How much money do I need to close my purchase?
Here is a method of calculating how much money you’ll need on the closing date to purchase your home. Of course, every purchase is different. Please do not rely on this without first calling and faxing us your agreement.
Payable to the vendor:
- Add purchase price.
- Subtract deposit paid with the agreement.
- Add estimated “adjustments” - i.e. items that the vendor will have prepaid by the closing date, such as the year’s property taxes or water account, which will be apportioned between you and the vendor as of the closing date. For a guesstimate, add $500
Taxes:
- Add provincial land transfer tax. It is based on the purchase price - amounts up to and including $55,000 = .5%; on the excess between $55,000 and $250,000 = 1.0%; on the excess over $250,000 = 1.5%; on the excess exceeding $400,000 where the property contains one or two single-family residences = 2.0%. (You may qualify for a reduction of land transfer tax, if this is your and your spouse’s first home and if it is newly constructed.) Click here for an automatic calculator (the accuracy of which we cannot guarantee)
- Add provincial registration expenses ($70 for the transfer to you and $70 to register your mortgage - your lender will require you to pay this expense)
- Is GST payable? Is the seller a builder or have there been substantial renovations to the property by a business? If so, then add GST payable to the purchase price (you may be entitled to a rebate either from Revenue Canada or the vendor of all or part of the GST)
Legal expenses:
- Add legal fees for purchase and mortgage. For an estimate, click here.
Additional expenses with traditional legal opinion:
- Add search expenses - about $150, but often more for rural properties
- Add estimated municipal fee to obtain tax certificate - about $60 to $100
- Add estimated municipal fee to obtain building compliance letter - about $100 (not required if title insured)
- Add law society insurance surcharge - an out-of-pocket expense - $50 (not required if title insured)
Additional expenses with title insurance:
- Your lawyer can advise you which insurance company is most appropriate in the circumstances and what their fee is. Estimate about $150 for a condominium and $200 to $400 depending on the price of the home.
Other expenses:
- Add condominium search fee (payable to the condominium management company, to confirm monthly fees and proper management) - $50
- Add environmental and water potability certificate(s) for a rural property - about $100
- Add septic tank compliance inquiry for a rural property - about $100
Your mortgage proceeds:
- Subtract - total value of mortgage funds available on closing
- Add - mortgage application fee - for a high ratio mortgage, estimate $235
- Mortgage insurance fee on a high ratio mortgage (usually through the CMHC). If the amount will be paid up-front, add it here. It can also be amortized over the mortgage.
The balance is the amount you should have saved for the closing date.
Please do not rely on this calculation and without first speaking with your lawyer or emailing John Allen a note. This is because every purchase is different and your costs could be considerably affected.
Note - for budgeting purposes, you might also add your moving expenses, renovation, utility setup and other expenses here, in order to calculate total savings required for your move.