Closing Costs and Associated Home Buying Fees

 Closing costs are essential fees and charges incurred during the process of purchasing a home, both before and after the closing. Typically, these costs amount to approximately 3% to 4% of the home's purchase price.

Typical Closing Costs

Land Transfer Tax (LTT):This tax is based on a percentage of the home's purchase price and is applicable in most provinces. Notably, Alberta and Saskatchewan have alternative fees.

Legal Fees:Legal fees cover the preparation and registration of legal documents. Costs can vary, but generally start around $500. It's advisable to shop around for legal services to find competitive pricing.

Title Insurance and Search Fees:Title insurance protects against ownership disputes, with separate policies available for buyers and lenders. A title search ensures the property's title is free from liens.

PST on Mortgage Default Insurance:If your down payment is less than 20%, you'll likely need mortgage default insurance from CMHC or Genworth. Ontario, Manitoba, and Quebec apply provincial sales tax (PST) to the insurance premium.

• Ontario: 8%
• Manitoba: 7%
• Quebec: 9.975%

Tarion Warranty Fees:These fees, also known as Warranty Enrolment Fees, are typically for new construction properties and can range from $385 to $1,500, depending on the home's price.

Appraisal Fees:While lenders often cover appraisal costs in new purchases, buyers occasionally incur this expense, typically ranging from $300 to $400.

Prepaid Utilities and Taxes:Buyers may need to reimburse the seller for prepaid utilities, property taxes, and insurance that extend beyond the closing date.

GST or HST on New Purchases:Newly built properties may require payment of federal Goods and Services Tax (GST) or Harmonized Sales Tax (HST), either included in the sale price or payable upfront as part of closing costs.

Other Considerations

These additional factors may not be direct closing costs but are important considerations:

• Septic tank and water testing
• Estoppel Certificate Fee (excluding Quebec) for condo purchases

Closing Process

At closing, your lawyer or notary will manage funds from your lender and your down payment. They'll settle outstanding amounts with the seller and register the property in your name. As a new homeowner, you'll receive keys and a comprehensive transaction report.

Closing Costs Calculator

Check out the basic calculation below to estimate closing costs, typically ranging from 3% to 4% of your home's value:

Home Value: $500,000 

Estimated Closing Costs: $15,000.00 to $20,000.00

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