Natasha Shaw

Closing costs are a list of charges you will encounter as you purchase your home. Many people are surprised at the additional costs over and above the price of the house! You should have at least 1.5% of the purchase price for closing costs in addition to the down payment (have around 2.0 to 2.5% to be on the safe side). The costs vary among provinces and cities.

These are some of the closing costs you may encounter, depending on your specific situation. Use this as a guideline then talk with your lawyer who can provide a more realistic estimate for your situation.

Appraisal Fee
An appraisal provides the lender with a professional opinion of the market value of the property. In urban areas this will cost from $250 - $350, and $500 and up in rural areas. This fee is normally the responsibility of the buyer.

Home Inspection Fee
A professional home inspection will inform you of any hidden flaws or damage that may exist in the home. It is well worth the $300 to $500 that it will cost. When hiring a home inspector, make sure the inspector has liability insurance, just in case they overlook something.

Fire (home) Insurance
Mortgage lenders require home insurance to be in place from the time you take possession of the home. The amount required is generally the amount of the mortgage or the replacement cost of the home. This cost can vary on the property size, amount of coverage, the insurance company and the municipality. The cost can vary anywhere from $500-$1000 (+) annually for most properties.

Land Survey Statement or Title Insurance Fee
A recent survey of the property is usually required by lenders. If one is not available, the cost can be up to $1000 for a new survey. The cost of an updated survey starts at about $350. In lieu of the survey most lenders today will accept title insurance, with costs starting at $200, depending on what policy you choose.

Legal Costs and Disbursements
Lawyers and notaries charge fees for their services involved in drafting the title deed, preparing the mortgage, and conducting the various searches. Disbursements are out-of-pocket expenses incurred during the process such as registrations, searches, and supplies. Legal fees in Alberta begin at $500 plus disbursements.

New Home Warranty
In most provinces, new homes are covered by a new home warranty program. This cost is usually built into the purchase price.

GST
GST is payable on the purchase of a newly constructed homes only. If you are purchasing a new home make sure you know who pays this, you or the builder. On the offer the purchase price will say “Plus GST” or “GST Included” as well as who gets any GST rebates. Many builders have included this cost into the purchase price so the buyer does not have to come up with it at closing.

Land Transfer Tax

The province in which the home is located in will charge a tax to transfer the deed into your name. This fee will vary depending on the province and the fair market value of the home. It can range from 0.5% to 1.5% of the purchase price of the home.

Closing Adjustments
An estimate should be made for closing adjustments for bills the seller has prepaid such as property taxes, utility bills, and other charges. Any bills after the closing date are the responsibility of the purchaser. A lawyer will let you know what they are once the various searches have been completed.

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