You found your house, you were approved for your mortgage, and you’re flushed with success. But before you pop the cork on that champagne, you may want to get an accurate read on the closing costs for your house. Remember… you don’t have the mortgage funding until the day you close. Canadian homebuyers are often shocked when they realize just how much money they need before they can walk through their new front door.

In short, “closing costs” are all of those extra costs that come with buying a home. They’re not typically built into the mortgage, so you’ll be expected to have some extra funds set aside to cover these costs. How much are you looking at? Generally, you can expect to fork out between 1.5% and 4% of the home’s selling price in total closing costs. Here are some of the costs you should be prepared to pay:

• A mortgage loan insurance premium can be a significant expense if you’re in a high-ratio mortgage – that is, if you have less than a 20% downpayment on your mortgage.
• You may need to pay an appraisal fee for your new home. In some cases your lender will want the assurance that your home has sufficient value for the money loaned.
• The lender will also want to see some insurance on your home – and you’ll want it too. Be sure you have insurance effective from the moment you legally take possession of your new home.
• You may also want a home inspection to ensure your property has a clean bill of health. A home inspector can evaluate the structure of the building as well as the major systems: electrical, plumbing, heating, etc.
• Remember, this is a sale: expect to pay some tax. It's called a Land Transfer Tax and it can be substantial: it is based on a percentage of the purchase price of the property.
• For a transaction of this size, you’ll definitely want a lawyer or a notary. You’re responsible for the legal fees and any disbursements – and these fees can vary. Your lawyer or lender may also recommend or even require title insurance, which can save the trouble and expense of surveys or unexpected issues with the property title in the future, and protect you from title fraud.

Other “money up front” costs can include utility hookups, and reimbursement of any bills pre-paid by the previous owner: property tax or utility bills for example. Similarly, there may be an interest adjustment, depending what day of the month you close. Finally, make a realistic assessment of your moving costs and what you’ll need in the way of furnishings or appliances.

It may seem a bit overwhelming but all you really need is a plan. Don't forget: you have an experienced mortgage planner on your side. I can help you plan and prepare for closing day so that you can focus your attention and enjoyment on your new home.