Closing Costs

The one-time fees beyond your down payment needed to complete a home purchase, often 1.5% to 4% of the price.

Closing costs are the one-time fees you pay to complete a home purchase, on top of your down payment. You usually pay them by the time the sale is completed. The Financial Consumer Agency of Canada suggests budgeting between 1.5% and 4% of the home's purchase price.

In many provinces, a large item is the land transfer or property transfer tax, usually calculated as a percentage of the price. Ontario uses rates of 0.5% to 2.5% depending on the price, and Toronto adds its own municipal tax. Buyers in some provinces pay a land registration fee instead.

Professional fees come next. Legal or notary fees are paid when the sale is completed, and CMHC puts them at a minimum of $500. A home inspection reports on the condition of the home. Your lender may require an appraisal at your expense. Title insurance, often suggested by your lender or lawyer, covers losses from problems with ownership of the property.

Adjustments reimburse the seller for property taxes or utility bills they prepaid past the closing date. If you need mortgage loan insurance, you can usually add the premium to the mortgage or pay it in full at closing. Moving costs, utility hook-ups and home insurance are also worth budgeting for.

Buyers who budget only for the down payment can be caught short on closing day. Build an estimate early, before you set your maximum price. Ask your lawyer or notary for a written quote of fees and disbursements before your offer becomes firm. First-time buyers may cut the largest line through land transfer tax refunds and exemptions, such as Ontario's refund of up to $4,000.

General information only, not legal, tax, or financial advice. Rules change and vary by province; confirm the current details with the relevant authority before you rely on them.