It’s almost moving day and there is so much to think about. As has been covered in the previous article, buyers have already put out a lot of money just to get to this point. Unfortunately, however, there is one final set of costs that a buyer must cover, this time at the lawyer’s office in the final closing settlement calculations.

These amounts are generally referred to as Closing Costs. And, unlike on HGTV where often sellers accept responsibility for these costs, it is typically the purchaser who pays these on top of the purchase price.

So here is what a buyer can expect to see in the deal closing paperwork they review with their lawyer. A buyer will be either reimbursing their lawyer for amounts already paid out on the buyer’s behalf, or they are factored into the math that determines how much more money the buyer needs to provide to the lawyer to complete the transaction.

Land Transfer Tax: Staring with likely the biggest amount after the actual purchase price itself, buyers in EG are subject to provincial land transfer tax. The amount payable depends on the purchase price. For example, EG’s $1.327M average sale price in 2023 would attract a Land Transfer Tax of $23,015. It’s a fairly complicated formula. However, there are plenty of online calculators which can be easily found and used to automatically calculate the tax amount.

Mortgage Advance Deductions: lenders will often deduct certain amounts from the money they provide to the lawyer for the mortgage portion of the purchase price. If applicable, these items can include appraisal/property valuation fees, lending/brokerage service fees, and interim interest covering the period between when they send money to the lawyer and the day of your first payment. Since these amounts are deducted from the loan amount the buyer requires to complete the purchase, the buyer will have to make up this shortfall at closing.

Title Insurance: most lenders in Canada will require this policy as a condition of the mortgage. Pricing is based on the amount the buyer is borrowing, usually around 1.0%* of the mortgage advance. The premium is reimbursed to the lawyer as part of the final deal calculations at closing.

Mortgage Insurance: if your down payment is less than 20% of the purchase price, the law says you must purchase a default insurance policy from CMHC or a similar company. Normally, the premium gets added to your mortgage principal. However, the 8% provincial sales tax on the premium is paid upfront. CMHC has an easy-to-use premium calculator online.

Prepaid Expenses: Since the normal billing cycle for certain regular and ongoing expenses like property taxes and condo fees may not coincide with the date a buyer takes possession of their new home, the lawyers make adjustments to make sure buyers and seller each pay their prorated share based on the day the property changes ownership. Similarly, for rural properties, like those found throughout EG, sellers will likely be required to provide a full propane or oil tank at closing, the cost of which, however, gets passed along to the buyer since they will be the ones consuming the fuel. These costs vary greatly depending on the transaction date and the specific property details.

Legal Fees/Disbursements: As with anything, a good lawyer is worth every penny they charge because the cost and aggravation of mistakes in the home-buying process can be significant. In addition to reviewing and advising on legal documentation, their office will also transfer the title of the property to the buyer, register the mortgage with the government, make the other disbursements required in the process, and prepare a final accounting of all the money involved in the transaction. While the complexity of a given situation can impact the cost of this service, typically $1,500* will cover their fees and minor disbursements.

Closing costs are not insignificant amounts, so planning for them in advance is essential for a successful and stress-free transition into homeownership. Buyers should work closely with their professional advisors (real estate agents, lawyers, mortgage brokers) to ensure they have the most complete information for decision-making and budgeting. Failure to do so will no doubt end in last-minute surprises, headaches, and panic-filled costly fixes, taking the fun out of buying a new home.

• Note the amounts listed are a general guide for information purposes only and are based on normal circumstances for a typical home being purchased by a regular buyer in the EG market. Actual costs incurred are based on individual circumstances and should be confirmed in advance. 

Lee Lander is the Owner & Broker of Record of Lander Realty Inc. and has lived in East Gwillimbury for over 25 years. She’s become the go-to local market expert: nobody knows EG Real Estate like Lee because nobody does as much business in EG as Lee does. Lee@LeeLander.com.