Closing Costs

What are Closing Costs?

Closing costs are the fees paid at the closing of a real estate transaction. While the mortgage and down payment will cover the purchase price, there are other expenses to consider as well. These are normally 1.5-2% of your purchase price.

Legal Fees & Miscellaneous Expenses- $1000 but will vary based on province. These are fees paid to the lawyer for his legal work throughout the purchase.

Land Transfer Tax- Varies based on Province. It is charged whenever ownership of the property changes hands and is paid to the Land Titles Office. 

No tax on the first $30,000 of the purchase price.

$30,001 - $90,000.................... 0.5%

$90,001 - $150,000................. 1%

$150,001 - $200,000............... 1.5%

Over $200,000.......................... 2%

Adjustments for Interest- $100-$1000. You will need to pay interest on any gap between the closing date of the purchase and the first payment date of the mortgage.

Property Tax and Utility Adjustments - $400-$500. Any prepaid taxes or utilities by the seller will need to be reimbursed. The purchaser is only responsible for the portion of the year that they own the home.

Title Insurance- $250. Title insurance covers problems that may arise- encroachments, liens against the property, title fraud, undischarged mortgages are some examples. This is an optional cost that will be presented to you by your lawyer.

GST/HST when applicable- 5% of Purchase Price (GST) New home sales are applicable to GST, unless they are exempt. Resale homes are not GST applicable.

Other Expenses to consider when purchasing a home-

Appraisal/Valuation Fees $150-200: Your lender may require an appraisal to determine the property lending value; this value may or may not be the purchase price.

Home Inspection Fees - $400-$750. A Home Inspector will evaluate structure and systems within the home, and provide a written report. Cost of an inspection will vary among inspectors and the additional services they may provide.

Property Survey- $700 & up. A property survey shows the boundaries and measurements of the land/property indicating the lot size, position of major structures, and will include right-of ways, easements and encroachments.

Insurance costs for high-ratio mortgage- If your down payment is less than 20%, you will pay a one time insurance premium. This amount can be added to the mortgage or be paid for in full upon closing.

Home Insurance - Purchase Home Insurance to protect your home and its contents from theft and unforeseen events.

Mortgage Life Insurance - Mortgage Life Insurance is a form of insurance specifically designed to protect a repayment mortgage.

A great resource for any first time homebuyer, which served as a great reference when writing this blog.


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