Buying a house can be a lot more complicated than any other purchase. Unlike most purchases, buyers may not pay the actual costs for the house upfront. They can decide to put the house on mortgage and pay monthly. Interestingly, the actual cost of the house may not be the only cost incurred when purchasing a home. Buyers will have to spend on additional fees called closing costs.
The closing costs a buyer pays depend on factors such as the neighborhood and the type of house. The Greater Toronto Area is an expensive city to buy a home. Buyers may spend up to 4% to 7% of their home’s purchase price as closing costs. However, the fees involved in closing costs vary. Some may be mandatory, while others may not. Here are some fees that make up the closing cost of a building in the Greater Toronto Area.
Home Inspection Fees
Inspecting a house that is up for sale is essential to know its actual condition. With this, buyers are aware of any repairs and remodeling costs they may incur. It covers several aspects of the home, such as its structure, maintenance, and amenities. The home inspection fee depends on what needs to be inspected and the size of the property. In the Greater Toronto Area, home inspection fees cost between $500 to $1000.
Land Survey Fees
Homebuyers may also consider a land survey, apart from home inspection fees. It shows them the exact boundaries of their property, helping them avoid future land disputes. The cost of a land survey in the Greater Toronto Area is between $500 to $2,000. However, it could cost more depending on the property involved.
Most people buy their homes on mortgage. When buying a house on a mortgage, the mortgage company will request an appraisal. The purpose of the assessment is to ensure that the house is worth the value of the mortgage. An appraisal would cost from $300 and above.
To ensure that the sale of a property is genuine and abides by the law, buyers will have to get a lawyer. The lawyer will handle all the administrative details of the deal. This ensures that the deed is transferred appropriately according to the law. The legal fees a homebuyer pays depend on the lawyer and services rendered. It costs around $500 or more.
Home insurance is not a mandatory fee, although it is highly recommended. But when buying a house on mortgage, the lender will request for it. It protects homeowners against damages to the home.
Land Transfer Tax
In the Greater Toronto Area, homebuyers pay land transfer taxes on all real estate purchases. It usually contributes the most to the closing costs. It is charged based on the value of the house. A property in Markham worth $1,000,000 will attract a land transfer tax of approximately $16,475 as an example. The percentage will vary based on the value of the house and other factors.
Other common fees that make a home’s closing cost include:
- Non-Resident Speculation Tax
- Mortgage Default Insurance
- Property tax adjustment
- Title insurance
Several other fees make up a buyers’ closing costs, and keeping track of them can be challenging. But working with an expert like Martin MacFarlane will help make the process easier. Today, reach out to Martin for professional support during house hunting and offer-drafting processes in Markham and Greater Toronto Area.