Purchasing a home is more than just paying the listing price. Various additional expenses can surprise you if not anticipated. Here, we explore the different costs you might face when buying a house in Canada to help you plan your budget effectively.

Legal Fees and Related Costs When engaging a real estate lawyer, you pay a fixed fee plus GST/HST. Additionally, there are disbursements—extra charges for tasks like property searches, document registrations, and office services. Lawyers might include land transfer taxes in these disbursements, so it’s wise to ask for a detailed estimate to avoid surprises.

Title Insurance This insurance protects you from issues such as unpaid utility bills or legal disputes affecting the property’s title. While not mandatory for all buyers, it’s recommended, especially for first-time homeowners, to safeguard against ownership issues.

Land Transfer Tax In some provinces, buying real estate incurs a land transfer tax. The tax amount varies by province and can also include municipal taxes in cities like Toronto. First-time buyers might qualify for tax rebates in certain regions, such as British Columbia.

Land Survey Fees A land survey maps out property boundaries and structures. Mortgage lenders often require an up-to-date survey, which you may need to commission if the property lacks one. The buyer usually bears this cost.

Property Appraisal Costs An appraisal, conducted by a certified professional, determines the property’s market value. Lenders often require this to ensure the property is worth the loan amount. Typically, the buyer is responsible for the appraisal fee.

Home Inspection Fees A home inspection, though optional, is highly recommended. It can reveal hidden defects that might not be visible during a walk-through. Even if the seller provides an inspection report, consider hiring your own inspector for additional assurance.

CMHC Insurance Premiums If your down payment is less than 20%, mortgage default insurance from the Canada Mortgage and Housing Corporation (CMHC) is required. This insurance protects the lender in case of default. The cost is added to your mortgage, with additional provincial sales tax in some areas.

Property Insurance Before closing, you must secure property insurance to cover potential damages to your home. This insurance is crucial whether or not you have a mortgage, as it protects your investment.

Summary of Home Buying Costs:

• Legal Fees and Related Costs: Includes lawyer fees and additional charges.
• Title Insurance: Protects against title-related issues.
• Land Transfer Tax: Varies by province and municipality, with possible first-time buyer rebates.
• Land Survey Fees: Required for mortgage approval if no current survey exists.
• Property Appraisal Costs: Confirms market value for lenders.
• Home Inspection Fees: Identifies hidden property defects.
• CMHC Insurance Premiums: Necessary for down payments under 20%, with added provincial tax.
• Property Insurance: Essential for protecting your home investment.

Understanding these expenses helps you budget effectively and prepares you for a smooth home buying experience.