Closing Costs in Canada: What to Budget For Besides Your Down Payment

When you’re ready to buy a home in Canada, it’s super exciting! But wait, there’s more to pay for than just the big down payment. Think of it like buying a fancy new toy – you need money for the toy itself, but also for batteries, shipping, and maybe even a special case! These extra costs for buying a home are called “closing costs.” They are things you pay when the house officially becomes yours.

Self-Employed Mortgages Ontario: If you’re a grown-up who works for yourself, like owning your own business or being a freelancer, getting a Self-Employed Mortgages Ontario can be a bit different. Lenders need to make sure you can really pay back the money, so they might ask for different papers to prove your income. It’s a good idea to talk to a mortgage expert who understands how to help people like you.

Here’s a simple list of what you might need to save for, besides your down payment:

The Money You Pay Right Away (or Just Before)

• Welcome Tax (Land Transfer Tax): This is like a special “welcome to your new land” tax from the government. How much it is depends on where in Canada you buy your house. It can be a pretty big chunk of money, so always check what it will be for your area.
• Lawyer Fees: You need a special lawyer to help you with all the important papers and make sure everything is fair and legal when you buy a house. They charge money for their time and for other small things they have to pay for, like checking records.
• Mortgage Insurance (if your down payment is small): If you don’t have a huge down payment (like less than 20% of the house price), you’ll need to pay for something called mortgage default insurance. This protects the bank, not you, in case you can’t pay your mortgage. Sometimes, you pay a small part of this upfront.
• House Check-Up Fee: The bank might want to send someone to look at the house and make sure it’s worth the price you’re paying. This is called an appraisal. You usually pay for this.
• House Inspector Fee (Good Idea!): It’s super smart to hire a house inspector to give the house a good look-over before you buy it. They can find out if the roof is leaky or if the furnace is old. This can save you big money later if they find a problem.
• New House Tax (GST/HST): If you’re buying a brand-new house, you might have to pay sales tax on it. Sometimes the builder includes this in the price, but always ask to be sure!

Other Costs You Might See at Closing Time

• Property Tax Sharing: Imagine the person selling the house already paid the property taxes for the next few months. When you buy the house, you’ll need to pay them back for the days you’ll own the house during that time. Your lawyer helps figure this out.
• Utility Sharing: Same idea for things like water or electricity. If the seller paid ahead, you might owe them a little bit for the days you use it after you move in.
• Condo Papers Fee: If you’re buying a condo, there’s a special document that tells you about the condo building’s rules and money stuff. You’ll pay a small fee for this.

Money You’ll Need After You Move In

• Moving Day Costs: Don’t forget about paying for movers, or a truck if you do it yourself!
• Turning On Utilities: You’ll have to pay a little bit to get your electricity, gas, and internet turned on in your name.
• House Insurance: You’ll need to pay for house insurance to protect your new home from things like fires or floods. The bank will make sure you have this.
• First Property Tax Bill: After you move in, you’ll get your first bill for property taxes.
• Fix-Up Money: If the house needs some work or you want to paint, save some money for that too!

So, buying a house is a big adventure, and it’s exciting! But just like saving for that big down payment, you also need to set aside money for these closing costs. They can add up to a good chunk of money, sometimes 1.5% to 4% of the house’s price, or even more. Make sure you talk to your mortgage person and your lawyer to get a good idea of how much you’ll need. Planning ahead means less stress when you get those keys! Knowing all these costs helps you budget smartly. If you run a business, you might even think about Small Business Loans Ontario to help with some of these initial costs for your new home, or for your business in general if you need to grow and save for your personal home.