What fees will you owe on closing day?
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.
Mortgage application – Typically not more than several hundred dollars. Due at the time of application.
- House inspection (optional) – $200 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. Land Transfer Tax Calculator
- 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 – (Less than 20% down payment) 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 $200. Due by closing.
- Status 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).