Congratulations, you bought your first house! You may have spent months, or even years searching for the perfect property, followed by a few weeks gathering documents for your mortgage financing, home inspection, and home insurance. Everything seems settled. You’re in the lawyer’s office about to sign the papers —- when you realize there’s a whole lot of cash you still need.
“Before the keys can be handed over, however, there are still a few expenses buyers need to shell out for,” says Penelope Graham, managing editor of Zoocasa. “These closing costs must be paid upfront in cash, unlike the mortgage which is amortized and paid in installments over time.”
For example, you’ll need to pay your real estate lawyer, down payment funds, PST on your mortgage loan insurance premium, land transfer tax and other miscellaneous costs. This can all add up to thousands of dollars. But, depending on home prices and land transfer tax rules, this end amount is not the same everywhere in Ontario.
“As housing markets and home prices range widely across the province, so too does the amount buyers can expect to pay upon closing,” Graham says.
To find out how these costs range, Zoocasa compiled estimates based on average home prices in 25 major markets across the province.
The study found that those buying in Oakville will face the highest closing costs, mostly because Oakville homes for sale are the most expensive among Ontario real estate, while Thunder Bay is the cheapest, as it has the most affordable property costs out of all cities surveyed.
In Oakville, the average home price in January 2020 was just over $1.1 million. For that, you’d need $220,959 in a cash down payment, $14,571 in land transfer tax, including the first-time buyer rebate, and about $2,000 in legal fees and miscellaneous costs (which is stable across across all cities in the province). Total cash required: an eye-popping $237,530.
Compare that to Thunder Bay, where the average home price was just $221,720 — roughly the same cost as just the down payment for an Oakville property. You’d need just $11,086 down, $674 for PST on mortgage insurance (or you can avoid mortgage insurance altogether if you put the full 20% down). You’d pay zero for Land Transfer Tax as a first time buyer since the rebate would fully cover it. Grand total? Just $13,760 on closing day.
Toronto is the fourth most expensive city for closing costs, with average Toronto real estate listings costing $884,385. The minimum necessary down payment would be $63,439, $2627 for PST on mortgage insurance, and $19,850 in Land Transfer Tax (Toronto is the only provincial municipality that charges its own tax). Altogether, you’re looking at $87,916 in closing costs.
That’s much higher than the Ontario average of $46,706 in closing costs.
Check out the infographic below to see how estimated closing costs are in your city for first-time home buyers if they were purchasing the average-priced home in each city:
Zoocasa is a full-service brokerage that offers advanced online search tools to empower Canadians with the data and expertise they need to make more successful real estate decisions. View real estate listings at zoocasa.com or download our free iOS app