buyer is paying. Standard single-family residential appraisals typically range from $300 to $400, but appraisals for other types of property can be substantially higher.
 

Real Property Report

This is sometimes referred to as a “survey” and is usually required by the lender. Once the RPR has been completed, it will be forwarded to the Town or MD Office, where it will be given a stamp of compliance if it conforms to all requirements in the applicable zoning by-laws. The RPR is a safeguard for lenders, as it will show if any buildings are not entirely on the property. Even if you do not require an RPR for financing, many lawyers will recommend that you get one for your own protection. Usually the RPR is provided by the seller, but if not it will cost the buyer approximately $550, plus $75 - $100 for the compliance stamp.
 

Financing over 80%

In Canada, the Bank Act requires that mortgages of more than 80% of the purchase price be insured. This means that the lender is insured against any loss if the borrower defaults on the loan. The insurer is either Canada Mortgage and Housing Corporation (CMHC) or Genworth Financial. For a one-time premium paid when the loan is advanced, they will cover any loss the lender might incur on the mortgage. The premium is paid by the borrower, usually by adding it to the mortgage. The amount of the premium is a percentage of the loan.
 

Although the buyer will not actually pay the premium at the time of closing (unless they choose to), it will be added to the mortgage, reducing the equity, so it is a real cost. The buyer will also pay the insurer an application fee between $75 and $235.
 

Home Inspection

The home inspection is usually charged by square footage, but for an average sized house around $450.
 

Property Tax Adjustment

Depending on the possession date, the buyer will either reimburse the seller, or vice versa, for a portion of the annual taxes.