Closing Cost in Canada
What Are Closing Costs ?
Closing costs are the fees associated with finalizing a home purchase in Canada. They typically range from 1.5% to 4% of the home’s purchase price and are paid at closing.
Common Closing Costs for Buyers in Canada:
Land Transfer Tax: A tax levied by the province or municipality based on the home's purchase price. Rates vary by location (e.g., Ontario’s tax can range from 0.5% to 2.0%).
Legal Fees: Costs for hiring a lawyer to handle the closing process, usually around $500-$1,500.
Home Inspection: Typically $300-$500 for a professional inspection to check the home's condition.
Title Insurance: Protects against any title defects or legal issues, typically $150-$300.
Appraisal Fee: If required by the lender, this can cost $300-$500.
Survey Fee: A survey of the property may be required by the lender or municipality, costing $300-$1,000.
Mortgage Default Insurance: If your down payment is less than 20%, you’ll need mortgage insurance (e.g., from CMHC), which is added to your mortgage amount.
Property Insurance: The first year’s homeowner’s insurance is usually due at closing.
Prepaid Property Taxes & Utilities: Depending on the timing, you may need to reimburse the seller for prepaid property taxes or utilities.
Who Pays Closing Costs?
Buyers generally pay most closing costs, though in some cases, the seller might cover certain expenses (e.g., repairs or part of the land transfer tax) as part of the negotiation.
How to Reduce Closing Costs:
Shop Around: Compare rates for legal fees, title insurance, and mortgage insurance.
Negotiate: You may be able to negotiate some fees with your lawyer or lender.
Look for Rebates: Some provinces (like Ontario) offer first-time homebuyer rebates on land transfer taxes.
