What costs do I have to pay at closing?

What costs will I have to pay on closing?

To avoid any surprises on closing, a good rule of thumb is to set aside an amount equal to 1.5% – 3% of the purchase price to cover expenses like these:

The Deposit with your Offer to Purchase: Part of your down payment, a deposit is due upon acceptance of your offer.

Prior to Closing

Home Inspection: Prepared by a qualified inspector to assess the property for defects and poor maintenance.

Appraisal: Prepared by an appraiser chosen by the lender, by CMHC or other mortgage insurers. If applicable.

Closing Costs

Legal Fee/Disbursements: Your lawyer will quote his fee for closing the purchase and mortgage(s) plus an approximation for his disbursements, which includes registration fees, courier costs, photocopies, etc. Ask for an estimate.

Land Transfer Tax: http://www.macnaughtonlaw.com/landtax.htm Go here to calculate the Land Transfer Tax which is due on closing and reflected in the “Statement of Adjustments” which your lawyer prepares prior to closing day.

Interest Adjustment: Monthly mortgage payments are due on the first of the month. Unless the closing date is the first of the month, you must prepay the amount of the interest accruing up to the 1st day of the following month, the Interest Adjustment Date.

Creditor insurance: If your mortgage is insured by CMHC, or Genworth financial the insurance premium will usually be added to the mortgage so it is not a cash requirement on closing. If the mortgage is insured through the lender or (self-insured) you may be required to pay the premium and HST on closing.

Prepaid Expenses: If the Vendor has prepaid any other expenses such as utilities, water and sewage taxes, property taxes, oil in tank, furnace/ air conditioner rentals, he must be compensated. This will be reflected in the Statement of Adjustments.
Property Tax Hold-back: If the lender is collecting and paying property taxes you may be required to pay to the lender an amount to ensure sufficient funds are available to pay the next installment of property taxes when due.

Other Fees: Occasionally, a lender and /or the broker will charge a fee for providing the mortgage. If so, these costs should be disclosed to you at the time the Disclosure Statement is issued to you.

For more information call Dana at 519-719-7095 or email at danaspicer@rmabroker.ca