Closing costs are the fees and expenses homebuyers pay at the end of the home-buying process. These costs can be a surprise for many first-time homebuyers, and they can add up to several thousands of dollars.
It is important to understand what closing costs are and why they are necessary to make informed decisions and avoid any surprises when purchasing a property.
In this article, we’ll break down what closing costs include, who pays them, and how much you can expect to pay.
Closing costs are the fees and expenses incurred by the buyer when a property is sold.
These costs can include a variety of items, such as:
- Legal fees: These are the fees charged by your lawyer or conveyancer for preparing and reviewing the legal documents related to the property purchase.
- Mortgage fees: These can include application fees, processing fees, and other charges associated with obtaining a mortgage.
- Property valuation fees: This is the cost of having a professional valuator determine the market value of the property you are buying.
- Stamp duty: This is a government tax on the transfer of property ownership, and the amount charged is based on the purchase price of the property.
- Title search fees: These are fees charged by the relevant government agency for searching the land registry to ensure that the property is free of any liens or encumbrances.
Generally, you will need to have a down payment, which is a percentage of the property’s purchase price.
The down payment amount can vary, but it is typically between 5% and 10% of the purchase price for a traditional mortgage, and you can pay more if you choose.
In addition to the down payment, you will also need to have money to cover closing costs, typically ranging from 2% to 7% of the property’s purchase price.
You can also check with your lender for an estimate of how much money you will need to close on a property purchase based on the specific details of your loan and the property you plan to purchase.
It is important to note that you may also need money in reserves after closing to cover any unexpected expenses or repair the property.
We have relationships with all the commercial banks and can assist you with prequalification, and can connect you with experienced and efficient mortgage specialists.