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Mortgage Closing Costs

Possible Mortgage Closing Costs

Banks usually require a purchaser to have a minimum of 1.5% of the purchase price available for closing costs (on top of deposit/down payment). Proof of availability will be required before any mortgage instructions will be forwarded to the client’s lawyer. Some exceptions may apply.

Deposit

This is part of your down payment and must be paid when you make an Offer to Purchase. The cost varies depending on the area, but it may be up to 5% of the purchase price. If you wish to make a down payment of 5% and you give a deposit of 5%, then your down payment is considered to be made.

Down Payment

With mortgage loan insurance you can own your home with a minimum down payment of 5% (DP may be borrowed by the lender in some situations). At least 20% of the purchase price is usually required for a conventional mortgage.

Mortgage Loan/Default Insurance Premium

If yours is a high-ratio mortgage (less than 20% down payment), your lender may need mortgage loan insurance. Your lender may add the mortgage insurance premium to your mortgage (most common) or ask you to pay it in full upon closing.

Appraisal Fee

Appraisal is an estimated value of the property. Lenders hardly trust anyone when it comes to money, so they hire independent professionals called “appraisers”. Appraisers visit the property you want to buy and estimate it’s value by comparing it to similar homes in the area. An appraisal insures lenders that you’re buying a real home, which is worth what you say it is. Your mortgage lender may require that the property be appraised at your expense (Not usually required for high ratio insured mortgages).

Aprox: $300 – $500

Home Inspection

Home inspectors evaluate the condition of the property. They make sure structure is OK, heating is working, water supply is drinkable and look for flaws, like cracks, leaks, electricity problems and other issues which can cost you money. (Not required by most lenders but is still a good idea to help ensure you are investing in a sound property)

Aprox: $250 – $350

Land Registration/Tarrif Fee

You may have to pay this provincial or municipal charge upon closing in some provinces and territories. The cost is a percentage of the property’s purchase price and may vary.
This cost is usually included in the lawyer’s bill.

In Alberta $35.00 plus $1.00 for each $5,000.00 or portion thereof of the value of land.
E.g. for $300,000.00: $35.00 plus $60.00 for a total of $95.00.

Legal &Attorny Fees

Fees to lawyers who prepare and review purchase documents.

$500-$900 + disbursements

Prepaid Property Taxes and/or Utility Bills

To reimburse the vendor for prepaid costs such as property taxes, filling the oil tank and so on. Your lawyer will include this in his/her final bill and disperse it appropriately.

Property Insurance

(also called Home Owners Insurance or Fire Insurance)

Different from private mortgage insurance. The mortgage lender requires this because the home is security for the mortgage. This insurance covers the cost of replacing your home and its contents. Property insurance must be in place on closing day. Property insurance protects against fires, floods, and disasters. Most lenders require some form property insurance to be in place. If so your lawyer will request you bring proof of insurance with you to your appointment.

Approximately $400 – $800 yearly

Title Search

Your home may have had many owners. Banks, government, construction companies and other people. Title search ensures that you are the only lawful owner of the property. It also checks for mistakes to prevent future problems. Lawyers usually take care of this and will add the fee onto their final bill.

$50 – $200

Title Insurance

Protects your ownership rights. Title insurance covers loss caused by defects of title to the property and protects you to the full cost of the property in case a person or a company emerges and claims ownership of the property. For example daughter of the previous owner shows up and states she owns the property because her father used to. If she wins the case, title insurance will pay lender whatever home is worth. Title insurance only covers lenders. You need to arrange your own. Again, lawyers usually take care of this and will add the fee onto their final bill

$300 – $500

Land Survey/Real Property Report

(Does Not Apply to Condos)
Land survey identifies land boundaries and determines if trees, plants and fences are part of your property. Not all lenders require land survey. Usually paid by seller but must be agreed upon in purchase agreement.

$350-$700 ($1000-$2000 on CMHC site)

Water Tests

If the home has a well, you will want to have the quality of the water tested to ensure that the water supply is adequate and the water is potable. You can negotiate these costs with the vendor and list them in your Offer to Purchase. A copy of the water potability test is usually required by the lender

$100 – $150

Septic Tank Inspection

If the house has a septic tank, it should be checked to make sure it is in good working order. You can negotiate the cost with the vendor and list it in your Offer to Purchase

Estopple Certificate Fee

This applies if you are buying a condominium or strata unit

Upto $100

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