I’m buying a preconstruction townhome. What’s included in my closing costs?

“What’s included in my closing costs?” is a question we hear a lot from our new home buyers, and while there’s an abundance of information online about closing costs and resale homes, buyers of preconstruction townhomes aren’t so lucky. We fix that with this post.

 

#1 HST on your purchase price

How much? If you’re buying a new construction home in Ontario, it’s 13% of the total purchase price.
When do I pay? Most Builders include this in the advertised purchase price.
Tips: At DiCenzo Homes we make it simple – HST is included in the Purchase price. Our customers like it when we take math tasks off their to-do lists!


#2 Land transfer tax

How much? The amount varies depending on the purchase price of your home. The Government of Ontario has a website that will walk you through the land transfer tax calculation
When do I pay? At the lawyer’s office when the deal closes
Tips: First-time homebuyers may be able to get a refund from the Ontario government for part of the land transfer tax, to a maximum of $2000.


#3 Legal fees

How much? Approximately $1200 to $2500
When do I pay? Whenever you use your lawyer’s services, including to review the offer to purchase and when the deal closes
Tips: Shop around and make sure any quotes you receive include all related expenses and disbursements so you’re comparing apples to apples. (DiCenzo Homes offers our in-house lawyers to our home buyers—a convenient and cost-effective service they love.)


#4 Title insurance

How much? Around $250
When do I pay? At the lawyer’s office when the deal closes
Tips: It’s optional, and many people think they can waive it when they’re buying a newly built home, but it’s a good investment. The land your home is built on could’ve had several owners. By purchasing title insurance, you’re covering yourself and your heirs for as long as you own the property in case liens or other claims against it come to light after closing.


#5 New home warranty fee

How much? It varies between $435 to a maximum of $2,034 for a home with a value of over $1.5 million
When do I pay? At the lawyer’s office when the deal closes
Tips: Some builders include these premiums (payable to Tarion Corporation) in the purchase price of your new home, while others charge it back to the new homeowner. Look for mention of warranty fees or premiums when you review your agreement for purchase and sale.


#6 Utility connections

How much? Anywhere from $500 to more than $2000
When do I pay? At the lawyer’s office when the deal closes
Tips: Check your agreement of purchase and sale carefully, as many new home builders will include the cost to hook up electricity, gas and water in your purchase price instead of tacking them on at the end.


#7 A property survey

How much? Around $500
When do I pay? At the lawyer’s office when the deal closes
Tips: At DiCenzo Homes we include a property survey in the purchase price to give their new homeowners peace of mind about the boundaries of their property. Ask your builder if they include a survey with your purchase.


#8 Home insurance

How much? Depends on the value of your home, but bank on at least $500
When do I pay? Arrangements will be made with your insurance company. You can pay annually or in instalments.
Tips: You’ll often have to prove you have fire insurance at closing, so bring the paperwork with you to the lawyer’s office.

 

#9 Mortgage interest adjustments

How much? Typically less than $1000
When do I pay? At the lawyer’s office when the deal closes
Tips: Ask your mortgage broker or agent for the exact cost, since the adjustment varies depending on your closing date and payment frequency.

 

#10 Home inspection

How much? Budget for $500
When do I pay? Directly to the home inspector you hire at the time of inspection
Tips: A home inspection isn’t necessary, but some purchasers of newly built homes like to hire a professional to do a walk-through of their home about a month before the one-year anniversary of their Tarion warranty, which is when the most comprehensive part of the warranty expires. According to Moneysense’s Top 10 mistakes new home buyers make, not bothering with an inspection means you may miss some problems with your home that you could otherwise get fixed under the provincial warranty.

 

Budgeting for your closing costs is an important part of being prepared for the day when you’ll get the keys to your new home. Equally important is having clear, open communication with a reputable builder so there aren’t any surprises when the deal is set to close.

 

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