Closing Costs and Associated Home Buying Fees

Closing costs are legal or administrative fees you need to pay when closing your home. There are costs to keep in mind before closing, and after. The average closing costs are calculated by 3% to 4% of the home's purchase value.

Typical closing costs

Land transfer taxes, legal fees and title insurance/search fees are common but there are additonal costs depending on what type of home you buy, and where you're purchasing.

• Land transfer tax
• Legal fees
• Title insurance
• Title search fees
• PST on CMHC insurance
• Tarion warranty fees
• Land survey fee
• Appraisal fee
• Prepaid utilities / taxes (if applicable)
• HST on new home purchases

Land transfer tax (LTT)

These are calculated based on a percentage of the home's purchase price. Every province in Canada has an LTT except for Alberta and Sasketchewan. Alberta has a land transfer registration fee and Sasketchewan has a Land Titles fee.

Toronto has an additional municipal tax.

You can receive a land transfer tax rebate for both Toronto and Ontario, British Columbia and Prince Edward Island as a first-time home buyer.

Legal fees

Typically include the preparation and recording of official documents. Fees can vary greatly but often at an minimum of $500. It's recommended to shop around for a lawyer or law firm to negotiate price.

Title insurance and search fees

Protects against losses in an ownership dispute. There's a type for the homebuyer and a type for the lender. A title search is done to ensure that the title is free and clear of any liens.

Not everyone is required to have title insurance so it's important to discuss with your lawyer or notary to decide if it's necessary.

PST on Mortgage Default Insurance

If you're buying a home with less than a 20% down payment then you'll need to purchase mortgage default insurance from CMHC or Genworth. You need to pay provincial sales tax (PST) on the insurance premium in Ontario, Manitoba and Quebec.

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

Tarion Warranty Fees

Also known as Warranty Enrolment Fees; typically for new construction condos and homes, not resales. The builder usually pays this but may pass the costs to the buyer: $385 to $1500 depending on the home price.

Appraisal Fees

The lender typically pays for the appraisal costs in a new purchase but occasionally the homebuyer pays for it: $300-$400

Prepaid utilties and taxes

If the existing owner has paid for utilities and property taxes upfront, the difference would be passed to the home buyer. This may include home utilities, property taxes and property insurance.

GST or HST on new purchases

If you're buying a newly built property, you'll need to pay for federal goods and services tax (GST) or harmonized sales taxes (HST) for applicable provinces. If it's included in the sale price then it'll be included in your mortgage, otherwise you'll need to pay for it up front as part of your closing costs.

Other costs you might need to consider

These aren't necessarily closing costs but are things you need to keep in mind if applicable:

• Septic tank testing
• Water testing if there's a well
• Estoppel Certificate Fee (excluding Quebec) when buying a condo

At closing, the lawyer will recieve funds from your lender, and the downpayment from the home buyer. If there's a previous owner, the lawyer will pay the them and register the home in your name. As a new homeowner you'll receive the keys and a transaction report with all the relevant paperwork.

Closing costs calculator

Below is a basic calculator that determines the range of closing costs on 3%-4% of your home's value:

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