Your mortgage isn't the only expense when buying a home. There are also closing costs that include appraisal fees, lawyer's fees, insurance and more. Generally speaking, your combined closing costs represent between 3% and 4% of the purchase price. These will vary by province and city, and are often linked to the price of the home. Your lender, lawyer or notary and real estate agent can help you estimate them.
High Ratio Mortgage application fee: Paid to the mortgage insurer to process your application if you're applying for a high-ratio mortgage (less than 20% down payment).
Mortgage default insurance: High-ratio mortgages (those with less than 20% down payment) require insurance against default. The cost is usually added to the mortgage, and ranges from 1.00% to 3.25% depending on the amount of your down payment. There is an additional 0.25% premium for variable rate mortgages.
Appraisal fee: The cost for a professional appraiser's opinion of the value of the property. Your mortgage lender will require an appraisal to determine whether the selling price is reasonable for that market.
Land survey fee (or title insurance in lieu): The lender usually requires a recent survey of the property or title insurance in lieu.
Home inspection fee: This covers the cost of a professional inspection of your home.
Legal costs: Legal costs include fees for the professional services provided by your lawyer or notary, costs involved in conducting a title search, drafting the title deed and preparing the mortgage, as well as registration fees and other disbursements.
Prepaid taxes, utility bills and other charges: The seller may have prepaid some bills before the closing date, which you will have to cover. All taxes, utility bills, and other charges incurred after the closing date become your responsibility.
Provincial tax: Often referred to as the Land Transfer Tax, this tax is applicable in most provinces and is usually a percentage of the purchase price. Some provinces may also charge tax on new construction.
GST: You pay GST on the purchase price of a newly constructed home.
Fire insurance: Mortgage lenders want you to protect your home – and their mortgage collateral – against fire and weather-related damage so it's necessary to purchase fire insurance.
Moving expenses: Costs will vary, depending on whether you do it yourself, rent a truck, or hire professional movers.
Additional expenses: These could include utility hook-up charges, any repairs you need to make after buying your home, the cost of appliances and window and floor coverings.
When you insure your home, you should insure your home for the total amount it would cost to rebuild your home if it were destroyed.
Friends, family, the phone book and Internet are some of the sources you can use to find homeowners insurers. Get a wide range of prices from several companies. But don't consider price alone.
Private Mortgage Insurance - PMI Private mortgage insurance is a type of insurance that helps protect the mortgage company against losses due to foreclosure. This protection is provided by private mortgage insurance companies and allows mortgage companies to accept lower down payments than would normally be allowed. PMI Cancellation
Mortgage insurance can usually be canceled by the home buyer after he or she has at least 20 percent equity in the home. Borrowers should contact their servicer to find out the procedure for canceling mortgage insurance when they think they have achieved 20 percent equity.
When you purchase a home, consider how you will protect your investment.
Homeowner's Insurance. Most mortgage lenders insist on fire insurance coverage at least equal to the loan amount or the building value, whichever is less. You should also consider a homeowner's policy which combines fire insurance on the building and its contents with personal liability coverage. Consult your general insurance agent or broker for professional advice on home insurance.
Mortgage Life Insurance. When lenders refer to mortgage insurance, they're referring to coverage that's provided by CHMC or MICC for a high ratio mortgage. Mortgage life insurance (MLI) is inexpensive coverage on your life which protects your family or beneficiaries by paying off your outstanding mortgage in the event of your death. For just pennies a day, you will have peace of mind knowing your beneficiaries will be mortgage free. MLI premiums are based on two factors: your age and mortgage amount. Your premium is added to your mortgage payment so there's no extra paperwork, and it remains the same until your mortgage is paid off. Joint coverage for spouses is also available.
Disability Insurance. Disability Insurance is important if your mortgage payments depend entirely or in part on your income. Disability insurance provides replacement income if an accident or illness prevents you from working.
Job Loss Mortgage Insurance. Recently insurance companies have started to offer Job Loss Mortgage Insurance. This insurance covers the mortgage payments in the event that you involuntarily lose your job.