What Are The Costs Associated With Buying A House in Ontario? (Fees & Expenses)
Written By Liam Swords
When purchasing a home, it’s crucial to understand the costs associated with buying a house. For buyers in Ontario, these include upfront expenses, closing fees, and ongoing monthly costs.
Knowing these details can save you from unexpected surprises and help you budget effectively. In this article, I’ll outline what you can expect to pay in fees when buying a house in Ontario.
What Are The Costs Associated with Buying a House in Ontario?
When buying a home, you’re not just paying for the property. From deposits to inspections, lawyer fees to land transfer taxes, there are many costs to consider when buying a house.
These additional house costs can be categorized into three main groups: upfront costs, closing costs, and monthly costs to maintain your new property. Understanding what costs are associated with buying a home will help you budget effectively and avoid financial surprises.
1. Cash Required at Time of Offer
The first set of expenses comes at the time of making an offer on a house. These costs include:
- Deposit: Typically ranges from $5,000 to $25,000. This is submitted with your offer to secure the property.
- Home Inspection: Costs between $250 and $750. For rural properties, additional inspections for septic and wells may range from $500 to $1,500.
Understanding these costs helps you plan your finances. For example, knowing how to check the market value of a house ensures your offer aligns with the property’s worth, avoiding overpayment.
2. Closing Costs
Closing costs in Ontario are fees incurred on the day you receive the keys. These include:
- Down Payment: Generally 10% to 20% of the purchase price. If the home costs $800,000, a 20% down payment would be $160,000.
- Mortgage Appraisal Fee: $400 to $650 to confirm the home’s value for your lender.
- Legal Fees: Lawyers charge $2,000 to $4,500, covering fees and disbursements for reviewing your agreement and preparing the needed real estate documents.
- Land Transfer Tax: Calculated as a percentage of the purchase price. For an $800,000 property, this tax could be around $12,000 but is reduced by $4,000 for first-time buyers due to rebates.
- Moving Costs: Depending on how far away you’re moving from, costs range from $2,000 for local moves to significantly more for long-distance relocations.
These expenses vary but are significant in calculating costs of buying a home.
3. Monthly Expenses When Buying a House
Monthly expenses start as soon as you’ve moved in. They include:
- Utilities: Heating costs $50 to $250, while the average hydro bill for electricity ranges from $40 to $200.
- Property Taxes: Usually 1% of the home’s purchase price, divided into monthly payments. For example, if you purchase a $750,000 property, the monthly property taxes would be around $650-700 a month.
- Repairs and Maintenance: Budget $100 to $500 per month for upkeep, or higher for older properties.
- Condo Fees: If applicable, these cover maintenance and amenities, reducing your repair costs.
In addition to these one-time and recurring costs, it’s helpful to understand the cost of living in Ottawa, including things like transportation, groceries, and other everyday expenses. This will give you a clearer picture of your financial commitments as a homeowner.
Example of the Fees When Buying a House in Ontario
To illustrate, let’s look at a real-world example of an $800,000 home purchased in Ottawa:
At Time of Offer:
- Deposit: $20,000
- Home Inspection: $540
Total: $20,540
On Closing Day:
- Down Payment (20% purchase price): $160,000
- Mortgage Appraisal Fee: $637
- Lawyer Fees: $2,397 (including disbursements)
- Land Transfer Tax: Initially $12,000 but reduced to $8,475 after first-time buyer rebate
- Moving Costs: $5,000
Total: $176,509
Monthly Costs:
- Mortgage Payment (4.39% interest, 5-year fixed mortgage, 25-year amortization): $3,503/month
- Property Taxes: $391/month
- Utilities: $155 ($55 for heat, $65 for hydro and water, and $35 sewer repairs and upkeep)
- Repairs and Maintenance: $500/month (in this example, the home was built in the 70s, so these buyers expected regular upkeep).
Monthly Total: $4,549
This example provides clarity on the additional costs when buying a home, allowing you to prepare financially.
What Are the Hidden Costs of Buying a House in Ontario?
Beyond the expected expenses, there are often extra costs when buying a house that might catch buyers off guard:
- Title Insurance: Title insurance is optional, but protects against title disputes. It is usually a one-time cost of around $300 to $500.
- Mortgage Insurance: Required if your down payment is less than 20%, which can add hundreds to your budget per year.
- Home Insurance: Home insurance is not legally required in Ontario, but recommended to protect your investment. Home insurance averages around $1,200 annually.
- Furniture and Appliances: New homes often require additional investments in furnishing and upgrading appliances.
Awareness of these hidden costs ensures that you’re not scrambling for funds at the last minute.
So How Much Does it Cost to Buy a House In Ontario?
How much money do you need to buy a house in Ontario? Taking our real-life example from above, our buyers needed $197,049 to purchase a home ($20,540 at time of offer and another $176,509 for closing costs). Additionally, they faced ongoing monthly expenses of $4,549.
Keep in mind that the cost of buying a house depends on the property’s price, location, and your financial plan. For instance, how much it costs to buy a house in Ontario differs significantly from how it costs to buy a house in Toronto, where prices are higher.
In Ontario, the cost of a house varies, but calculating all costs involved in buying a house, including taxes, legal fees, and insurance, ensures a realistic budget. For instance, first-time buyers benefit from rebates, lowering the costs of buying a house in Ontario.
Final Thoughts on What Fees are Associated with Buying a House In Ontario
Hopefully this article has helped you understand all the expenses involved in buying a house. From deposits and inspections to closing fees and monthly costs, you should consider every item. Working with an experienced Ottawa real estate agent can ensure you’re well-prepared.
At Liam Swords TEAM, we’re dedicated to helping you find your dream home in Ottawa. With our in-depth knowledge of the city and its neighbourhoods, we’ll guide you to the perfect property that fits your budget and complements your lifestyle.
Start your journey today and explore homes for sale in Ottawa with confidence!
Liam Swords is an accomplished real estate agent in Ottawa, having sold over 1,000 homes. As the team leader of Liam Swords Team, he combines extensive market knowledge with a commitment to client satisfaction.
