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Closing Costs*

NOTE: Figures given are estimates only, and will vary according to property.

The initial costs of purchasing of a home can add up surprisingly quickly.

Be careful not to overlook sale closing costs and extras associated with your actual home purchase. For a resale home, these extras can easily add another 1.5% to 2% on top of the purchase price, so be sure to plan for these fees so that you're not caught by surprise. Each of these costs is detailed below.

Inspection Fee $300

You'll want to have an inspection performed by a professional building inspector before finalizing your offer to purchase. The inspection may bring to light areas where repairs or maintenance are required and will assure you that the house is structurally sound. Usually the inspector will provide you with a written report. If they don't, then ask for one.

Mortgage Application Fee $250 (many banks will waive this fee if you finance with them)

Some financial institutions charge a mortgage application fee to process your application. If your request for a mortgage is turned down, most will return the application fee to you. This application fee is also charged by some institutions each time your mortgage is renewed.

Appraisal Fee $250

The financial institution extending the mortgage will hire an appraiser to ensure that the property you are buying meets its criteria for a mortgage. You are generally responsible for the cost of the appraisal.

Legal Fees $800 

You will be required to retain a lawyer or notary to act for you in the purchase and mortgaging of the property, and you will be responsible for payment of the legal fees and disbursements. Fees for these services may vary significantly, so shop around before making your decision.

Deed Transfer Tax 1 1/2% of the purchase price

Sometimes known as the "Welcome Tax", most provinces levy a one-time tax based on a percentage of the purchase price of the property.

Other Closing Costs

When buying a resale home, the purchase price is always payable "subject to the usual adjustments" at closing.

This means that any amount that the seller has already prepaid will be adjusted so that the home buyer pays the excess amount back to the seller, and vice versa.

These adjustments can include:

• municipal property and school taxes
• monthly condominium maintenance fees
• first and last month's rental for rental properties that may be in the home
• utilities, such as water and fuel oil, including HST.
• Interest Adjustment Costs
  
  Interest adjustment dates can be a potential cash flow killer so please take note of your lender's policy.
  
  Most lenders expect the first mortgage payment one month after closing the purchase - however, if you close mid-month, some lenders expect the first payment at the beginning of the next month, two weeks before you would normally expect. Or they charge a pro-rated interest to make up the difference.
  
  When arranging your mortgage, ask how interest is collected to the interest adjustment date. By asking the right questions, you can avoid a cash flow crisis on closing.
  
  Property Insurance
  
  All homes must have adequate insurance coverage against fire, and other risks of loss, theft and liability. You may find that insurance on your new home is more costly than your previous residence. Your mortgage lender requires that you provide your lawyer or notary with proof that your insurance is in place by the closing date.
  
  Moving Costs
  
  Whether the move into your new home is a do-it-yourself affair or you hire movers, there will certainly be costs involved. If you plan to move during the peak spring/summer months, you should contract for service two to three months in advance if possible.
  
  Mortgage Premiums
  
  Depending on the type of mortgage you choose there could be additional costs, i.e., default insurance premiums (for low down payment mortgages), plus the cost of a survey of the property (many times this is not required by the bank). 
  

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*excerpts used in this page were taken from http://www.royalbank.ca/ and combined with local data.