Closing Costs in 2018: What You Need to Know

Your long journey is over. You found the perfect home. You sold your old home with the help of a beautiful home staging. You contacted a moving company so you know how much it will cost to move and when you’ll leave. The only thing left to do is move in to your new place…


Hold on.

What’s this bill? And that bill? And those bills?

While the actual property is the most expensive part about buying a home, there are still quite a few expenses to be paid along the way. These are called “closing costs” and the amount will vary for each home purchase.

Closing costs are annoying, as you probably just want the money to stop flowing out of your wallet at this point, but as a homeowner you better get used to paying. Here’s a breakdown of the different costs you’ll encounter at closing and what they’re for.


Fees you’ve already paid

By now you will have already paid the home inspector, the deposit to the sellers (which is part of your down payment), and the mortgage default insurance if required. The mortgage default insurance is added on top of your mortgage, so you don’t have to pay it all up front.


Fees you need to pay

Land transfer tax

This provincial tax is applicable on every property sale and is calculated as a percentage of the purchase price. Some cities also have a municipal land transfer tax, which is in addition to the provincial tax. First-time homebuyers may be entitled to a land transfer tax rebate. You can use this calculator to calculate your land transfer tax.


Legal fees

Paying the real estate lawyer will run around $500.


Title insurance

Title insurance protects you in the case of a property dispute and usually costs between $100 and $300.


PST on CMHC insurance

Although you don’t have to pay the entire CMHC premium up front, you are required to pay the PST on the whole amount.


Fees you may have to pay

Septic tank

If the house is on a septic system, the septic tank should be tested to make sure it’s working properly. This is definitely not something you’ll want to break after moving in.


Water tests

If the house uses well water, you’ll want to make sure the well is working properly and the water is safe to drink. You should also learn about the safe limit of usage.


Appraisal fee

An appraisal is an estimate of the value of your home done by a professional. The lender wants to know the value of the house so that they can be sure of its resale value in case you default on the mortgage.


Property tax reimbursement

If the last homeowner paid for the property taxes in advance, you might have to reimburse them the cost.


Fees you should consider paying

Homeowner’s insurance

Unlike car insurance, homeowner’s insurance isn’t legally required. However, the cost of something going drastically wrong, such as a fire, can be financially crippling. Getting home insurance will protect you not only against total home destruction but even minor things like your personal property being stolen or damaged. Check out our list of things home insurance covers.


You’re finished! At this point, all your costs have been paid and you’re able to move into your new home on the closing date. Congratulations on your home purchase!


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