April 4, 2023

Guide to Closing Costs and Loan Fees

A couple received a house key, up close from a low angle

You’re right to think that buying a home in Ontario is expensive, but the cost of real estate isn’t the only thing you need to pay for. In addition to the home price, buyers need to pay a slew of extra fees before taking possession of the property.

While home prices may have dropped in price in the past few months, the reduction is relative. They’re still vastly more expensive than they were in 2020, even if you head out of the cities. That’s without even factoring in rising interest rates at the bank.

Before buying, you should know about everything you’ll need to pay for, from closing costs to loan fees. Read on to learn more about what they are.

Fees Before Signing the Mortgage

Some costs associated with buying a home get incurred before writing your signature on the dotted line. Not all are essential, but most of them are recommended.

For example, you don’t necessarily need to get a home inspection, though contracting one gives you peace of mind that there’s nothing fundamentally wrong with the property before you buy it. The fee should be around $500, depending on the inspection’s complexity.

You’ll need to give the seller a deposit. It shows you have serious intentions, but it also counts towards the down payment. There’s no mandatory minimum for the deposit, unlike the down payment.

After the Purchase

Property Taxes

Upon signing the mortgage, you’ll have to make a few more purchases. Many Canadian provinces have a land transfer tax, and some cities like Toronto have a municipal one that is payable on closing. The size of the fee depends on the home’s price.

In fact, over the years, your home’s value is likely to rise, along with its tax bill. That your primary asset increases in value is excellent, but your costs go up before you can realize the gains in value unless you apply for mortgage loans in Canada from professionals like Burke Financial.

We can help you get a home equity loan or HELOC that suits your budget and lifestyle to help pay for big-ticket, milestone expenses, or smaller things related to the daily cost of living.

Legal Disbursements

Every real estate purchase requires legal fees and disbursements, which usually cost about $500. A residential lawyer needs to draft official documents before you can take ownership.

Many lenders require title insurance in case there’s a property ownership dispute. You’ll usually have to make the purchase through your lawyer, and it generally costs about $100-300. Considering the costs of property and the potential liability of things go wrong with a title dispute, the price for protection here is very small.

If you are a current homeowner, you signed your mortgage months or years ago. When you need mortgage lenders to help unlock the equity in your home now, you need Burke Financial. Every month you’ve paid means there’s more equity you’ve built up, so speak to us to learn more about accessing up to 85% of your home’s value.

Miscellaneous Fees

Property Taxes

Some property-related expenses aren’t built into the initial cost but still need to be paid regularly. Don’t just look at the price tag of a home. Consider all the miscellaneous fees you’ll need to pay for when you’re setting your budget.

Calculator and document on a desk, working out numbers

For example, you’ll have to pay property taxes, which will cost you a percentage of your home’s value depending on your municipality’s tax rate. To give you an idea of approximately what you’ll owe, in Toronto, in 2022, residential property taxes were 0.83%. A $400,000 home came with a $3,320 tax bill.

If the buyer has already paid their annual tax bill for the full year, you may need to reimburse them since they shouldn’t have to pay taxes on the home you now own.

Property Insurance

Property insurance, or homeowner’s insurance, is necessary to have for closing day, so it must be in place. Property insurance covers the cost of replacing your home and its contents, so it’s vital.

It’s usually paid in monthly or yearly premiums. Speak to a professional about the right insurance options for you.

Borrowing Costs

Burke Financial specializes in finding homeowners the right way for them to tap into their home’s equity. We can help you access up to 85% of your home’s value, all with low-interest rates and flexible terms.

You can apply for bridge loans if you’re caught between homes, though we have solutions for all situations, no matter your level of credit, debts, or income. Our home equity loan closing costs are some of the industry’s lowest, and you’ll get excellent service from dedicated professionals along the way.

Leveraging your home’s equity is one of the best ways to get low borrowing rates because nothing reassures lenders like seeing real estate as collateral.

Sometimes improving your financial health involves bundling multiple debts into one so you don’t accidentally forget to make a payment. The principal amount owed is one obstacle, but the unwieldy nature of juggling several debts at once can be difficult.

Burke Financial’s debt consolidation loan fees are low, so you can streamline payments and save valuable money each month. Keep the money you work hard for, and don’t break a sweat making payments.

The industry-leading team at Burke Financial works with clients across Southern Ontario. Thousands of Canadians have already received our help, and they’ve enjoyed getting debt relief help from a top-rated firm accredited by the Better Business Bureau.

Buying a home is a very exciting time in life. It can also be stressful. Property is something that will physically and financially shield you and your family, so it’s crucial to knock the buying process out of the park. That entails being prepared for all the various payments you’ll need to make before, during, and after the immediate purchase, so keep the above in mind and contact Burke Financial if you could use a boost with your money.


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