Mortgage Closing Costs in Canada: What You Need to Know (And How to Plan for Them!)
- Edith Parinas
- Mar 19
- 4 min read
So, you’ve finally found your dream home, secured your mortgage, and are ready to close the deal—but wait! Have you factored in your closing costs?
One of the biggest surprises for many homebuyers in Canada is the extra costs that come due on closing day. I’ve seen firsthand how some buyers get caught off guard because they didn’t budget for these expenses. And trust me, nothing takes the excitement out of getting your keys like scrambling to come up with extra cash at the last minute.
To help you avoid any surprises, let’s break down what closing costs are, how much you should budget, and what to expect on closing day.
What Are Mortgage Closing Costs?
Closing costs are one-time fees that you must pay before or on the day you take possession of your new home. These fees cover everything from legal work to taxes and can range from 1.5% to 4% of the home’s purchase price.
📌 Example: If you’re buying a $600,000 home, you should expect closing costs between $9,000 – $24,000.
Now, let’s go over the most common fees so you can plan ahead.
The Most Common Mortgage Closing Costs in Canada
1. Land Transfer Tax (LTT) – The Big One!
Land Transfer Tax is one of the largest closing costs and varies by province. Some cities, like Toronto, even have an additional municipal LTT on top of the provincial tax.
How much is LTT?It’s a percentage of the home’s purchase price and is calculated using a tiered system. For example, in Ontario, the breakdown is:
0.5% on the first $55,000
1.0% on $55,000 – $250,000
1.5% on $250,000 – $400,000
2.0% on $400,000 – $2M
2.5% on amounts over $2M
Good News:
✔ First-time homebuyers may qualify for a rebate (up to $4,000 in Ontario).
✔ Some provinces, like Alberta and Saskatchewan, don’t charge LTT but have smaller title transfer fees.
💡 Tip: Check your province’s rates ahead of time so you’re not caught off guard.
2. Legal Fees & Disbursements – $1,500 to $3,000
A real estate lawyer is required to review contracts, conduct a title search, register the mortgage, and handle funds. Fees typically range from $1,500 – $3,000, depending on complexity.
✔ What your lawyer does for you:
Confirms ownership history of the property.
Ensures no outstanding liens or legal issues.
Registers your mortgage and ownership documents.
Transfers funds from your lender to the seller.
💡 Tip: Get quotes from a few real estate lawyers to compare fees.
3. Title Insurance – $250 to $500
Title insurance protects you from ownership disputes, title fraud, or unpaid property taxes from the previous owner. It’s a one-time payment and is typically required by your lender.
✔ Why it’s important: It protects you from legal issues if someone else claims ownership of your home.
4. Home Inspection Fee – $300 to $700
A home inspection is optional but highly recommended, especially for resale homes. This small cost can save you thousands by identifying potential problems like faulty wiring, leaks, or foundation issues.
✔ Best for: Buyers who want peace of mind before finalizing their purchase.
5. Appraisal Fee – $300 to $600
An appraisal ensures your home is worth the amount you’re borrowing. Lenders may require one, especially if you’re putting down less than 20% or buying a unique property.
✔ When it’s needed: If your lender requests it, you’ll have to cover the cost.
6. Property Taxes & Prepaid Utilities – Varies
Some sellers prepay property taxes and utility bills, and as the new homeowner, you may need to reimburse them for any unused portion.
✔ How to prepare: Your lawyer will calculate any adjustments, so be ready for this extra cost.
7. Mortgage Default Insurance (If Your Down Payment Is Less Than 20%)
If you’re buying with less than 20% down, your mortgage must be insured by CMHC, Sagen, or Canada Guaranty. The premium is added to your mortgage, so while it’s not an upfront cost, it does affect your total borrowing amount.
📌 Cost Example:For a $500,000 home with a 10% down payment, the CMHC premium would be 3.1% of the mortgage amount ($450,000) = $13,950 added to your loan.
How to Budget for Closing Costs
Now that you know what’s involved, here’s how to ensure you’re financially prepared:
💰 Step 1: Estimate Costs Based on Your Home Price
✔ Use 1.5% to 4% of your home price as a guideline.
💰 Step 2: Set Aside the Funds in Advance
✔ You’ll need to pay these costs upfront, so they can’t be rolled into your mortgage.
💰 Step 3: Keep an Emergency Fund
✔ Unexpected costs do happen—having a buffer ensures no last-minute stress.
Final Thoughts: Plan Now, Avoid Surprises Later!
Too many buyers focus only on their down payment and mortgage rates, forgetting that closing costs can add up quickly. But by planning ahead, you can avoid any last-minute financial stress and enjoy a smooth home-buying experience.
💡 Need help estimating your closing costs or planning for your home purchase? Let’s chat! I’ll help you budget properly so you can move into your dream home without financial surprises.
📅 Book a Free Consultation Here → Book a consultation online today.
It's Tax time—and I’m here to help every step of the way.! BOOK A CONSULTATION.
– Edith Parinas
'The Mortgage Broker ~ The Yogi ~ The Blogger'
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