Buyers: What To Budget for Closing Costs When Buying A Toronto Condo
While you can purchase a home in Toronto with a 5% down payment, don’t be caught off guard by the additional expenses that may or may not pop up before closing! It’s important to know what potential expenses you may have to incur prior to purchasing a home in Toronto so you can be prepared for them.
Closing Costs To Expect When buying A Condo in Toronto
Let’s break down Toronto closing costs into a few categories, before closing, on closing date, and the common hidden costs after closing so you’re not caught off guard.
Closing Costs Due Before Closing
Your Deposit: (Normally 5% of the purchase price) The first and biggest closing cost to consider when buying a condo in Toronto will be the deposit. In Toronto usually you will pay this deposit to the listing brokerage within 24 hours of your offer being accepted to be held in trust as a show of good faith that you intend on closing on the purchase and have the funds available.
Mortgage Application and/or Appraisal Fee: ($300-$500) Depending on the lender you choose, you may have to pay for an appraisal to be completed on the property you’re interested in purchasing. This appraisal will be conducted by a professional to verify that the property you’re interested in purchasing is worth the price you’ve offered. Things can get complicated when money is tight and an appraisal comes in below the purchase price. Check out this blog post about what happens when an appraisal comes in lower than your purchase price.
Home Inspection(s): ($300-$700) While the need to have a professional inspection varies depending on the properties type, age and condition, it’s always a good idea to have things checked out when any evidence of a potential problem exists.
Status Certificate: ($100-$130) You always want to take a look at the status certificate when purchasing a condo in Toronto. Often the seller will have this available before going on the market, but when they don’t it will be up to you to have a clause in your offer allowing the status to be ordered and reviewed. The status certificate outlines the overall health of the building, as well as the rules & obligations you’ll need to abide by after purchasing a condo unit in the building.
Property Survey: ($1000+) A property survey confirms the property’s boundary lines as well as its legal description. Confirming the boundaries of the property you’re about to purchase, especially if there’s any potential dispute, encroachment, restrictions, or easements, you’ll want to be in the know.
Closing Costs Due on Closing Date
Legal Fees: ($2000-$2600) These fees will be inclusive of the cost for having the title of the property transferred to your name, title insurance, as well as the lawyers fee for handling the transaction.
Adjustments: (Varies) The most common adjustments will be in regards to property tax, condo fees and utilities. If for example you’re purchasing a property on June 15th, and the seller has already paid the entire years property tax, the lawyer will calculate to the exact day the the amount of property tax prepaid by the seller from June 15th to December 31st, and create an adjustment which the buyer must pay. The same goes for condo fees, if the month’s fee is paid but you’re moving in on the 15th, the remaining days of the month need to be credited back to the seller.
Land Transfer Tax: (Varies) This is a sales tax charged by the provincial government. The formula used to assess the tax is as follows:
- 0.55% of the first $55,000 of the purchase price
- 1.00% of the next $195,000 of the purchase price
- 1.50% of the next $150,000 of the purchase price
- 2.00% of the balance of the purchase price
In addition to the provincial tax, if you’re purchasing a condo in Toronto, there’s an additional municipal land transfer tax which doubles the amount due. If you’re a first-time buyer in Toronto, the Municipal Land Transfer Tax will reduce by a maximum of $4,475.00 on closing.
Hidden Closing Costs Due After Closing
Here’s where many buyers forget to budget the right amount.
- Movers & Moving Supplies: ($1000+ or $150+/hour) Depending on how much furniture you plan on moving, how far the movers have to travel, if you need to put anything into storage and any unexpected delays during the moving process this can range from just $600 to thousands of dollars.
- Utility Connection Charges: (Varies) Hydro, Water, Gas, Internet, TV service providers may charge new account setup fees, security deposits, installation fees, pre-payment and so on.
- Elevator Booking Deposit: ($250-$500) While this is usually refundable, it’s money that you’ll need available to prepare a certified cheque.
- Cleaning Service: ($250-$450) It’s always a good idea to have your new home deep-cleaned so you can start off on the right foot! Thankfully, when you buy with a member of our team, we cover the cost of having your new home professionally cleaned.
- Locksmith: ($50-$100) Have peace of mind knowing that nobody else has a key to your new home.
- Painting: ($300-$3000) A fresh coat of paint does wonders for a new space. The cost depends on the size of your space and if you plan on doing the work yourself.
- Furniture, Kitchenware, Houseware: (Varies) Once you’re moved in you’ll quickly realize what’s needed to complete the space. If you’re a first time home buyer, you may also need to consider filling a fridge, pantry, spice rack, laundry & cleaning supplies.
- Lighting & Lightbulbs: ($50-$200) While on the topic of completing your space, brightening up rooms with brighter & high efficient LED.
- Replace HVAC Filter(s): ($50)
- Repairs & Improvements: (Varies) Often right after moving in minor (and sometimes major) repairs need to be completed. Whether these are cosmetic or not, having some funds set aside will help.
- Mail Forwarding from Canada Post: ($100) You can purchase mail forwarding from Canada Post to have any mail delivered to your previous addresses sent directly to your new home for a certain period of time. This helps give you time to update your address with anybody that may have slipped your mind. You can purchase this here.
If you’re ready to take the next step and begin your search for a home, Contact us today to see how we can help you prepare.