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Closing Costs

Your mortgage isn't the only expense when buying a home. There are also closing costs that could include appraisal fees, lawyer's fees, insurance and more. On average your combined closing costs represent between 1% and 3% of the purchase price. These will vary by province and city, and are often linked to the price of the home. Your mortgage broker, lawyer, or real estate agent can help you estimate them.

• Land Survey Fee or Title Insurance - The lender usually requires a recent survey of the property or title insurance. In Canada, title fraud has become a major problem. Title Insurance is the only way to protect you and your property from this risk. The insurance costs approximately $165 to $225 and is a one-time payment.

• Fire Insurance - Mortgage lenders want you to protect your home and their mortgage collateral against fire and weather related damage so it's necessary to purchase fire insurance. This can cost up to $800 annually.

• Appraisal Fee - The cost for an appraisal to determine the value of the property can range from $100 to $500 depending on the type of appraisal required and location of the property. Your mortgage lender may require an appraisal to determine whether the selling price is reasonable for that market. If your mortgage is high ratio, insured by CMHC or Genworth, they will pay this fee for you.

• Home Inspection Fee - This covers the cost of a professional inspection of your home. It is recommended before finalizing an offer to purchase because it may reveal areas where repairs are required. A home inspection can cost $150 to $500.

• Legal Fees - Legal fees include fees for the professional services provided by your lawyer or notary, costs involved in conducting a title search, drafting the title deed and preparing the mortgage, as well as registration fees and other disbursements. Legal fees typically start at $400 and go up from there.

• Closing Adjustments - The seller may have prepaid some bills before the closing date, which you will have to cover. All taxes, utility bills, and other charges incurred after the closing date become your responsibility. These costs can vary.

• Land Transfer Tax- This tax is applicable in most provinces and is usually a percentage of the purchase price from 0.5% to 3.0%. Not applicable in Alberta or Saskatchewan.

• GST - You pay GST only on the purchase price of a newly constructed home.

• Estoppel Certificate- This is only required if you are purchasing a condo. It outlines a condominium corporation's financial and legal state of affairs. Approximate cost $100.

• Tax Adjustment - The taxes on property will be adjusted as of the possession date, so they are shared between the buyer and the seller.  If the seller has already paid them with a closing after June 30^th as buyer, you must come up with your share in one lump sum.  This can add an extra $1000 to $2000 to the cost of your purchase.

• Tax Pre-Payment - You are buying your home prior to June 30^th and so the taxes aren't paid.  You get a nice tax adjustment, but your mortgage company wants you to pay the entire year up front.  You can plan on an extra few thousand, depending on your annual taxes.  Better yet, ask your realtor or mortgage broker if the lender follows this practice.

• New Title Registration - Information Services Corporation charges .3% of the value of the property as the cost of registration for your new property.  Cost depends on the value of property. For a $150,000 property, it will be $450.  ISC will also charge you for title applications ($35 per title) and title searches ($10 per title) and tile prints ($15 per title).

• New Mortgage Registration - ISC charges $150 for the registration of a mortgage.