Costs Associated with Buying a Property
Bill Fraser • October 6, 2020
So you want to buy a property, that’s great! Make sure you have your wallet ready to bring to the table. In addition to the downpayment, there are many other costs associated with purchasing a home; typically, these are called closing costs.
Your closing costs represent the things you will have to pay for out of your pocket, and the amount of money necessary to finalize the purchase of a property. And like most things in life, when it comes to closing costs, it pays to plan ahead.
The best time to work through the costs associated with closing your mortgage is before you even start looking for a place to buy. Closing costs should be part of the pre-approval conversation; they are just as important as saving for your downpayment.
If your mortgage is high ratio and insured through CMHC, they will want to see that you have at least 1.5% of the purchase price available in addition to your downpayment. Ensuring this money is available will make sure you have enough to pay for everything associated with buying a property.
So with that said, here is a list of the things that will cost you money when you’re buying a home. If you have any questions or would like a referral to an industry professional, please ask!
Inspection or Appraisal
A home inspection is when you hire a professional to assess the condition of the property to make sure that you won’t be surprised by unexpected issues.
An appraisal is when you hire a professional to compare the value of the property against other properties that have recently sold in the area.
The cost of a home inspection is yours, while the cost of the appraisal is sometimes covered by your high-ratio insurance, and sometimes covered by you!
Lawyer or Notary Fees
To handle all the legal paperwork, you will be required to hire a real estate lawyer. They will be responsible for the transfer of the title from the seller's name into your name and will make sure the lender is registered correctly on the title. Chances are, this will be one of your most significant expenses, except if you live in a province with a property transfer tax.
Taxes
Depending on which province you live in, and the purchase price of the property you are buying, you might have to pay a property transfer tax or land transfer tax. This cost can be high; you’ll want to know ahead of time an estimated cost here, before ever writing an offer.
Insurance
Before any financial institution lends you money, they will want to see that you already have property/home insurance in place for the purchase. If disaster strikes and something happens to the property, they want to be listed on an insurance policy to cover the costs.
Unlike property insurance, which is mandatory, you might also consider mortgage insurance, life insurance, or a disability insurance policy that protects you in case of unforeseen events. Not necessary, but worth a conversation.
Moving Expenses
Congratulations, you have a home, now you have to get all your stuff there! Don’t underestimate the cost of moving your stuff. If you’re moving across the country, the cost of hiring a moving company is steep, while renting a moving truck is a little more reasonable. If you’re moving locally, hopefully, the cost of moving amounts to some gas money and pizza for friends.
Utilities
Hooking up new services to a property is more time consuming than costly. However, if you are moving to a new province or don’t have a history of paying utilities, you might be required to come up with a deposit for services. It's not really worth moving into your new place if you can’t afford to turn on the power or connect the water.
So there you have it, this covers the majority of the costs associated with buying a new property. However, this list is by no means exhaustive, but it should serve as a guide as you work with trusted professionals.
If you have any questions about your closing costs, or anything else mortgage-related, contact me anytime, I’d love to hear from you!
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You’ve found the right home, your offer’s been accepted, and your financing is approved—congratulations! But before you can pick up the keys and celebrate, there’s one more important stage: the closing process. Closing is the final step in your homebuying journey, where all the paperwork, legal details, and financial transactions come together. It can feel overwhelming if you don’t know what to expect, but with the right preparation, closing can be smooth and stress-free. Here’s a step-by-step guide to help you understand the process. Step 1: Hire a Lawyer or Notary A real estate lawyer (or notary, depending on your province) handles the legal side of closing. They will: Review the purchase agreement and mortgage documents Conduct a title search to confirm the seller has the legal right to sell the property Ensure the mortgage lender is properly registered on the title Handle the transfer of funds between you, the lender, and the seller Your lawyer or notary will be your main point of contact during closing, so choose one you trust and who communicates clearly. Step 2: Finalize Your Mortgage Your lender will send the mortgage instructions directly to your lawyer or notary. At this stage: You’ll provide proof of property insurance (lenders require this before releasing funds) You’ll confirm your down payment and closing costs are available in your lawyer’s trust account The lawyer will prepare all documents for your review and signature Step 3: Pay Closing Costs Closing costs typically range from 1.5% to 4% of the purchase price. These can include: Legal fees Title insurance Land transfer tax (where applicable) Adjustments for property taxes or utilities prepaid by the seller Home inspection or appraisal fees (if not already paid) Your lawyer will provide a final statement of adjustments so you know exactly how much is due on closing day. Step 4: Sign the Paperwork A few days before closing, you’ll meet with your lawyer or notary to sign all the necessary documents, including: Mortgage agreement Title transfer Insurance confirmations Statement of adjustments Bring valid government-issued ID to this appointment. Step 5: Transfer of Funds On the day of closing: Your lender sends the mortgage funds to your lawyer Your lawyer combines these funds with your down payment and pays the seller Legal ownership of the property is transferred into your name The lender is registered on title as a secured creditor Step 6: Get the Keys! Once the paperwork is filed and the funds have cleared, your lawyer will confirm that the transaction is complete. You’ll then get the keys to your new home—officially making it yours. The Bottom Line The closing process is a series of important steps, but with the right team in place, it doesn’t have to be stressful. By working closely with your mortgage professional and lawyer, you’ll have guidance every step of the way—from signing the documents to turning the key in the front door. If you’d like help preparing for the closing process—or want a clear breakdown of your own closing costs— connect with us today.
