You’re almost there! The only thing standing between you and your new home is some signatures and a few more cheques, including one particularly sizable one: the land transfer tax. Not all municipalities charge this tax. Alberta, for instance, does not, and others (such as Ontario) offer rebates for first-time buyers. If you do have to pay it, though, the bill could be well into five figures depending on the value of your home — so, uh, make sure you still have some money left. (Here’s a land transfer tax calculator to help estimate your costs.) At this point, the real estate agents step out of the process, and all the work is done between your lawyer and the seller’s lawyer.
Closing day typically happens around 90 days after the deal is struck, but “nothing really happens for 80 of those days,” says Khalil Ebrahim, a veteran real estate agent and principal broker with Pine Financial (the Toronto-based company Wealthsimple recently partnered with to offer mortgages). This period of time is for you to lock in your financing and make arrangements to move. Then about 10 days before closing, you’ll visit your lawyer to sign your mortgage documents and fill out forms confirming your capacity to pay the agreed-upon sale price. You’ll also write a cheque for those land transfer fees, and your lawyer will release your security deposit to the seller’s lawyer.
In most cases, the closing process is fairly straightforward, but occasionally there are hitches. Maybe your mortgage financing falls through, or gets delayed, and you need short-term bridge financing to keep the deal together until you secure your loan. Perhaps your down payment savings are tangled in investments and cashing them in is taking longer than expected. Or maybe you spot a leak on the property, damage to the floor, or a door that won’t close during a final walkthrough 24 hours before the closing, and your agents need to negotiate the right incentive to keep the deal going.
If everything is in working order, though, the actual closing should only take a day and cost around $2,000 in fees. Your lawyers will get together and exchange documents. Many times neither you nor the seller will even be in the room. “More often than not,” Ebrahim says, “you’ll never know what each other looks like.”
One quick pro tip: try to avoid closing on a Friday. If anything goes wrong, you’re in for a stressful weekend before you can resolve it on Monday. Once all the i’s are dotted and the t’s are crossed, the seller’s lawyer will hand over the keys, and that’s that. The home is officially yours.
