Your mortgage is just one of the many expenses when purchasing a home. There are also a number of closing costs you must pay upfront, usually before you move in. Closing costs are the legal and administrative fees and disbursements associated with buying your home. Combined together they can represent between 3% and 4% of the purchase price, and they will vary by province and city.

Appraisal Fee

Mortgage lenders require that a home is appraised before they will issue a mortgage to ensure they are not lending more than the property is actually worth. Fees range from $300 to $500.

GST/HST

It varies by province and type of home. In some provinces, you will pay GST on the purchase price of a newly constructed home. In B.C., Ontario, and the Atlantic provinces, you’ll pay an HST, consisting of GST and provincial sales tax.

Home Inspection Fee

Covers the cost of a professional inspection of your home and is generally up to $500 for most homes. Not required by most lenders but is generally a good idea for the buyer to identify any potential problems in advance.

Home Insurance

Your mortgage lender requires that you have insurance in effect to protect against fire and weather-related damage when you legally take possession of your new home.

Land Transfer Tax

Applicable in most provinces, it is usually a percentage of the purchase price. Some provinces may also charge tax on new construction.

Legal costs

Legal costs include fees for the professional services provided by your lawyer or notary, costs involved in conducting a title search, drafting the title deed and preparing the mortgage, as well as registration fees and other disbursements.

Mortgage default insurance

High-ratio mortgages (those with less than 20% down payment) require insurance against default. The cost is usually added to the mortgage, and ranges from 1.80% to 3.60% depending on the amount of your down payment.

Prepaid property taxes and/or utility bills

Any tax and utility costs that the seller has prepaid must be reimbursed by the purchaser – these are known as adjustments.

Additional costs after closing

Other costs that you should budget for include moving expenses, storage costs, utility hook-up fees, redirecting mail, new appliances, tools, painting and decorating. It is recommended that you set aside at least $1,000 to $2,000 for these expenses.

Source: CMLS Financial