When you sell a home, the sale price is not the same as the amount that reaches your bank account. Your lawyer will use the closing funds to pay the amounts that must be settled, then release the remaining proceeds to you.
For planning purposes, a useful starting formula is: sale price minus mortgage payout, agreed selling costs, legal costs, applicable adjustments and other property-specific obligations = estimated net proceeds.
1. Start With the Actual Selling Price
Your calculation should use the expected selling price—not simply the asking price. Before making plans based on your equity, establish a realistic value range using relevant recent sales and current competition.
2. Subtract Your Mortgage Payout
If the property has a mortgage or secured borrowing registered against it, your lawyer will obtain payout information and deal with the amounts that must be discharged on closing. Depending on your mortgage terms and what you do next, lender charges or prepayment costs may also apply. Ask your lender for a current estimate rather than assuming the balance shown in online banking is the final payout amount.
3. Account for Real Estate Remuneration and HST
Do not rely on a generic percentage when estimating this cost. Real estate remuneration is established in your listing agreement, and applicable HST should be included in your calculation. Use the actual terms you agree to for your property.
4. Include Legal and Closing Costs
Your real estate lawyer can provide the most reliable estimate of legal fees and disbursements for your transaction. The final statement of adjustments may also include items such as property taxes or condominium common expenses, depending on what has been paid and the closing date.
5. Consider Other Property-Specific Costs
- mortgage prepayment or discharge-related costs, if applicable;
- amounts required to clear registered liens or other obligations;
- moving and storage expenses;
- seller-paid preparation, repair or staging costs not otherwise included;
- bridge-financing costs if you are buying before sale proceeds are available; and
- tax consequences where applicable, particularly for properties that are not solely a principal residence.
Tax and legal treatment depends on the facts of the transaction. Consult your accountant and Ontario real estate lawyer where appropriate.
A Simple Example
Suppose a home sells for $1,000,000 and the seller has a $400,000 mortgage payout. That does not automatically mean the seller receives $600,000. From that amount, the seller still needs to account for the remuneration agreed in the listing agreement, HST where applicable, legal/closing costs and any other transaction-specific deductions or adjustments.
The safest approach is to build a seller net sheet using your actual mortgage information and agreed costs rather than a generic online percentage.
Start With a Realistic Home Value
Your net-proceeds estimate is only as useful as the selling-price assumption behind it. If you own in North York, Richmond Hill or Markham, I can review recent comparable sales and active competition to establish a more realistic starting range.
How Much Could You Net From Your Sale?
Request a complimentary home evaluation first. Once you have a realistic selling range, you can combine it with your mortgage payout and transaction-specific costs to make a much better estimate of what may be available for your next move.
This article provides general real estate information and is not legal, tax, accounting or mortgage advice. Obtain advice specific to your transaction from the appropriate professional.