In preparing to buy a home in Niagara-on-the-Lake, there are many unfamiliar or un-thought of expenses. These expenses include:
A deposit is part of your down payment and is used to show the seller that you are genuinely interested in the property. Usually this cheque is made out to the listing brokerage and are usually around 1% but can be as high as 5% of the purchase price depending on the home and area.
Most banks ask for at least 5% of the purchase price for a high-ratio mortgage and at least 20% of the purchase price is usually required for a conventional mortgage.
Mortgage Loan Insurance Premium
With a high ratio mortgage you may need mortgage loan insurance. The lender may add this insurance to your mortgage or you can pay the premium upon closing. This insurance protects the lenders against mortgage default, and allows consumers to purchase homes with a smaller down-payment.
An appraisal of your future home may be needed by your lender at your expense. This is an estimate of the value of the home. Costs range from $250-$350 and is paid directly to the person/company performing the appraisal. You maybe able to get this fee waived as part of the mortgage agreement with your bank, make sure you ask about it! If not, you may want to shop the mortgage around to other lenders.
Home Inspection Fee
Most conditions in an Offer to Purchase include a home inspection. This is a general report card on the home which ranges from the home mechanics (furnace/air conditioner/electrical etc..) to the homes exterior (roof, shingles, chimney, windows etc..) A home inspection ranges from approximately $350-$500 depending on size and complexity of the home. Larger or older homes may cost more.
Land Transfer Tax
All buyers have to pay this provincial tax upon closing unless you are a first time home buyer. First time home buyers are exempt from this tax. The amount is determined by the property’s purchase price and is paid at closing usually through your lawyer. Land Transfer Costs in Ontario is 0.5% on the first $55,000, 1.0% on portion between $55,000-$250,000 and 1.5% on balance over $250,000.
All mortgage lenders will require this as the home is the security for the mortgage. This property insurance will cover the cost of replacing the home and its contents. This must be in place on closing day.
A current survey maybe required from the mortgage lender. If the seller does not have one or refuses to get one then it is up to the buyer to attain a survey to satisfy the conditions of the mortgage prior to closing. Or you may get Title Insurance through your lawyer to avoid getting a survey.
Water Quality Inspection
If the property contains a well or cistern you as the buyer will want to get an inspection to make sure the water is safe. This is usually a condition to the Offer to purchase and is paid for by the buyer.
Legal Fees and Disbursements
Legal Fees are paid on closing with a minimum of $500 and upwards depending on complexity of purchase. Disbursement fees are those such as title search, letter searches, registration costs, pro-rated adjustments (property tax, fuel etc.) and miscellaneous costs which include photocopies and faxes.
Title insurance relates to a loss or liability for loss due to the invalidity of title to a property. Title insurance is designed primarily for two audiences: lenders and owners.
As a rule of thumb you can estimate 1.5% of purchase price for your closing costs.
-by Cheryl Carmichael, Sales Representative with Niagara-on-the-Lake Realty