I get asked this question a lot by Buyers:  Which of the costs associated with a house purchase must be paid up front?

Deposit – [cash, with offer] –  The deposit [usually 5% cash] is paid to the Seller at the time the offer is accepted.  The deposit is put into a trust account (held by the Seller’s real estate brokerage or lawyer) and will not be touched until closing.  The deposit goes towards the price of the house and can be used as part of the down payment.

Land transfer tax – [paid in cash, on closing] – Land transfer tax is a big part of the price to be paid on the day of closing. It cannot be bundled with the mortgage.

Down payment – [paid in cash, on closing] – The buyer decides how much of their own money they will use for the purchase.  The remainder owed must be borrowed from a  lender (the mortgage). The minimum down payment is 5% (you can use the deposit).

Lawyer fees and Adjustments– [paid in cash, on closing] – Lawyer fees will be around $1000 plus other costs that are incurred by the lawyer (registration fees, courier costs, and title insurance).  There also may be some adjustments (money the seller paid in advance like property tax, utilities) that the buyer has to reimburse.

HST on New Homes – often this is paid by the Builder but sometimes the Buyer is surprised at closing! Check your contract.