The Costs of Buying a Home Beyond the Down Payment

Most buyers spend a long time saving a down payment, and it's easy to treat that figure as the whole cost of buying. Another set of costs arrives around closing day. None of them is a surprise if you know to expect it, and planning early keeps your savings from being stretched at the last minute.

The usual one-time costs

Legal fees. A lawyer, or a notary in some provinces, searches the title, registers the transfer and the mortgage, and handles the money on closing day. The bill includes their fee plus charges such as registration and search costs.
Land transfer tax. Most provinces charge a tax or a registration fee when a property changes hands, and some municipalities add their own. Some offer relief for eligible first-time buyers. Where it applies, it's paid at closing from your own funds.
Home inspection. Paid for by the buyer, usually before the purchase becomes firm. It's your choice in most cases, and the report can tell you a lot about the repairs a home may need.
Appraisal. A lender may require an independent opinion of the property's value. Sometimes the lender covers the cost and sometimes the borrower does.
Title insurance. A one-time premium for a policy that protects against certain problems with the property's title. Many lenders require it.
Adjustments. If the seller has prepaid property tax, condo fees or utilities past the closing date, you reimburse your share. Your lawyer or notary sets these out in a statement of adjustments.
Mortgage default insurance. Where it's required, the premium is normally added to the mortgage rather than paid up front. In some provinces a sales tax applies to that premium, and the tax is typically due at closing.
Home insurance. Lenders require it to be in place by closing, so the first premium often lands at the same time.
Moving and setting up. Movers or a rented truck, utility connections, new locks, and the things a new place seems to need right away.

Why the totals differ so much

We've left figures out on purpose. The amounts depend on the province, sometimes the municipality, the purchase price, the type of property and the professionals you hire. A newly built home can bring costs a resale home doesn't, such as sales tax on the purchase and adjustments in the builder's agreement. Tax rules and rebate programs also change, so a friend's experience may not match yours.

Planning for them

Lenders generally want to see that you have funds for closing costs on top of your down payment, so these costs matter to your application as well as to your bank account. It helps to ask early for written estimates from the lawyer or notary and anyone else you'll be paying, and to keep that money separate from the down payment.

If you'd like help putting together a realistic estimate for the kind of purchase you have in mind, we'd be glad to go through it with you.