The purchase price is not the whole budget
The listing price gets most of the attention, but the expenses around the purchase can decide whether closing day feels organized or alarming. Before you offer, build a cash plan that separates your down payment from the other costs of buying.
The exact amount depends on the price, property type, location and financing. Many buyers use 1.5 to 4 percent of the purchase price as an initial planning range for closing costs, excluding the down payment. Your lawyer and mortgage professional can narrow that estimate once the property and mortgage are known.
Deposit and down payment
The deposit is delivered after the offer is accepted, according to the agreement. It demonstrates the buyer's commitment and is credited toward the purchase on closing. The balance of the down payment is normally provided to the lawyer before closing.
Because deposits move quickly, keep the funds accessible and be ready to document where they came from. Large transfers or recent gifts may require supporting records for the lender.
Ontario land transfer tax
Ontario land transfer tax is calculated using graduated rates based on the purchase price. Eligible first-time buyers may qualify for a refund of up to $4,000. Your lawyer will calculate the tax and apply any eligible refund as part of the closing process.
A buyer who has previously owned a home, including a home outside Canada, may not qualify. Couples should get advice when only one person is a first-time buyer because the ownership history and spousal rules can affect the refund.
Legal fees title insurance and disbursements
Your lawyer reviews the agreement, searches title, arranges title insurance, prepares registration documents, coordinates funds and registers the transfer and mortgage. The final invoice normally includes professional fees, title insurance, registration charges and other disbursements.
Ask for an estimate early, then leave a buffer. The final amount can change with the property, lender instructions and closing adjustments.
Mortgage related costs
Some lenders require an appraisal. The lender may cover it, or the buyer may pay it. Buyers with less than 20 percent down will generally require mortgage default insurance. The premium is usually added to the mortgage, while applicable provincial tax on the premium is paid in cash at closing.
A mortgage pre-approval itself is commonly free. Be cautious about treating every possible lender or broker charge as a standard expense. Your disclosure documents should identify any fee that applies to your specific mortgage.
Inspection adjustments and moving expenses
A home inspection can reveal defects and future maintenance needs before conditions are waived. Specialized inspections for septic systems, wells, pools, fireplaces or sewers may be appropriate for certain properties.
Closing adjustments reimburse the seller for prepaid expenses that benefit the buyer after closing, such as property taxes or some condominium charges. Then there are practical expenses: movers, utility setup, new locks, insurance and the repairs or purchases that appear during the first few weeks.
A sample cash plan
For a $650,000 purchase, start by calculating the required down payment and deposit. Then add land transfer tax after any eligible refund, the lawyer's estimate, inspection costs, any appraisal, moving expenses and a contingency amount. Do not rely on one blanket percentage when an actual worksheet can give you a much clearer answer.
We can prepare a personalized estimate before you shop so you know how much must remain available after the down payment.
Your next step
Request a buyer closing-cost review with Charlotte Ferguson, REALTOR® and Mortgage Agent Level 2. Bring your target price and available savings, and we will map the numbers before an offer makes the timeline considerably less relaxed.
Visit mortgagewithchar.com to begin.