Here’s how much first-time homebuyers can expect to pay in closing costs in Hamilton

Buying a home in Hamilton is already a challenge at a time when the average home price (all home types combined) has hit $617,496, according to recently released data from the Realtors Associa

Buying a home in Hamilton is already a challenge at a time when the average home price (all home types combined) has hit $617,496, according to recently released data from the Realtors Association of Hamilton-Burlington.

Inventory is low and demand is high, but there are other costs you might not be thinking about on your house hunt–especially closing costs. 

Real estate website and brokerage Zoocasa says that homebuyers who put down a minimum downpayment will have to pay quite a bit to cover all of their closing-related costs in most Ontario cities, and Hamilton buyers can expect to pay $38,643.

While that sounds hefty, it’s not as bad as other cities. Oakville residents can expect to pay a whopping $237,530 in closing costs–the highest on the list. Toronto residents can expect to pay $87,916, Burlington residents will pay about $73,314, and Milton residents will pay about $66,776.

A recent blog post by Zoocasa reminds homebuyers that a number of payments are required on closing day, including the down payment, PST on the mortgage loan insurance premium, land transfer tax, legal fees, title insurance and other miscellaneous costs.

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“As housing markets and home prices range widely across the province, so too does the amount buyers can expect to pay upon closing,” says Penelope Graham, managing editor, Zoocasa. 

“To find out how these costs range, Zoocasa compiled estimates based on average home prices in 25 major markets across the province. Calculations assume the minimum down payment is made (and includes the initial deposit amount), that all LTT rebates for first-time homebuyers have been applied, and that mortgage default insurance costs have been rolled into the mortgage, and hence do not need to be paid on closing day.”

As far as closing costs go, buyers must provide a minimum 5 per cent downpayment for homes priced at $500,000 and below, and 10 per cent for any portion of the purchase price between $500,000 and $999,999. Homes priced at $1 million or more require a minimum 20 per cent down payment. Homebuyers paying less than 20 per cent down on their home purchase are required to take out mortgage loan insurance, and a PST of 8 per cent is charged on this insurance coverage and is due at closing.

Home purchases in Ontario are also subject to a provincial land transfer tax (and Toronto has its own special city-specific tax that other municipalities do not have). The Ontario land transfer tax is calculated based on increments of the home’s purchase price.

According to the study, homebuyers can expect to pay the most on closing day for Oakville real estate, as the local average home price is comparatively higher than in other Ontario markets at $1,104,796, requiring the full 20 per cent down payment of $220,959. Although no mortgage loan insurance premium is required due to the 20 per cent minimum down payment, buyers will still pay $237,530 to close their home transaction.

The second most expensive market is Richmond Hill, where the average home price comes to $1,094,091. That requires a down payment of $218,818 and a final closing bill of $235,175. Vaughan ranks as the third most expensive for closing costs. The average home price also comes above $1 million at $1,054681, requiring a minimum 20 per cent down payment. Buyers can expect to pay a down payment of $210,936, leading to a total closing cost bill of $226,505.

In Hamilton, the average house price sits at $562,235 and the minimum downpayment needed is $31,224. The mortgage loan insurance premium sits at $21,240 and the PST is $1,699. Add in a land transfer tax of #3,720 and other costs totalling $2,000, and you need $38,643 to cover closing costs.

Average home prices for Jan 2020 were sourced from each city’s regional real estate board or and the Canadian Real Estate Association.