Closing Costs On Home Purchase in Canada

When you are ready to purchase your home it is important to be aware that it will cost you some money to complete the deal.  There is nothing worse than going through the entire process and finding out that the costs of completing the transaction are higher than you thought. 

 

Home Inspection Fee

Typically a condition included in your Offer to Purchase.  You or your realtor will hire a professional home inspector and they will give you a report detailing the condition of your home.

Typically costs under $500 but can save you in the long run since the inspector’s analysis may uncover fundamental deficiencies in the home (cracked foundation, leaky roof, etc) that could cost you thousands.  Better to know upfront.

Deposit

This amount is eventually included in your down payment. It is included in your offer to purchase and held in trust at your realtor’s office until your offer is accepted.  If it is accepted, the deposit, as mentioned, is included in your down payment.  If your offer is rejected, you get the deposit back.  Deposits are typically 5% of the offered purchase price.

Mortgage Default Insurance

Typically added to your total mortgage amount and amortized over the life of your mortgage so it is not an upfront closing cost.  I mention it however, because it can be expensive.  If you are purchasing a home and plan to put down less than 20%, you will have to pay this mortgage default insurance premium.  This insurance PROTECTS THE LENDER should you default on your mortgage payments.

Land Transfer Tax

This tax is calculated differently province to province, is a percentage of your home purchase price and must be paid upon closing.

Legal Fees

Bank on paying at least $500 (plus GST/HST)

Title Insurance

Title insurance protects you and your lender in case of losses resulting from property ownership disputes.  Most lenders require this insurance as a condition of financing and it can be purchased through your lawyer/notary for around $100 – $300.

PST on Mortgage Default Insurance

Although your mortgage default insurance is included in your mortgage and amortized over the life of your mortgage, the PST on the insurance is an upfront closing cost.

Other Possible Closing Costs

• Septic tank tests

• Water Tests – well water quality and adequate supply

• Estoppel Certificate Fee – Applicable if purchasing a condominium or strata unit – Approximately $100

•    Provide your down payment less deposit to your lawyer/notary.
•    Your lawyer pays the previous owner, registers your new home in your name, and delivers to you the deed and keys.

Other Closing Cost Considerations

Property Insurance – replaces home and contents

Utility Bills – prepaid costs such as property taxes and utilities may have to be reimbursed to the previous owner

Property taxes – a percentage of your home value, paid yearly or monthly to the local municipality or your lender

Closing Day Events

•    Lender will provide mortgage funds to your lawyer/notary.

•    Provide your down payment less deposit to your lawyer/notary. •    Your lawyer pays the previous owner, registers your new home in your name, and delivers to you the deed and keys.