Buyers often don’t realize the cost of buying any residential property in Mississauga is more than the down payment and mortgage. Closing costs can be very significant adding thousands of dollars to the purchase of a condo or house. If these closing costs are not taken into consideration by the buyer it will be a shocking surprise when they learn about it. Generally speaking closing costs are made up of various fees and taxes which are incurred because of the purchase of the property. These costs are variable meaning every situation is different, and are usually explained by the lawyer at the time of closing. Below is a list of closing costs:
Land Transfer Tax - In Mississauga the buyer of a condo or house has to pay the Ontario Land Transfer Tax with the exception of qualifying first time buyers who would receive up to $2000 credit.
0.5% - on the first $55,000
1.0% - on the portion between $55,000 to $250,000
1.5% - on the balance over $250,000
2.0% on anything over $400,000
For quick calculations of land transfer tax please go to my webpage for Land Transfer Tax Calculator.
CMHC Insurance Premium – If the down payment is less than 20% of the purchase price the lender will require this coverage. Mortgage insurance helps to protect lenders against mortgage default and helps consumers purchase a home with a minimum of 5%. The premium can be paid in a single lump sum or it can be added to the mortgage. The premium payable is based on a percentage of the home’s purchase price that is financed by a mortgage. PST must be paid at the time of closing. To estimate the Mortgage Insurance cost I have a calculator you can use.
Legal Fees and Disbursements - The buyer will require a lawyer’s services to purchase a house or condo in Mississauga. The lawyer will be responsible for payment of all related fees and disbursements. As every situation is different I suggest shopping around to find the best price and services covered, but I usually see clients paying around $1600 which also include things like registration of charge “mortgage”, transfer of deed and Title search of the property.
Title Insurance Premium – This is a type of policy which is designed to protect the home owner from challenges to the ownership of their home or from problems related to the title of the property. A conversation with the lawyer should happen to find out if Title Insurance would be useful. This could be around $200 plus.
Property Tax / Utility Bill Adjustments – In the agreement for sale of a condo or house the purchase price of a resale home is always subject to the usual adjustments at closing. This means the seller has already prepaid for taxes or utilities and any excess amount would be adjusted back to the seller.
By Todd Lee
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