What Are Closing Costs?

Closing Costs are a miscellaneous collection of fees and charges that a buyer of property must pay on or before closing of the transaction at the lawyer’s office.

Depending on the type of property and the nature of your deal these may include but are not limited to the items described below. Check with your Realtor to make sure you know what costs to expect when you buy a home.

  • Legal FeesL the fee for the lawyer’s time
  • Registry Fees: the cost of registering your mortgage and deed at the Registry Office, a division of the provincial government.
  • Appraisal Fees: the cost of an appraisal if required by your mortgage lender.
  • Survey Fees: the cost of a property survey if required by your mortgage lender.
  • Interest Adjustment: interest charged by your mortgage lender from the time the deal closes to the date of the first mortgage payment period.
  • Fuel Equalization: cost of furnace fuel left behind by the seller.
  • Fire Insurance: it will be a condition of your new mortgage that you prove you have Fire Insurance coverage
  • Property Taxes: for the balance of this year and, as well, the lender may require that you top up your property tax fund so that there are sufficient funds available to service the property taxes due for the next taxation year.
  • Land Transfer TaxDepending on which province you live in (Alberta, Saskatchewan or rural Nova Scotia are excluded), you could pay up to 2% of the purchase price. In PEI, this is a 1% tax levied on the purchase amount of your new home if and only if, you have lived in PEI less than 6 months or it is your second home. The tax is collected by your lawyer and he or she can explain the details to you.

How Much Will My Closing Costs Be?

Lenders will want you to prove that you have Closing Costs equal to 1.5% of the cost of your new property by showing the appropriate funds are in your bank account; however actual Closing Costs vary greatly from transaction to transaction and you should be prepared for costs of between $3,000 and $5,000. Your mortgage lender will help you estimate these costs.

When Do I have to pay Closing Costs?

Unless you have a very good relationship with your lawyer most of these costs must be paid on or before the day you close your deal, which is why they are called Closing Costs.

Ritchie Simpson is with CENTURY 21 Colonial Realty in Charlottetown, PEI.


  1. Aziz Yousef 07/28/2011 at 11:28 PM

    I am a Short Sale Specialist. Short Sale means a homeowner may be able to sell their home for less than what they owe the Lender. When lenders agree to do a short sale, it means the lender is accepting less than the total amount due. Not all lenders will accept short sales or discounted payoffs. The forgiven debt may be taxable income. The seller should discuss this matter with a tax accountant as there are situations where your income would not be taxed.

  2. Trouver un courtier immobilier 10/22/2011 at 9:11 AM

    Thnks, great post.

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