Real Estate Closing Costs for Canadian Homeowners: What You Need to Know

Sep 17, 20244 min read

Real Estate Closing Costs

Are you buying a home, getting a new mortgage, or renewing your current one? These transactions all come with closing costs. Let's look at what these costs mean for you and your budget.

Three Types of Closing Costs

1. Buying a Home: Closing Costs

When you buy a home, expect to pay 1.5% to 2.5% of the purchase price in closing costs. For a $500,000 home, that's $7,500 to $12,500 extra. These costs often include:

Lawyer fees: $500 to $1,500 for document review, legal advice and mortgage registration
Land transfer tax: Varies by province. In Ontario, on a $500,000 home, it's about $6,475
Home inspection: $300 to $500
Title insurance: $250 to $500
Property appraisal: $300 to $500
Movers: $1000 to $3,000
Broker/Lender fees: If you're getting a mortgage from a B or private lender. These fees can't be estimated using a general percentage. Instead, your mortgage balance, credit score, and mortgage type will determine the broker and lender fees.
Bridge Loan Fees: $250 to $350
Down Payment: Generally 5% to 20% of the home price.

Closing Cost Example For A $500,000 Purchase Using An (A) Lender And A 20% Down Payment

Closing Cost	Amount
Lawyer Fees	$1,000
Land Transfer	$6,475
Home Inspection	$300
Title Insurance	$250
Property Appraisal	$300
Movers	$0
Broker/Lender Fees	$0
Bridge Loan Fees	$0
Down Payment	$100,000
Money Needed On Closing	$108,325

2. Getting a New Mortgage (Refinancing or Remortgaging):

Refinancing usually costs 0.25% to 0.50% of your mortgage amount. On a $400,000 mortgage, that's $1,000 to $2,000. Costs may include:

Lawyer fees: $500 to $1,500 for document review, legal advice and mortgage registration
Title insurance: $250 to $500
Appraisal: $300 to $500
Mortgage discharge fee: $200 to $350 if changing lenders
Prepayment penalty: This will vary from mortgage to mortgage and can't be accurately estimated without knowing your mortgage amount and term type
Broker/Lender fees: If you're getting a mortgage from a B or private lender. These fees can't be estimated using a general percentage. Instead, your mortgage balance, credit score, and mortgage type will determine the broker and lender fees.

Closing Cost Example For A $400,000 Mortgage With A (B) Lender

Closing Cost	Amount
Lawyer Fees	$1,000
Title Insurance	$250
Property Appraisal	$300
Mortgage Discharge Fee	$350
Prepayment Penalty	$2000
Broker/Lender Fee (2%)	$8,000
Money Needed On Closing	$11,900

3. Renewing Your Mortgage: Often Cheaper, But Not Free

Renewals usually cost less, but may still include:

Lawyer fees: $500 to $1,500 for document review, legal advice and mortgage registration.
Title insurance: $250 to $500
Appraisal: $300 to $500 if required
Administrative fees: $200 to $500, depending on the lender
Broker/Lender fees: If you're getting a mortgage from a B or private lender. These fees can't be estimated using a general percentage. Instead, your mortgage balance, credit score, and mortgage type will determine the broker and lender fees.

Closing Cost Example For A $400,000 Mortgage With An (A) Lender

Closing Cost	Amount
Lawyer Fees	$500
Title Insurance	$250
Property Appraisal	Covered by lender
Administrative Fees	Covered by lender
Broker/Lender Fee	None. (A) Lender
Money Needed On Closing	$750

Planning for These Closing Costs

Closing costs add up quickly. Here's how to handle them:

Start saving early: If you're buying a home, aim to save at least 1.5% to 2.5% of the home's value for closing costs.
Talk to your lender: Ask if they can lower or cover some fees. Most lenders have some sort of renewal program in place to reduce or eliminate the transfer fees when you move your mortgage.
Use home equity: If you're refinancing or renewing your mortgage, see if your lender can let you use some of your home equity to cover these costs.

Final Thoughts On Closing Costs

Never ignore closing costs. They're a big part of your total housing expenses, so always include them in your budget when buying a home or changing your mortgage.

TL;DR:

• Closing costs occur when buying, refinancing, or renewing a mortgage, typically 1.5% to 2.5% of your home's value or mortgage amount.

• For a $500,000 home purchase, expect $7,500 to $12,500 in closing costs.

• Always factor these costs into your budget to avoid surprises and make informed decisions about your mortgage.

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