Costs for the Buyer

The cost of buying a house is more than the mortgage you will receive from your financial institution. It’s fairly rare today that a deposit is required of a potential buyer upon signing the agreement to buy. However, other costs are inevitable and numerous. These include:

  • The down payment required in a mortgage. It generally varies from 5% to 25% of the purchase price.
  • The evaluation of the property by your lending institution and the fees for opening a mortgage dossier.
  • Inspection of the property. This isn’t obligatory, but hiring a building inspector is crucial. The inspector’s report will be a determining factor in your final decision whether or not to buy. The cost is usually between $200 and $500.
  • The GST and QST in the case of buying a new house.
  • Legal and notary fees.
  • Transfer tax, otherwise known as the welcome tax.
  • School and property tax adjustments.
  • Fuel cost adjustments, if applicable.
  • Tax on your mortgage’s insurance premium if it’s insured by the Canada Mortgage and Housing Corporation. The tax must be fully paid by the time you take possession.
  • Moving costs.
  • Home insurance.
  • Co-ownership costs, if applicable.
  • Etc.

The financing required to buy a property is calculated as follows:

Cost of acquisition
The cost of purchasing the property (say $275 000)
+ indirect costs (say $7000)
= $282 000. This is the cost of acquisition.

 

Required financing
The cost of acquisition ($282 000)
-  deposit (example: $10 000)
-  the down payment (example: $25 000)
= $247 000. This is the required financing.