What are Closing Costs?
Buying a condo is one of the largest purchases you’ll make in your lifetime, and we know it’s a big decision regardless of whether you’re a first-time home-buyer, you’re downsizing from your family home, or you’re an investor looking to rent out your unit.
Having a down payment is the most important piece of the financial puzzle when looking to buy pre-construction, as is selecting a unit in your price range – you want to make sure you can afford the mortgage payment, monthly condo fees, and your utilities. (Check out RateHub’s handy payment calculator if you want to estimate your monthly costs.)
Another cost to consider is closing costs, which you’ll pay when your unit is completed and you’re moving in. Everyone pays closing costs when they purchase a home, but we want to take a look at closing costs for pre-construction condos to help you understand what those charges are for and what you can expect to pay.
What are closing costs? Closing costs can include the Tarion warranty fee (the body that protects condo buyers in Ontario), realty taxes, Canada Post fees, law society fees, a status certificate charge, utility meter costs and hook up charges, legal fees (those will vary depending on which lawyer you choose), land transfer taxes, and development charges.
What are development charges and why do I have to pay them? Don’t worry, development charges aren’t just extra costs we arbitrarily charge homebuyers. They’re actually fees charged by the city to cover the infrastructure and municipal services affected by each new condo building – for example sewers and water mains, roads, transit, fire and police services.
How much are they? Closing costs are typically 1.5-5% of your purchase price, and it ranges based on what type of homebuyer you are (first-time or not), the value of your unit, and it could further vary if you plan to live there or rent it out to a tenant.
How can closing costs vary from purchaser to purchaser? If you’re a first-time homebuyer you can avoid certain fees – for example, you can get a rebate on your land transfer tax. The fees are also dependent on the purchase price and size of your unit. If your down payment is less than 20% you’ll also incur CMHC fees.
For more insight on closing costs, visit the buyer education centre at ClosingCosts.ca. You can always ask questions about our closing costs at any time – just give our sales centre a call at 416.223.0003 or come in for a visit at 784 St. Clair Ave West.