Understanding Closing Costs in Canada: What Homebuyers Need to Know

When buying a home in Canada, most people focus on the purchase price and their mortgage approval. But there’s another important expense to prepare for: closing costs. These are additional fees and expenses that must be paid on top of your down payment when finalizing your home purchase. As a mortgage broker, I often remind clients that understanding these costs upfront can save a lot of stress later.

What Are Closing Costs?
​Closing costs cover various legal, administrative, and financial requirements associated with transferring property ownership. While these costs vary depending on the province, type of property, and price, they typically range from 1.5% to 3% of the home’s purchase price.
Common Closing Costs in Canada

1. Land Transfer Tax (LTT):
   This is the largest closing cost for most buyers. Provinces—and in some cases, municipalities—charge LTT, which is calculated as a percentage of the home’s price.  .
2. Legal Fees:
   You’ll need a real estate lawyer to handle the transfer of ownership, review the purchase agreement, and register your mortgage. Legal fees typically range from $800 to $2,000 when including all of the extras that get tacked on.
3. Home Inspection Fees:
   If you opt for a home inspection, expect to pay $300 to $500. While optional, inspections can save you from unexpected repair costs after you move in.
4. Title Insurance:
   Title insurance protects against potential disputes or claims related to your property title. This one-time cost is usually between $300 and $600. This is mandatory with lenders in Canada.
5. Adjustment Costs:
   These are reimbursements to the seller for property taxes, utilities, or condo fees they’ve prepaid beyond your closing date.

Budgeting for Closing Costs
Lenders often require proof that you can cover your closing costs, so it’s essential to save for these alongside your down payment. A good rule of thumb is to set aside 3% to 4% of the home’s purchase price to cover these expenses.
If you’re unsure about what closing costs to expect or how to plan for them, reach out to a mortgage broker. We’re here to help you navigate every step of the homebuying process, ensuring no surprises on closing day!
Ready to take the next step? Contact me to get started on your homebuying journey!