Homebuyers and sellers are often simply looking forward to completing the transaction so they can move forward. But in making the transition, there are costs to consider when buying or selling real estate. For those about to take on the process of buying or selling a home, it’s important to analyze the hidden costs involved. In this post, we’ll review a few of the costs you will face if you’re buying or selling a home this year.
Both buyers and sellers will encounter legal fees during the property transaction. Lawyers are required to ensure documentation is completed according to the legal standards, and to mitigate future issues regarding property ownership. These legal fees vary from lawyer to lawyer but typically could be between $1500-$2000. Contact your lawyer for more information on pricing.
An appraisal fee is the price for the lender to appraise the value of a for-sale property. This fee is usually between $250 and $500 and must be paid directly to the lender by the buyer when finalizing their mortgage. The appraisal fee, in some cases, may be rebated to the consumer.
The buyer’s agent and the seller’s agent share three to five percent of the selling price of the property. This is paid by the seller out of the final price they receive for their home. It’s important for sellers to review their real estate agents fees before signing a service agreement.
Land Transfer Tax
The Canadian government requires that homebuyers pay a land transfer tax when completing the purchase of a new home. This fee varies greatly from province to province, ranging from .5% to 2% of the value of the home. For more information on Land Transfer Taxes try visiting http://www.fin.gov.on.ca/en/tax/ltt/
Mortgage Termination Fee
A mortgage termination fee, or discharge fee, is the price a seller may be liable for if they have a closed mortgage and would like to sell before the mortgage matures. However, if they transfer the mortgage to a new property, these fees can be avoided. Variable mortgage products typically have a penalty of 3 months interest only, whereas fixed mortgage products often use a Interest Rate Differential calculation for their penalty that differs from lender to lender.
Be sure to speak to one of our mortgage professionals for more details.