When you’re preparing to buy a home, most buyers focus on saving for the down payment. But many first-time (and even repeat) buyers are surprised by the closing costs — the extra expenses due on closing day that can add up to thousands of dollars.
Understanding these costs in advance will help you budget properly and avoid last-minute stress. Here’s a breakdown of the most common closing costs in Canada that every buyer should know about.
What Are Closing Costs?
Closing costs are the additional fees and expenses you pay on top of your down payment when finalizing a real estate transaction. These costs typically range between 2% and 5% of the home’s purchase price.
For example, if you’re buying a $400,000 home, you should budget an additional $8,000 to $20,000 for closing costs.
Common Closing Costs to Expect
1. Land Transfer Tax
Most provinces charge a land transfer tax (LTT) when you buy a property. The amount depends on the purchase price and where you live. First-time homebuyers may qualify for rebates in some provinces, including Nova Scotia.
2. Legal Fees and Disbursements
A real estate lawyer is required to handle the transfer of ownership. Legal fees typically range from $800 to $1,500, plus HST. Disbursements (out-of-pocket costs like title searches and registration fees) are also included.
3. Title Insurance
Title insurance protects you against issues such as property boundary disputes, fraud, or errors in the property’s title. This one-time cost is usually between $200 and $400.
4. Home Inspection
While optional, a home inspection is strongly recommended. It usually costs $400 to $700 and can save you thousands by revealing hidden problems before you buy.
5. Appraisal Fee
Some lenders require a professional home appraisal to confirm the property’s value. Appraisals typically cost $300 to $500.
6. Property Tax and Utility Adjustments
If the seller has prepaid property taxes, utilities, or condo fees, you’ll need to reimburse them for your share as of the closing date.
7. Mortgage Default Insurance (If Applicable)
If your down payment is less than 20%, you’ll need mortgage default insurance through CMHC, Sagen, or Canada Guaranty. This premium is usually added to your mortgage, but provincial sales tax on the premium must be paid upfront at closing.
How to Budget for Closing Costs
To avoid surprises, here are a few budgeting tips:
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Estimate 2–5% of your purchase price for closing costs.
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Ask your lender or broker for an estimate of costs specific to your situation.
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Keep a little extra aside in case unexpected expenses arise.
Final Thoughts
Closing costs are an important part of the homebuying process that many buyers overlook. By planning ahead and understanding the fees involved, you’ll be fully prepared for closing day — without scrambling for extra funds.
If you’re considering buying a home in Nova Scotia or anywhere in Canada, I can help you understand your full costs upfront and guide you through the mortgage process with confidence.
Contact me today to get started on your homeownership journey.