Making the decision to purchase a home, refinance your existing mortgage, or sell your existing property comes with additional costs or fees that you may not be aware of. And in the case of a purchase or refinance, some of those fees are calculated as a percentage of the mortgage, so your extra costs could add up quickly. Whether it’s a purchase, refinance, or sale, it’s important that when building your budget and assessing your cash requirements, you factor in any additional costs you may incur.
Purchasing or refinancing costs
Appraisal fee
Early in the purchase or refinance process, after getting approved for a mortgage, an appraisal of the home is conducted by a real estate appraiser. This fee covers the property valuation performed by a third-party appraiser. The fee ranges depending on the value and type of your property. Home Trust partners with specific appraisers in each province.
Land survey
Although title insurance search is often acquired to mitigate any existing ownership disputes, a survey of the property by an accredited land surveyor is also strongly recommended. This will establish whether the building is located within the specified legal boundaries and complies with local building bylaws. Although the cost of a survey starts at around $500, it could be much higher in complex cases. When purchasing an existing house, ask the current owner whether a survey is available, or include this condition in your offer to purchase.
Home/property insurance
This insurance protects your home and its contents in the event of loss, damage, or destruction. Home insurance is mandatory to obtain a mortgage with Home Trust.
As the mortgagor, you are responsible to arrange fire insurance for the full replacement value prior to the mortgage being funding for the duration of the term. The cost of the insurance will vary based on property value, municipality, and insurance provider. Fire insurance is mandatory to obtain a mortgage with Home Trust.
Title insurance
Title insurance protects property buyers (personal title insurance) and mortgage lenders (lender title insurance) against defects or problems with a title when there is a property ownership transfer. If a title dispute arises during a sale, the title insurance company may be responsible for paying specified legal damages, depending on the policy.
Legal fees and disbursements
A real estate lawyer completes the sale or purchase of a property, including costs for title searches and the preparation/registration of mortgage documents. Your legal fees should be negotiated up front with your lawyer to avoid any misunderstanding later and allow you to better determine your cash requirements.
Mortgage life and disability insurance
Mortgage life and disability insurance provides a safety net for you and your family. It enables you to pay off the outstanding balance on your mortgage in the event of your death or make your monthly payments in the event of a disability. This insurance is optional.
GST/HST
Depending on the province or territory, you will be charged either 5% GST (Goods and Services Tax), 5% GST + 7% PST (Provincial Sales tax), or 13% or 15% HST (Harmonized Sales Tax) where applicable.
Closing adjustments
You should consider any necessary adjustments to be made between you and the seller for property taxes, insurance, and heating costs. Your lawyer will help you with this calculation.
Selling costs
Land transfer tax
In most provinces, a land transfer tax, paid to the province by the purchaser when a transaction closes, must be paid. This tax varies between provinces (and in some cases, municipalities) but typically, it is based on the amount paid for the property at the time of purchase. Your lawyer or real estate agent can provide you with the provincial figure and help calculate your fee. Learn more about land transfer tax.
Real estate agent fees
A real estate agent is a licenced professional who helps home buyers and sellers come together in real estate transactions. Real estate agent fees (commission fees) can be negotiated, are calculated either as a percentage (typically, 5%+HST/GST) of the home’s selling price, or as a flat, and are paid by the home’s seller.
Other costs to consider
Prepaid property taxes, utilities, and condo fees
These are ongoing fees associated with your home and will vary, but they should be factored in when budgeting your monthly home-related expenses.
Home inspection
A home inspection provides an opportunity for the purchaser to make an informed decision about the potential expenses that may be incurred within the first few years of owning the home. The cost of a home inspection depends on several factors such as age, size, and location of the home.
Moving
If you’re moving locally, depending on the size of your home, you can expect to pay professional movers upwards of around $2,600. That cost increases if you’re moving out of province. Even if you plan on tackling the move yourself, you should factor in costs like truck rental and supplies such as boxes, packing tape, and bubble wrap. When you’re ready to start packing, read our blog “A professional organizer’s advice for moving” for moving tips.
Ask an expert
A mortgage broker understands what additional costs you may incur when buying a home, refinancing your mortgage, or selling your property. Knowing how much extra you’ll need to set aside for the province or region you are in can help you stay on track, on budget, and avoid any unexpected surprises. Contact your mortgage broker for more information.
Need more information?
If you’d like to speak with someone, or have questions about purchasing a new home, contact Home Trust Mortgage Customer Service today at 1-855-270-3630. We are available Monday through Friday from 8:00am to 10:00pm and Saturday from 9:00am to 5:00pm ET.