Real Estate

Closing costs on a pre-construction in Ottawa

  • Last Updated:
  • Jan 31st, 2020 4:12 pm
[OP]
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Mar 30, 2010
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Kagaaruk, NU

Closing costs on a pre-construction in Ottawa

Can someone give me an idea of how much I need to set aside for closing costs on a pre-construction home (three bedroom, one car garage detached for $550k) in Ottawa? Obviously doesn't have to be accurate, but I just want a ballpark figure so I can plan ahead.

The pre-construction would be on the east end of Ottawa, somewhere in the Orleans area. I'm also a first time home buyer.
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11 replies
Newbie
Dec 17, 2019
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When you sign your contract all of the closing costs should be listed which apply to you. I know usually it's combination of lawyer fees, pavement for driveway, city fees etc.
Deal Addict
Jan 15, 2017
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Some of the most common closing costs in Ottawa are:

Legal Fees: $750 and up
Disbursements: $475 and up
Title Insurance: varies as it depends on if you are getting a mortgage and the mortgage lender wants you to purchase it's title insurance budget $1200 and up
Land Transfer Tax: On $550,000 is $7,475 as a first time buyer you are eligible for a $4000 rebate so $3,475
Tarion Fee: Some builders have you pick up the Tarion fee: at $550,000 is approximately $1,025
Mortgage Default Insurance: If you are paying less than 20% down, you have to pay mortgage default insurance. In ON, you will pay PST on the premium at closing. This amount will depend on the size of your down payment
Pre-Paid Expenses: Varies. These are expenses that the builder has paid and you need to re-imburse for the time that you own the home
House Insurance: While not actually a closing cost, you will need to arrange house insurance and provide proof to your lawyer at closing if you are getting a mortgage

Also remember that almost all of these fees are subject to HST.
Jr. Member
Apr 25, 2019
187 posts
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Ontario
Side note: if you are not planning to live in the property and renting it out to a tenant, you have to pay HST (7.8% of purchase price) upfront at closing and get back max $24,000 from CRA with 1 year lease agreement (tenant).
[OP]
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Mar 30, 2010
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skeet50 wrote: Some of the most common closing costs in Ottawa are:

Legal Fees: $750 and up
Disbursements: $475 and up
Title Insurance: varies as it depends on if you are getting a mortgage and the mortgage lender wants you to purchase it's title insurance budget $1200 and up
Land Transfer Tax: On $550,000 is $7,475 as a first time buyer you are eligible for a $4000 rebate so $3,475
Tarion Fee: Some builders have you pick up the Tarion fee: at $550,000 is approximately $1,025
Mortgage Default Insurance: If you are paying less than 20% down, you have to pay mortgage default insurance. In ON, you will pay PST on the premium at closing. This amount will depend on the size of your down payment
Pre-Paid Expenses: Varies. These are expenses that the builder has paid and you need to re-imburse for the time that you own the home
House Insurance: While not actually a closing cost, you will need to arrange house insurance and provide proof to your lawyer at closing if you are getting a mortgage

Also remember that almost all of these fees are subject to HST.
That's nearly $12k in closing costs. Which of these things can be rolled into the mortgage? I know the PST on the mortgage insurance can't be, but what about the rest?

Also, what about levies? How much are they and can they also be rolled into the mortgage?
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Jan 15, 2017
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dc200 wrote: That's nearly $12k in closing costs. Which of these things can be rolled into the mortgage? I know the PST on the mortgage insurance can't be, but what about the rest?

Also, what about levies? How much are they and can they also be rolled into the mortgage?
None can be rolled into the mortgage, as your mortgage is qualified based on its Loan to Value of the house. Rolling these into your mortgage would change the Loan to Value. Don't know what levies you mention as I am not aware of any for Ottawa.

Edit to add: Also remember that you may need money for your upgrades on a pre-construction. Different builders have different policies with regards to upgrades, but most require a deposit on the upgrades at the time of selection with the remaining balance added to your final cost.
[OP]
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skeet50 wrote: None can be rolled into the mortgage, as your mortgage is qualified based on its Loan to Value of the house. Rolling these into your mortgage would change the Loan to Value. Don't know what levies you mention as I am not aware of any for Ottawa.

Edit to add: Also remember that you may need money for your upgrades on a pre-construction. Different builders have different policies with regards to upgrades, but most require a deposit on the upgrades at the time of selection with the remaining balance added to your final cost.
Upgrades are added to the total price of the home, correct? If that's the case, then I should be fine as long as I'm approved for a mortgage of that amount. With that said, I don't think I'm going to spend anything on upgrades unless I see something that's a necessity.

Regarding levies, Toronto has these and I thought maybe Ottawa may have them as well. Good to hear that this is not the case, but are there any other surprises I should account for? E.g. driveway paving, gas meter installation, water connections, etc?

Apologies if I'm asking silly questions; I'm new to all of this.
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Jul 4, 2004
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Property taxes were not mentioned but I believe they are paid in advance for the year by around June so if you take possession in the summer, you will also be charged for the taxes already paid (possibly around $2500 for 1/2 year of $5k/year taxes.
[OP]
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OK, how is this? I've come up with a list of all the costs (closing, taxes and everything else) that I'm going to have to keep in mind. Did I leave anything out?

These are all estimations for a 3 bedroom detached home, with added HST where applicable.

  • Legal: 847.5
  • Disbursements: 565
  • Title insurance: 1356
  • Land transfer tax: 4520
  • Tarion fee: 1157.12
  • Insurance tax: 1356
  • Property taxes: 5650
  • Gas/water/electrical connections???
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The property taxes that the builder paid will be a pre-paid expenses that you will need to re-imburse. The good news though is that the builder's property tax is low as it is based on the un-improved value of the land. The "normal" property tax for the improved value of the property - with the house built on it - will commence when you actually buy it.

A heads up - it can sometimes take the city some time (sometimes more than a year) to get the property on its tax system and actually bill you for your property taxes. It is to your benefit to follow up with the city and have this done quickly or you could be facing a property tax bill that exceeds one year or more. Either make sure you receive the bill in a timely manner or start putting away money each month for the eventual large bill.
Last edited by skeet50 on Jan 31st, 2020 4:13 pm, edited 1 time in total.
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Utility connections are not part of closing, just another cost to buying a house. With a new build, you will most likely need to consider appliances, window coverings, air conditioner, garage door opener, eavestrough, deck and fence after closing.
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dc200 wrote: Upgrades are added to the total price of the home, correct? If that's the case, then I should be fine as long as I'm approved for a mortgage of that amount. With that said, I don't think I'm going to spend anything on upgrades unless I see something that's a necessity.
...
100% of the cost of upgrades are rarely added to the total price of your home as most builders will require a deposit on the upgrades when you select them. The percentage amount of the deposit can vary from builder to builder. Some want 10%, others 50%. Make sure to ask before signing your purchase agreement as upgrades can significantly increase the total cost of the home.

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