What are Closing Costs in Canada?

Everything you need to know about the different components of closing costs.

Closing costs are the fees paid to complete the purchase of a home in Canada. These expenses are over and above the deposit and down payment and typically range from 3 percent to 5 percent of the purchase price for resale homes, though they can fall between 2 percent and 6 percent depending on several factors. For instance, on a $200,000 home, the closing costs can range from $6,000 to $8,000.

Common Components of Closing Costs

Land Transfer Tax
Land transfer tax is a significant part of closing costs in Ontario and is applied at closing. In Toronto, both a municipal and provincial land transfer tax must be paid, while in other areas of Ontario, only the provincial one applies. For more expensive homes, this tax can add thousands of dollars to the closing costs.

Alberta only charges title registration fees, which are much lower but British Columbia does have Land Transfer Tax, similar to Ontario. It’s important to check with your Realtor on local requirements so you can plan in advance.

Legal Fees
Legal fees cover the cost of hiring a lawyer to review the legal documents to ensure you get clear title to the property, and they handle all the other related tasks such as transfer of funds, registering the new title and mortgage on the property, etc. Legal fees are a required part of closing costs across Canada.

Title Registration Fees
Title registration fees are charged to officially record the new owner on the property title. These fees are significantly lower than land transfer taxes. 

Inspections and Appraisals
Home buyers may pay for property inspections and appraisals as part of their closing costs. A home inspection checks the property’s condition, while an appraisal determines its value

Mortgage Registration Fees
Mortgage registration fees are paid to register the mortgage against the property title. This process makes the mortgage official in the government’s property records and is completed by the lawyer as part of their services to the buyer.

Property Taxes
A buyer may be required to reimburse the seller for prepaid property taxes, from the closing date to the end of the tax period. This amount is pro-rated based on the closing date.

Home Insurance
Lenders require buyers to have home insurance in place as part of the conditions for lending. The buyer provides proof of insurance as part of their closing activities.

Survey Fees
Survey fees are charged if a survey is needed to confirm the property boundaries. This is sometimes required by the lender or by the law.

Adjustments
Adjustments are settlements between buyer and seller for pre-paid charges. These can include property taxes, utilities, and any other bills paid in advance by the seller.

Goods and Services Tax / Harmonized Sales Tax
Goods and Services Tax or Harmonized Sales Tax applies to new homes and commercial properties. You will also pay GST on all services.

Other Expenses
Other closing costs include miscellaneous expenses tied to obtaining the mortgage or preparing required documents.

Range and Variability

The amount paid for closing costs depends primarily on factors such as the home price and location. For example, a home buyer in Toronto could face a large land transfer tax charge for a home worth $800,000, whereas a buyer in Alberta will pay no land transfer tax, only the title registration fees. Each of these vary based on the purchase price of the home. The total closing costs must be budgeted for when buying a home and cannot be rolled into the mortgage. Depending on circumstances, they can vary by thousands of dollars.