Published September 16, 2020
What 4 Fees Should Buyers Budget for?
Here are some important home buying fees to factor into your plans.
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In real estate, surprises in the form of costly fees can derail a transaction or add unnecessary stress at the very least. That’s why it’s important as a homebuyer to know about everything you’ll be expected to pay beforehand. Here are the four big-ticket items to budget for when purchasing a property:
1. Lender fees. These fees, which come with getting a new mortgage, will vary depending on whether your mortgage is through an A lender or a B lender, whether it’s a high-ratio mortgage or one that’s secured, and other like factors. Due to this variation, there’s really no precise figure that you can expect to pay, but you can always ask your lender up front for a good estimate of what will be coming out of your pocket.
2. Lawyer fees. Your attorney will represent you from the agreement of purchase and sale all the way until closing. Sometimes, if they represent the lender, your fee will be slightly reduced, but in any case, you should expect to pay between $800 and $1,200. Again, this fee varies depending on the specific situation, but naturally, a smooth closing with no issues will help keep your fees lower than a scenario in which your lawyer is having to do a lot of work.
"The only instance where you’d waive the home inspection is if you find yourself in a bidding war."
3. Land transfer tax. In Ontario, this tax is calculated at 2% on amounts greater than $400,000 and less than $2 million. If you’re buying above $2 million, the rate is 2.5%. Remember to discuss taxes with your agent in your initial meetings so as to avoid unpleasant, costly surprises.
4. Inspection fees. While not mandatory, home inspections are highly recommended. The only instance where you’d waive the inspection is if the home you’re buying is highly sought after and you find yourself in a bidding war; to win out, you’ll want to make sure you have the strongest offer with the least number of contingencies. Home inspection rates vary and may average anywhere across the GTA from $350 to $500. You can usually pay these fees via credit card, e-transfer, or even cash.
If you have questions about any of the ‘Big Four’ fees associated with buying a new home, reach out via phone or email. I’d be happy to provide you with more information and discuss other real estate-related topics in greater detail.
