Understanding Closing Costs When Buying a Home

Buying a home is exciting, but the costs go beyond just the purchase price. Many first-time buyers and those who haven’t bought a home in a while are surprised by the additional expenses that pop up during the process.

Understanding these costs upfront can help you avoid financial surprises and stay on budget. Let’s break down the most common closing costs you’ll encounter when buying a home in Guelph, Ontario.

What Are Closing Costs?

Closing costs are the fees and expenses you pay to finalize your home purchase. These typically range from 1.5% to 4% of the home’s purchase price. The exact amount depends on the property, mortgage terms, and service providers involved.

Common Closing Costs for Home Buyers

1. Balance of Down Payment:

   • After you’ve made your initial deposit with the offer, you’ll pay the remaining balance of your down payment at closing.

     
     

2. Mortgage-Related Costs

   • Mortgage loan administration/appraisal fees: Your lender may charge fees to process your mortgage and assess the property’s value.

   • Loan discount fees/points: If you choose to pay points to secure a lower interest rate, this cost is due at closing.

   • Credit report fees: Lenders often require a hard credit check, which may cost around $50+.

   • Mortgage insurance premiums: If your down payment is less than 20%, you’ll need mortgage insurance, with costs based on the home’s price.

     
     

3. Legal Fees and Title Costs

   • Legal fees: Expect to pay between $1,500 - $2,000 for a lawyer to review documents and facilitate the closing.

   • Title registration fees: Cover the cost of transferring the property title into your name, this is minimal $70-$150 fee.

   • Title insurance: Typically costs $250 - $500 and protects you against title-related issues.

   • Land survey expenses (if required): This can cost $1,000 - $1,500.

     
     

4. Land Transfer Tax

   • Ontario charges a land transfer tax based on the purchase price. First-time homebuyers may qualify for a rebate.

   • This will be one of your biggest expenses

     
     

5. Property Taxes and Utility Adjustments

   • You may need to reimburse the seller for prepaid property taxes, utility bills, and other costs.

Moving Costs to Consider

1. Packing and Moving Services

   • Professional movers can cost between $1,000 - $2,000, depending on the home’s size and distance.

   • Packing supplies and vehicle rentals (starting at $40+ per day)

   
   

2. Temporary Accommodation and Storage

   • Budget for short-term housing (hotel or Airbnb) if there’s a gap between moving out and moving in.

   • Storage units typically range from $50 - $130/month.

     
     

3. Additional Moving Expenses

   • Don’t forget the costs of food, transportation, and other essentials on moving day.

Settling-In Costs for Your New Home

1. Home Maintenance and Security

   • Changing locks costs around $50 - $200 per lock.

   • A deep clean of your home may cost $200 - $400.

     
     

2. Repairs and Renovations

   • Budget for minor repairs, painting, and any upgrades you’d like to make.

     
     

3. Furnishing Your New Home

   • New furniture, décor, and appliances can add up quickly, especially if you’re moving into a larger space.

   • Do NOT buy these BEFORE moving in - as it can impact your debt-to-income ratio which impacts your mortgage viability

     
     

4. Outdoor Upkeep

   • Lawn care, landscaping, and snow removal equipment may be necessary depending on the season.

     
     

Tips for Budgeting and Saving

• Plan ahead: Budget an additional 1.5% to 4% of the home’s purchase price for closing costs.

• Shop around: Compare quotes and services from different lawyers, movers, and service providers.

• Understand your mortgage: Ask your lender about all potential fees and insurance costs.

  
  

WAIT!! What about paying my REALTOR?

• The home Seller typically pays the commission for both the buyer's and the seller's representation. Learn more about that here.

Ready to Start Your Home-Buying Journey?

💬 Contact us today to learn more and schedule a consultation.