Closing Costs

What fees will you own on closing day?

Buying a home can be hectic. You’re coordinating meetings, arranging for financing and the house inspection, and making moving plans – all this and more on top of your usual responsibilities. It can seem like you’re being pulled in a million different directions as you approach closing day and prepare to move into your new house.

In all the commotion it can be easy to forget budgeting for closing costs. These are fees owed on, or by, closing day that must be paid for your house purchase to be complete. Most of these fees are in addition to, and separate from, your mortgage loan (although some closing costs can be tacked onto your mortgage).

Closing costs can amount to a significant expense. Experts recommend budgeting at least 1.5% of the purchase price toward closing costs.

To give you a rough idea of what to expect, some of the most common expenses are listed below. These expenses are approximations only – they may vary by region, and are prone to frequent changes. Your Royal LePage real estate agent can help you further define more precise numbers.

Mortgage application – Typically not more than several hundred dollars. Due at the time of application.

House inspection (optional) – Approximately $350 and up. Due at the time of application.

Legal fees (including disbursements) – Expect to pay between $1000 and $2500 for a real estate lawyer, but cost varies depending on the extent of services provided. Due at closing.

Land Transfer Tax – Varies by province and sometimes by municipality or city.

Various registration fees (including deed /mortgage and governmental) – Several hundred dollars and up. Due at closing.

Interest adjustment – Varies with mortgage amount and terms. Due at closing.

Property tax/pre-paid utilities adjustments – Varies widely, but often under $1,000. Due at closing.

Mortgage default insurance – 1.00% to 3.25% of the principal amount of your mortgage. Due at closing.

Property/fire insurance – Expect to pay $300 to $700 for most properties, but it varies according to coverage level, region and property type. Due by closing.

Title insurance – Around $350. Due by closing.

Estoppel certificate (for condos only) – Around $100. Due by closing.

Don’t forget to budget extra funds for expenses related to moving (moving company, utility hookups) and regular housing costs once you own the home (utility bills, maintenance).

So, you search high and low and finally settle on the house you want to call home. You sit down with your real estate agent and hammer out the fine points of the deal. The offer to purchase is typed, your agent presents your offer to the seller, and... oh no! Rejected! The nerve!

Try to keep your emotions in check. In fact, it is rare for any first offer to be accepted in its entirety. Upon receiving your offer, the seller is faced with three options:

Closing the Purchase

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