Closing costs are the final, often unexpected, expenses that come due on the day you take possession of your home. Many buyers are surprised to discover that, beyond the down payment, they need additional funds to cover a wide range of fees. According to CMHC and Sagen (formerly Genworth Financial), it’s recommended to have at least 1.5% of the purchase price set aside for closing costs—but planning for 2.5% is a safer bet, especially as costs vary by location and property type.
Planning for Closing Costs: A Must-Read for Home Buyers
Below is a breakdown of common closing costs. These may vary based on your unique situation and location, so always consult with your lawyer for a personalized estimate:
- Appraisal Fee (Typically Required for New Homes): Lenders may require an appraisal to confirm the market value, costing between $100–$300.
- Home Inspection Fee (Common for Resale Homes): Inspections typically range from $300–$400 and offer peace of mind for buyers.
- Fire Insurance: Required by lenders, costs typically fall between $250–$600 per year depending on the property and coverage.
- Provincial Sales Tax on Mortgage Insurance: If your mortgage is insured through CMHC or Sagen, the insurance premium may be added to the mortgage, but the tax must be paid at closing.
- Land Survey or Title Insurance: A survey can cost $600–$900, while title insurance is often a more affordable alternative.
- Legal Fees and Disbursements: Lawyers charge for preparing your documents, title search, and closing services. Additional disbursements may include registrations and third-party expenses.
- Land Transfer Tax: Varies by province and is based on the purchase price. First-time buyers may be eligible for rebates.
- New Home Warranty (For New Builds): In Ontario, builders must register homes under Tarion Warranty Corporation. Coverage fees are around $600 and protect against builder defaults or defects.
- HST (on New Homes Only): Check whether HST is included in the purchase price. This affects whether you or the builder pays it and who receives any eligible rebates.
- Closing Adjustments: Buyers may need to reimburse sellers for prepaid expenses like property taxes or utilities prorated to the closing date.
Let Kristen Help Simplify Your Closing Process
Navigating closing costs doesn’t have to be overwhelming. Let Kristen Desrochers and her dedicated real estate team help guide you through every detail of the home buying journey—including what to expect financially at closing. Visit our Home Buyers Resources to learn more and get started with expert support today.