What Are Closing Costs?

When buying a home, it is very common for buyers to underestimate the ACTUAL cost of buying.

Before looking at buying a residential resale home, you should meet with a mortgage professional to ensure you not only qualify to purchase a home, but that you have the financial resources to provide a down payment AND all the other costs associated with buying.


In addition to the mortgage you will be undertaking, there are always additional costs to keep in mind.  The amount of these costs can differ from home to home depending on your unique requirements.

Once you know how much you qualify for it’s time to discuss the process and the other costs that you will be looking at during the home buying process.


Before we begin our home search, the first thing we want to address is the DEPOSIT - Many times home buyers confuse the deposit with the down payment and don’t realize that the “deposit” is usually just a small portion of your down payment.  The “deposit” money is typically provided upon acceptance of an offer by all parties as a sign of “good faith”.   This money must be “readily available” and must be provided within 24hrs after acceptance of an offer.  Therefore, if your deposit money is tied up in RRSP’s or Investments, it is a good idea to “free up” this money ahead of time.


The next financial matter usually comes along with doing a home inspection.  If an agreement of purchase and sale contains a provision for the buyer to do a home inspection, it will be the buyer that is responsible for hiring and paying the home inspector.  Home Inspection fees can vary and range from about $300 and up depending on the size and nature of the home.


If you are purchasing a condominium, you may also be required to pay for a Status Certificate which typically costs $100.  This is required when buying a condo so that your lawyer can protect you by ensuring that the by-laws, status and financial situation of the Condominium Corporation are all satisfactory to you.


Some other costs you will experience are, but are not limited to:

  • Land Transfer Taxes (Land Transfer Tax Calculator) - Calculated on the value of the property.
  • Lawyer Fees - The lawyer is required for title search, title registration, handling money in trust and much more.
  • Title Insurance - More information on Title insurance.  The cost of title insurance on a property under $500,000 is $325.00, beyond $500,000 it is $325.00 plus $0.90 for every $1,000 beyond the first $500,000.
  • Property Tax Adjustments - If the property tax are paid in advance.  You will owe the seller the portion of the tax that they paid that cover any period after the closing date.  This amount will be calculated to the day by the lawyers at the time of closing. Condo
  • Fee Adjustments (If buying a condo) - Similar to the property tax adjustment, if you close on your condo half way through the month and the fees were paid for the month, you would owe the seller half a month's fees.  This amount will be calculated to the day by the lawyers at closing.
  • Appraisal Fees - The bank may require an appraisal of the property you are purchasing prior to funding the mortgage.  This could typically cost in the $250 to $350 range however many times the mortgage company will roll this into their costs.
  • Land Survey - Depending on the property, this may or may not be necessary.
  • Fuel Charge Adjustments – If you are buying a home that is heated by propane or oil, the seller will be responsible for ensuring that the tank is full on the day of closing.  In return, you will owe the seller for the cost of the entire tank which is calculated at prevailing rates.
  • Utility Company Deposits - Utility companies sometimes require a deposit when you set up a new account. If you have a history with the utility company from a previous address, this is usually waived.
  • House Insurance – Contact your insurance agent to give you a quote/estimate and ensure you have the appropriate coverage.
Moving Costs - This is entirely dependent on how you intend to move.  Are you going to rent/borrow trucks and do it yourself or will you hire a professional mover.   It’s up to you and prices will vary based on how much you have to move, how far you are going etc.

So as you can see, there is more homework to do than just finding the right house.  It’s always a good idea to investigate what all your costs are to ensure you have no unpleasant surprises at the time of closing.  And, by doing a proper budget, you can buy your next home with the comfort of knowing exactly what your monthly expenses will be.


For more information, contact your local Realtors, Kim and Dennis Downey.