There’s so much to consider when you’re buying a new home. You have to think about how much you can afford, what kind of mortgage you want to get, and where you want to live.

Then there are those extra expenses you may not have thought about. What about movers? What about new appliances? Do you want to repaint the walls or upgrade the floors? Do you need to do major renovations before you move in? The list is endless!

On top of all that, you have to budget for closing costs. If you’re not familiar with mortgage closing costs, these are fees you have to pay to complete the purchase of your new home. You have to pay them upfront in full, so it’s important to have the money available.

At Northwood Mortgage, we’re all about saving you money! We’ll help you figure out everything you need to know about mortgage closing costs, including:

  • What they are and how much they will cost you.

  • Some strategies you can use to reduce your mortgage closing costs.

  • How Northwood Mortgage can help you with home buying, including understanding mortgage closing costs.

What are mortgage closing costs?

There are several different mortgage closing costs you must pay upfront. These are the most common ones:

  • Appraisal. The job of an appraiser to estimate the value of a home. A third-party appraiser conducts it. A mortgage lender will want one to ensure that the home you are buying is actually worth what you are paying for it. They tend to cost no more than $200.

  • Home Inspection Fee. A home inspection is performed by a qualified inspector who will check out the house from top to bottom. They will give you a report listing both major and minor issues they find with the house. They can cost, on average, between $300 to $500.

  • Fire Inspection Certificate. This is separate from a home inspection and, also, another requirement from the mortgage lender. Costs will vary depending on the size of your home.

  • Deposit. The good news is that your deposit counts toward your down payment. The bad news is that it’s not part of your mortgage—you have to come up with it upfront. The amount of the deposit required will vary depending on the home location and other factors.

  • Land Transfer Tax. All provinces have a land transfer tax that you must pay upon closing. Some cities, like Toronto and Vancouver, also have a land transfer tax. It’s based on the purchase price of your home.

  • Legal Fees and Disbursements. You can expect to incur a minimum of $500 (plus GST/HST) on legal fees charged for the preparation and recording of official documents.

  • Title Insurance. Title insurance is necessary to protect you and the lender against a loss in case of a property ownership dispute. You can purchase it through your lawyer; it runs no more than $300.

  • PST on CMHC insurance. Though CMHC mortgage default insurance itself is financed through the mortgage, you must pay PST on the insurance when you close on your house.

Ways to Reduce Mortgage Closing Costs

Now that you’ve learned about the mortgage closing costs you have to cover, you may want to find ways to reduce them. Here are some ideas:

  • Ask for a discount. It never hurts! Talk to your real estate agent to see if they recommend a less expensive home inspection or ways to reduce the lawyer’s fees.

  • Talk to your real estate agent and the people you are buying your home from. There may be some flexibility in how much of a deposit you have to provide.

  • Look into rebates. Ontario, British Columbia, and Prince Edward Island offer land transfer tax rebates for first-time homebuyers.

  • See if you can fold the costs into your mortgage. You may be able to work with your lender to see if you can add your closing costs into your loan. This will drive up your monthly payment, though, so keep that in mind if you are pursuing this option.

  • Ask around. See if your family, friends, or co-workers know a real estate lawyer who may be willing to work with you and give you a reduced rate.

How Northwood Mortgage Can Help You

We’ve been around since 1990, and we have a staff of over 135 professional mortgage agents. We can offer you all of the following:

  • High-quality services and products to all our customers.

  • Prime and subprime mortgages. This means that if other lenders have said no to you, we may be able to say yes!

  • Help to answer all of your questions about mortgages such as:

    • Mortgage basics. What exactly is a mortgage?

    • Mortgage features. There’s so much terminology involved with a mortgage. Do you want a fixed or variable rate mortgage? Open or closed? What’s amortization?

    • How we can work with you to secure financing.

    • I don’t think I have enough to secure a conventional mortgage. What exactly are Canada Mortgage and Housing Corporation (CMHC) insurance? Why do I have to have it, and how much will it cost me?

    • What’s the difference between a first and a second mortgage?

    • And many more! Whatever you need about mortgages, we’re here to help. That includes discussing mortgage closing costs.

Now You Know

Buying a home can be very complicated, but you aren’t alone. At Northwood Mortgage, we’re here to help you every step of the way. Today, you’ve learned all about mortgage closing costs, including:

  • The types of costs and how much they run.

  • How to save money on your closing costs.

  • How Northwood Mortgage can walk you through every step of the mortgage process.

Contact Us

Mortgage closing costs are part of buying a home. At Northwood Mortgage, we’re here to make sure you know how much they’ll cost you and that you’re prepared for them. Call us today at 888-492-3690 or contact us if you have questions about mortgages and closing costs.