> Mortgage Centre | What Closing Costs Can Entail

What Closing Costs Can Entail

If this is your first time buying a home, all the extra costs and fees may come as a bit of a shock. Most first-time homebuyers think that dealing with securing a mortgage is the first and only hurdle to surmount in their journey to homeownership. Mortgages can be quite daunting, and that is why having an experienced broker on your team can make that part of the process as seamless for you and your family as possible. But your broker will be with you throughout the entire process, from first application through to signing. That is why we at Mortgage West – The Mortgage Centre want you to know as much about any and all possible closing costs involved with buying a home. Even if this is not your first mortgage, it can be helpful to look over this list again, just to make sure you have everything accounted for.

Closing costs are any additional legal costs and administrative fees associated with purchasing a home that are not including in the selling price. They usually account for around 1-4% of the selling price, depending on the specifics of your particular home and region. Certain costs are covered in your mortgage, or by the lender. This includes mortgage default insurance. If you made a down payment of less than 20%, you are required in Canada to buy mortgage default insurance, otherwise known as Canada Mortgage and Housing Corporation (CMHC) Insurance. This will be included in your monthly mortgage payments. It is different from other closing costs, as it is not paid entirely upon closing. The costs, incurred by the buyer, which must be paid in total once the house has been paid and signed for, include:

  • Legal Fees: A minimum of $500 plus relevant taxes to cover the preparation of all necessary legal documents
  • Title Insurance: Most lenders require title insurance, which protects against possible future ownership disputes. Title insurance can be purchased through a notary and costs around $300.
  • Land Transfer Tax: The amount to be paid varies depending on your province. The Land Transfer Tax is calculated as a percentage of the total cost of the home.
  • CMHC Provincial Sales Tax: Again, this cost varies depending on the GST/HST in your province. The total cost of the CMHC insurance is distributed over the course of your entire mortgage but the GST/HST needs to be paid in full upon signing.
  • Septic Tank and Water Test: If your new home has a septic tank or a well, you will need to pay the cost of the initial quality test. You may be able to negotiate this with the previous owner.
  • Estoppel Certificate Fee: In all provinces except Quebec, you may need to pay this additional fee of up to $100 if you are buying a condo.

As with everything involved in buying a home, having a well informed and expert team on your side makes all parts of this journey simpler and can give you ease of mind. For more information about closing costs, or to find the best mortgage for you, please contact Rose Blankenagel at Mortgage West – The Mortgage Centre.