BEFORE CLOSING DAY

Once you have found the right property, it is important to understand both its condition and the costs associated with completing your purchase. Inspections, appraisals, insurance and other due-diligence items can help you make informed decisions and avoid unexpected expenses.

Home Inspection

A professional home inspection can provide valuable information about the condition of the property, including its structure, roof, electrical, plumbing, heating and cooling systems.

Depending on the circumstances, an inspection may be completed before submitting an offer or included as a condition in your Agreement of Purchase and Sale. If significant issues are discovered, you may have an opportunity to reconsider your purchase or negotiate appropriate terms, depending on your agreement.

Property Appraisal

Your mortgage lender may require an appraisal to confirm the property's market value before advancing mortgage funds.

The appraisal is generally arranged by the lender, although the cost may be charged to the buyer. It is a good idea to allow for this expense when budgeting for your purchase.

Property Survey

A property survey identifies boundaries, buildings, easements, rights-of-way and other features that may affect the property.

An existing survey may sometimes be available from the seller. If an up-to-date survey is required and one is not available, a qualified Ontario Land Surveyor may need to prepare one.

Title Insurance

Title insurance provides protection against certain title-related risks, including title fraud, ownership disputes, some zoning or building permit issues, encroachments and other defects that may not be discovered before closing.

Your lawyer will advise you about the appropriate coverage. The cost of title insurance is normally included as part of your legal closing expenses.

Property Insurance

Your mortgage lender will normally require proof that adequate property insurance is in place before mortgage funds are released.

Arrange your insurance well before closing and make sure coverage becomes effective on the day you take ownership of the property.

Mortgage Protection Insurance

You may also wish to consider optional protection for your mortgage and family finances.

Depending on your needs, coverage may be available for life insurance, critical illness, disability or loss of income. Review the available options carefully and consider whether personal insurance coverage or lender-provided mortgage insurance is appropriate for you.

CLOSING DAY

Closing day is when ownership of the property is legally transferred to you. In addition to your down payment and mortgage funds, there are several other expenses that may become payable at or before closing.

Land Transfer Tax

Ontario buyers are generally required to pay Land Transfer Tax when purchasing real estate.

If the property is located in Toronto, an additional Municipal Land Transfer Tax also applies.

Eligible first-time home buyers may qualify for rebates that reduce a portion of these taxes. Your lawyer will calculate the amount owing and apply any available rebates for which you qualify.

HST on New or Substantially Renovated Homes

HST may apply to newly constructed homes and certain substantially renovated properties.

Depending on the type of purchase and how the property will be used, you may qualify for an applicable new housing rebate. With new-construction purchases, it is important to confirm whether HST and any rebate have already been included in the purchase price.

Property Tax, Utility and Condominium Adjustments

The seller may have already paid certain expenses beyond the closing date, such as property taxes, utilities or condominium fees.

Your lawyer will calculate the appropriate adjustments so that each party is responsible for their share of these expenses. These amounts will appear on the Statement of Adjustments prepared for closing.

Mortgage Default Insurance

If your down payment is less than 20% of the purchase price, mortgage default insurance will generally be required.

The insurance premium is typically added to the mortgage amount. However, applicable provincial sales tax on the insurance premium must normally be paid separately at closing and cannot be added to the mortgage.

Legal Fees and Disbursements

Your lawyer will charge legal fees for completing the purchase and registering your ownership and mortgage.

You will also be responsible for applicable disbursements, which may include registration fees, title searches, title insurance and other expenses incurred by the lawyer on your behalf.

AFTER CLOSING DAY

Congratulations - the property is officially yours.

After the transaction has been completed, your lawyer will normally provide you with a closing or transaction report containing important documents relating to your purchase.

Keep these records in a safe place, as they may include your registered deed, mortgage information, Statement of Adjustments, title insurance policy and other important documents.

You should also ensure that utilities, property tax accounts, condominium payments, insurance and any other ongoing services have been properly transferred or established in your name.

Planning ahead for these expenses can make your closing smoother and help you enjoy your new home with fewer surprises.

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