CLOSING ON YOUR HOME PURCHASE
As a buyer you have a responsibility on your shoulders to actually bring the transaction to a close. Statistics say that 1 in 4 transactions don’t close (a bit skewed in my opinion, seems like way too many) so make sure you know what your next steps are after your offer has been accepted.
Fulfill the offer conditions.
If your offer had any conditions in it such as financing, a home inspection, etc, you need to make sure that the conditions are fulfilled in that specified time. This calls for organization on your part as well as your Realtor’s and any involved third party. Usually, this stage runs smoothly and everything gets processed in time. Keep in mind that because of the activity of the Toronto real estate market some offers are put in without any conditions so as to present the seller with a “clean” offer and increase your chances of buying the property. This mostly applies to homes in a bidding war.
Find a real estate lawyer.
This is an essential part of a real estate transaction and having a good real estate lawyer can and will save you money and risk. In fact, you can’t carry out a real estate transaction without a lawyer since they are the ones that register properties, discharge mortgages, search title etc. When you are buying a condo, your real estate lawyer is the one who looks over the status certificate to make sure everything is in good standing order with the condo corporation. Your real estate lawyer is the person who arranges for transfer of funds and key exchanges. We have a number of lawyers we work closely with who are there to help.
Know your closing costs.
As great as it seems, a down payment is not the only lump sum of money you have to have in your bank account for a property purchase. There are a number of closing costs that can really add up on a transaction so make sure you budget accordingly.
- Legal Fees – Could cost $1200+. Obviously all lawyers charge different rates but expect to pay up. Your lawyer provides you with a bill as to what all these charges are.
- Disbursements – Paid to your lawyer, these include deed registration, tax certificates, mortgage registration, Land Registry searches, miscellaneous costs. $500-$800
- Adjustments – Prepayment of hydro, taxes. Really depends on the type of property you are purchasing. This is discussed with your lawyer before the transaction closes. Depending on the time of year you are occupying your property and whether the previous owner prepaid anything, this can range from a few hundred dollars and up.
- Home Insurance – Mandatory in order to get a mortgage. Expect to pay $400+ per year depending on your property, insurance type and insurance company. Shop around to find the best deal.
- Land Transfer Tax – Ontario and Toronto. It is the buyer of the property that pays the LTT. The taxes are calculated based on the price of the home. Your lawyer will arrange for the taxes to be paid on closing day. The amount of the taxes is NOT included in the purchase price. It is essential to have this money ON TOP of your down payment.
- Moving Costs – These could really add up depending on the services that you are using and the moving company that you chose. Moving companies usually start at $500 depending how much stuff you have and how far you’re going with all of it.
- Mortgage Loan Insurance – If your down payment is less than 20% of the purchase price, an insurance premium will be applied to your mortgage. You can choose to pay it right away or add it to your mortgage and pay it with your mortgage payments. This is based on the size of your down payment and your purchase price. Most people add this to the mortgage amount and pay it gradually like they pay the mortgage. *This is not the same thing as Mortgage Life Insurance
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