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How To Buy A Home In Canada: Understanding Closing Costs

Buying a house requires a lot more than you may think; it involves searching for a house, planning to save for the down payment, find a good broker, secure a mortgage, and in the end, finalize the deal. Apart from all these things, there is one more crucial element that needs to be taken care of. This element is known as closing costs. This article will cover all the different expenses related to closing a deal on your house. 

What are the Closing Costs? 

The chances are high that people buying their first house may not know about the closing costs charge or may underestimate them, but that can create a lot of consequences. Typically, closing costs are related to legal fees, land transfer, registration fees, mortgage expenses, title insurance, etc. These can range from around 3 percent to 4 percent on the total purchase value of the house. Shortly, we will understand the calculation in detail. 

For a smooth experience, cater to the following closing expenses before you proceed to buy a house. 

Certificate of Location/ Land Survey Fee 

The certificate of location or land survey fee comes in handy before making the final call on a mortgage loan. This can cost around $1000 to $2000 based on your property type and size. If the seller of the house fails to fulfill this responsibility, you may have to look after it. 

Property Evaluation

Getting the house you want to be evaluated is a big must! It helps you recognize the price you are paying is not more than the current market value. It saves you from paying more money than you should. This cost may be around $300 and is based on your property type. 

The Legal Expenses

Legal expenses are very common and include fees for lawyers like title search, title deed drafting, mortgage preparation, etc. It would cost you around $500 excluding the GST or HST. 

The Cost of Title Insurance

Title insurance helps you against frauds. In this, you are protected from any damage or fake information related to the property you purchase. This cost amounts to around $400.

Taxes Related to Municipality and Province

This closing cost is calculated very differently depending upon the province or city you are buying a house in. For example, if you are buying a house in Toronto, you will have to pay this tax twice, to the province as well as the municipality. While for other cities of Ontario, it is just applied at a province level.

This tax is also known as property transfer tax, land transfer tax, registration fees for land, tariff, or deed registration fees. Mostly, it is charged on resale homes. 

Property or Fire Insurance

For this closing cost, you can consult a lawyer to help you calculate the approx charges. Ideally, your insurance should cover the replacement cost in case of fire or any other damage. Also, you have to make sure that this insurance policy is in effect when you close the deal. I suggest you also have insurance for your home belongings like jewelry, clothes, furniture, etc. in case of damage, theft, or any kind of loss. 

The cost of this is based on the insurance coverage you opt for and the discount. You can choose to pay installments, monthly, quarterly, or annually.

Prepaid Bills and Taxes

There can be cases that the house owner you bought the house from has paid the taxes, utility bills, or any other kind of charges in advance. Thus, you are responsible to be reimbursed the same. 

Charges for Home Inspection

A home inspection is needed and helpful for you to know if the house you are buying has a good condition or not. You can decide a fair price based on this. The estimated closing cost for this is around $500. 

Fees for Inspecting Water Quality

Water quality would help you to know that the house that you’re buying has good water quality. It would also assist you to know if it has any kind of chemicals or is harmful to your health.

Mortgage Default Insurance

This is the main requirement if you are buying a house in Canada. If your down payment amount is less than 20 percent, you are liable to buy mortgage insurance. This will be added when you finalize the deal. The charges on mortgage insurance vary between 0.6 percent to 6.5 percent of the total amount of loan.

Changes for Estoppel Certificate

This is also a major requirement if you are buying a Condo house in any province of Canada except Quebec. This certificate has information regarding the financial statements of your Condo house, the reserved fund that you have kept with them, and other charges that you are liable to pay. This is needed by the lawyer while closing the deal on the house. This will cost you around $100.

GST or HST Charges

You are liable to pay GST or HST when you buy a new home. If you are buying a refurbished house you are in need to pay this fee. Though for first-time home buyers, there are rebates given by the provinces. For that, kindly check the websites of Service Canada or Canada Revenue Agency.

Read: How to Open A CRA Account? (Updated 2022)

Optional Charges

1. Moving Out Charges

This is one of the optional costs that you can save if you are willing to move your luggage on your own without the help of Packers and Movers. If you are opting for this service you can expect around $2,000 of cost.

2. Mortgage Payment Protection

This cost is also optional and you can choose not to buy it. The purpose of mortgage payment protection is to help you fulfill your financial liability of paying the mortgage on time. It will help and protect your family in case you fall ill, lose your job, or on your unfortunate demise.

3. Other Expenses

This cost includes various kinds of small expenses like buying new tools, painting and decorating your house, cleaning any supplies, buying furniture, etc. This would cost you around $1000 to $2000 based on your requirements.

How Much to Expect for Closing Costs?

  • Closing costs depend on a few things like, 
  • Purchase Price
  • The Province and City You Choose
  • The Down Payment Amount
  • Type of Property You Buy

Let me show you an example, I have used the Closing Costs Calculator by WOWA.

City /


First Time Home BuyerHouse ValueDown Payment in %Down Payment AmountHouse Type Closing Cost
TorontoYes$600,00020$120,000Town House$10,375
TorontoNo$600,00015$90,000Detached House$20,091
Quebec CityYes$350,00015$52,500Detached House$6,497
British ColumbiaYes$400,00020$80,000Condo$1,900
British ColumbiaNo $400,00020$80,000Detached House$8,000

As a first-time homebuyer in Toronto, if you pay a down payment of 20 percent for a detached house, you will pay the following in closing costs. 

Land Transfer Fees: $8,475

Legal Fees: $900

Home Inspection: $500

Title Insurance: $400

Government Registration Charges: $200

While if we see a condo house as first time home buyer in British Columbia in the table above, the closing costs would look like this:

Land Transfer Fees: 0

Legal Fees: $900

Home Inspection: $500

Title Insurance: $200

Government Registration Charges: $200

Estoppel Charges: $100

There would be no estoppel charges if you are buying a detached house, it applies only to condos and townhouses. 

Closing Cost for a Non-Resident

These are the charges that would apply if you are a Canadian resident, if you have not got your residential or citizenship status, house buying closing costs would cost you a lot. See the example below for the Quebec example given in the table, in the case of a nonresident. 

Closing Costs: $58,997

Land Transfer Fees: $3,666

Legal Fees: $900

CMHC Insruance: $831

Home Inspection: $500

Title Insurance: $400

Government Registration Charges: $200

Non-Resident Speculation Tax: $52,500

As a nonresident, buying a house in Canada’s top cities like Toronto would be even costlier. For the condo house example, it would cost an individual a whopping $110,189. 

Devanshee Dave

Devanshee is a staff writer at She is a finance enthusiast and has completed her Master’s degree in Mass Communication & Journalism. She has worked as a journalist in a local business newspaper, multiple start-ups as well as finance and economy-related online media houses.

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