Buying Real Estate? – Here’s A Closer Look at the Typical Costs Involved

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Muskoka Real Estate Matters – By Maggie Tomlinson

As we continue to enjoy great summer weather, it is my pleasure to share with the Muskokan readership a series of informative editorials with tips for buying and selling Muskoka real estate in 2021.  Last week we explored Proper Pricing, Preparation & Promotion For a Successful Sale. Now let’s take a closer look at the costs of buying that are often unanticipated by Buyers.

As a Real Estate Broker and Accredited Buyer’s Representative, I believe it is important to review the typical costs associated with buying a cottage or home at the earliest opportunity, so there are no surprises when the closing date arrives.

Deposit – Once an offer is accepted the Buyer will have 24 hours to submit a deposit, which is then held in trust until the closing date. Typically the deposit is between 5% and 10% of the sale price, and it is becoming increasingly common for the deposit funds to be wired by electronic transmission.

Home Inspection – Most buyers will include a requirement for home inspection in their offer to purchase. Your realtor will be able to recommend at least 3 qualified inspectors for you to choose from. Costs can vary depending on additional inspections for septic systems or wood burning appliances, approx $400 and up.

Mortgage Costs – Loan processing or bank appraisal fees are usually about $300. Mortgage insurance can also be required. Both costs are generally added to the mortgage amount, but it’s always best to confirm all fees directly with your lender.

Home Insurance – This cost can vary, but should be arranged several weeks prior to closing and include property, contents and liability. Discuss with your realtor any specific issues that will affect insurance coverage, such as old wiring, hydro service, oil tanks, other structural or material problems.

Title Insurance – Typically costs are between $300 and $500. A note of caution: title insurance does not correct title problems – it merely compensates the Buyer as a result of negative impact resulting from a title defect. Please consult with your lawyer.

Legal Fees – Your lawyer will charge you for services, including title searching, and for other expenses (disbursements) which can exceed $1,500 for most cottages & homes. Before retaining their services ask for a detailed breakdown of fees, disbursements and mortgage work.

Land Transfer Tax – In Muskoka, Buyers are required to pay LTT to the Province of Ontario only (there is no additional municipal tax) based on the following formula:

0.5% is paid on the first $55,000 of property value;

1.0% is paid on the next $195,000 of property value;

1.5% is paid on the next $150,000 of property value; with

2.0% paid on any value in excess of $400,000

* Amounts exceeding $2,000,000, where the land contains one or two single family residences: 2.5%

* First time Buyers may also be eligible for rebates.

Closing Adjustments – These costs may include the appropriate portion of prepayments made by the Seller for property taxes, and allowances for fuel such as propane or oil heating. Generally the tank(s) will be filled by the Seller on closing, and the Buyer will be charged for the cost of the full tank.

H.S.T. – Although HST is typically not charged on most resale cottages and homes, it is applicable to many of the transaction fees associated with the purchase, including brokerage and legal fees and home inspections. There are some exceptions to the rule, as well as rebates and exemptions that may apply, so it is recommended to seek advise from a professional, e.g. accountant, tax lawyer.

Have high expectations of your realtor, ask questions & be aware of additional costs to include in your budget.

Until next time – Happy August – and happy buying and selling!


Maggie Tomlinson is a professional Real Estate Broker with Chestnut Park Real Estate Limited, Brokerage, serving her clients from the heart of Muskoka. Maggie has successfully been actively marketing and selling cottages, homes, vacant land and commercial properties for years.
If you have any questions about buying or selling, your answers are always just a phone call or email away.
705.644.9283[email protected]

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