What are closing costs?
Closing costs are the legal and administrative fees you will have to pay when your home purchase closes.
These are one-time costs, but there are several costs to consider and they add up fairly quickly. So it’s important to build them into your budget before you make an offer on the home you want.
Some closing costs are optional:
- Title insurance
- Assessment fees
- Inspection fees
- If your down payment is less than 20%, the 9% tax on themortgage insurance premium (CMHC, SAGEN, CANADA GUARANTY)
- Fuel oil tank, (Reimbursement of the remaining fuel oil in the tank)
- Propane tank (depending on remaining gas level)
- Electricity meters (Hydro-Québec)
- Gas (e.g. Gaz Métropolitain)
Mandatory fees:
- Notary fees
- Transfer fees
(Welcome tax)
The total of these fees can reach 1.5% to 2% of the amount of your future property.
How much are the closing costs?
The total amount of closing costs depends on several factors, including where you live and the type of home you are buying. Generally speaking, it is advisable to save between 1.5% and 2% of the purchase price of the home for closing costs.
For example, if you buy a home for $400,000, your closing costs will be an additional $6,000 to $8,000. That’s a pretty significant amount of money, so you need to consider closing costs when you make an offer and calculate your down payment.
