| Info Centre
- Land Transfer Taxes & CMHC:
 To
avoid closing cost surprises, buyers need to plan ahead. While the seller
bears most closing costs, there are a few items buyers need to be aware
of.
One is Canadian Mortgage & Housing Corporation insurance, which applies
to high-ratio mortgages. If your downpayment is less than 25% of the total
purchase price, your bank will want CMHC insurance on your mortgage. In
essence, CMHC insurance protects the bank from ever having to foreclose
on a property that is worth significantly less than it was mortgaged for.
An additional 2.5% fee will be added to the value of your mortgage to
accommodate this insurance. So when you're calculating your debt-load
ratio (which should, with mortgage, heat, taxes and all credit liabilities
included, total less than 42% of your income), remember to include this
fee.
A second closing cost is the Land Transfer tax, which requires cash and
will not be rolled into your mortgage.
In Ontario, here's what you can expect to pay:
Up to $55,000 X .5 % of total property value
From $55,000 to $250,000 X 1 % of total property value
From $250,000 to $400,000 X 1.5 % of total property value
From $400,000 up X 2 % of total property value
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