In the in our new series, Barriston Briefs, Mira Ortved discusses
There are six costs you should consider when you’re budgeting for a real estate purchase in Ontario.
The first of these costs are adjustment to the purchase price, adjustments refer to fees that run with the land they include things like. Property taxes condo fees and even rental income if you’re purchasing an income property. Your lawyer and the vendor’s lawyer will work together to determine the exact amount of these fees that you’re responsible for. But this can impact the amount of money that you need to bring in to close the deal. If for example, you buy a condo on the first day of the month you’ll be responsible for the condo fees for that month on closing, consult with your lawyer about the adjustments that will be applicable in your case.
The second fee to consider our lending fees if you’re using a mortgage to purchase your property there are certain fees that the lender will deduct from the principle of the mortgage before it’s advanced to the lawyer on closing. These fees can include things like administrative fees, wiring fees and even originating fees. If your mortgage will be insured by the Canadian Mortgage and Housing Corporation the cost of that insurance and the HST applicable on that cost will also be deducted from the principle of the mortgage before it’s advanced to your lawyer on closing. Consult with your mortgage broker what fees will be applicable in your case so that you can know the exact amount of the principal that will be available to fund your purchase.
The third fee to consider is land transfer tax, land transfer tax is a tax that is applied by the province of Ontario to all transfers of property. It amounts to about one percent of the purchase price but if you google land transfer tax calculator you can find the exact amount that will be applicable in your case. First-time homebuyers may be eligible for a rebate of the land transfer tax applicable in their case, you should consult with your lawyer if you think you may be eligible for this rebate.
The fourth fee to consider is title insurance briefly speaking title insurance protects your good title to your property there are several different ways of protecting your good title and you should consult with your lawyer about what is best for you. But in most cases, title insurance is the best option. You should consult with your lawyer about the cost of your title insurance policy it varies greatly depending on the type of property that you’re purchasing if for example the property that you’re purchasing is serviced by well or septic this can increase the cost of your title insurance policy. Most firms including our firms charge flat fees for assistance on a standard real estate transaction. You should consult with your lawyer what their fees will be and what they include some of the fees we’ve discussed in this video may be included in their fees and then some may not be. Also, keep in mind that all legal fees are subject to HST.
The final fee to consider our disbursements on the lawyer’s file disbursements refer to fees that the law firm assumes on your behalf and you reimburse them for in closing. They include things like courier fees the cost of certifying a check and even the hard cost of your title search. You should consult with your lawyer about the exact fees that will be applicable in your case because you should only ever be charged for the fees that are actually incurred on your file.