Canadian Mortgage Closing Costs Checklist

Closing costs are often the most overlooked expense when buying a home in Canada. While your focus is naturally on the down payment and mortgage approval, closing costs can add $8,000 to $15,000 (or more) to your home purchase. Understanding and budgeting for these costs is crucial for a smooth transaction.

Budget Rule of Thumb

Plan for 1.5% to 3% of your home's purchase price in closing costs. On a $500,000 home, this means budgeting $7,500 to $15,000 beyond your down payment.

What Are Closing Costs?

Closing costs are the fees and expenses you pay when finalizing your home purchase. These costs are separate from your down payment and monthly mortgage payments. They cover various services required to complete the legal transfer of property ownership and ensure the transaction meets all regulatory requirements.

Complete Closing Costs Breakdown

Legal and Professional Fees

Legal Fees

Lawyer/Notary fees:$800 - $1,500

Title insurance:$300 - $600

Registration fees:$100 - $300

Property Services

Home inspection:$400 - $800

Property appraisal:$300 - $500

Survey (if required):$1,000 - $2,000

Government Taxes and Fees

Land Transfer Tax (Provincial)

Varies significantly by province. Here are typical rates for major provinces:

Province	Rate Structure	$500K Home
Ontario	0.5% to 55K, 1% to 250K, 1.5% to 400K, 2% over 400K	$6,475
British Columbia	1% to 200K, 2% to 2M, 3% over 2M	$8,000
Alberta	No provincial land transfer tax	$0
Quebec	0.5% to 250K, 1% to 500K, 1.5% over 500K	$3,750

Toronto Municipal Land Transfer Tax

Toronto charges an additional municipal land transfer tax equal to the provincial rate. On a $500,000 home in Toronto, you'd pay approximately $12,950 total in land transfer taxes.

GST/HST on New Homes

New home purchase:5% - 15% (varies by province)

GST/HST rebate available:Up to $30,000 - 36,000

Mortgage-Related Costs

CMHC Insurance Premium

2.8% - 4.0% of mortgage amount

Required if down payment less than 20%

Can be added to mortgage

Other Mortgage Fees

Mortgage application:$0 - $500

Mortgage broker fee:Often free

Rate hold extension:$200 - $500

Utility and Service Connections

Utilities Setup

Hydro connection/transfer:$50 - $200

Gas connection:$100 - $300

Water/sewer (if applicable):$100 - $500

Other Services

Internet/cable setup:$100 - $300

Home security system:$200 - $500

Moving costs:$500 - $2,000

Insurance and Property Adjustments

Insurance Requirements

Home insurance (annual):$800 - $2,000

Required before closing

Life insurance (optional):Varies

Often offered by lender

Property Tax and Utility Adjustments

You may need to reimburse the seller for prepaid expenses or receive credits:

Prepaid property taxes (could be credit or charge)
Utility deposits or prepaid amounts
Condo fees (if applicable)
Oil tank fuel (rural properties)

First-Time Home Buyer Programs

Several programs can help reduce your closing costs:

Federal Programs

First-Time Home Buyer Incentive: Shared equity loan up to 10% of purchase price
Home Buyers' Plan (HBP): Withdraw up to $35,000 from RRSP
First-Time Home Buyer Tax Credit: $750 tax credit on qualifying homes
GST/HST New Housing Rebate: Rebate on new construction

Provincial Programs

Ontario: Land Transfer Tax Refund up to $4,000 for first-time buyers
BC: First Time Home Buyers Program - property transfer tax exemption
Alberta: Various down payment assistance programs
Quebec: Home Ownership Program with favorable loan terms

Sample Closing Cost Calculation

Example: $500K Home Purchase in Ontario (Not Toronto)

Legal fees and disbursements:$1,200

Title insurance:$400

Home inspection:$600

Property appraisal:$400

Land transfer tax (Ontario):$6,475

Home insurance (first year):$1,200

Utility connections:$300

Moving costs:$1,000

Property tax adjustment (estimated):$500

Total Closing Costs:$12,075

Plus CMHC insurance if applicable (would add ~$15,500 for 10% down)

Money-Saving Tips

Shop around for legal services - Fees can vary significantly between lawyers
Bundle home and auto insurance - Many insurers offer discounts for multiple policies
Negotiate who pays for what - Some closing costs can be negotiated with the seller

Time your move strategically - Moving mid-month or mid-week can be cheaper
Get multiple quotes - For inspections, insurance, and moving services
Check for first-time buyer rebates - You may qualify for various programs

Frequently Asked Questions

Q: Can closing costs be added to my mortgage?

A: Generally, no. Most closing costs must be paid in cash at closing. However, CMHC insurance premiums can be added to your mortgage balance. Some lenders may offer "cashback" mortgages that provide funds for closing costs, but these typically come with higher interest rates.

Q: When do I need to pay closing costs?

A: Most closing costs are paid on your closing date through your lawyer's trust account. However, some costs like home inspections are typically paid when the service is provided, before closing.

Q: What happens if I don't have enough money for closing costs?

A: If you can't pay closing costs, your purchase may fall through. This is why it's crucial to budget for these expenses early. Consider gifts from family, borrowing from your RRSP (Home Buyers' Plan), or negotiating with the seller to cover some costs.

Q: Are closing costs tax-deductible?

A: For your principal residence, closing costs are generally not tax-deductible. However, if you're purchasing an investment property, many closing costs can be deducted as business expenses or added to the property's cost basis.