In Canada, closing costs are an inevitable part of buying a home. They refer to costs that are in addition to the principal payment on a home and can include things like legal fees or property taxes. If you’re looking to purchase a home in Canada, you’ll need to budget for these, as well. Here’s what else you should know:
They can include a number of different costs. Closing costs can be made up of property assessment and home inspection fees, legal costs, title insurance, land transfer tax, and more. They may be paid to either the seller or another party, such as a lawyer or the municipal government.
Expect to budget up to 5 percent of your home’s purchase price. Closing costs can vary, depending on the nature of your purchase and the city you’re living in, but generally, you can expect closing costs to range from 2 to 5 percent of your home’s purchase price. Pro tip: budgeting for an amount on the higher end of the spectrum will give you a better buffer, and if you don’t end up needing the whole amount, you can put it toward home improvements.
You might be able to negotiate some closing costs with the seller. If you luck out and happen to be looking in a buyer’s market, there’s a chance you might be able to ask if the seller will pay some of the closing costs.
There are things you can do to reduce your closing costs. Not all costs are fixed. While it’s generally not recommended to skimp on services like home inspections, you can certainly shop around and ask legal firms or home inspection companies for quotes during your search. This may help bring your costs down somewhat.
Don’t let closing costs scare you away, especially if you’re a first-time buyer. Just make sure you budget for them appropriately. And be sure to ask your real estate agent or broker for guidance if you don’t understand something.