10 Costs to Be Aware of When Buying a Home

If you’re thinking of buying a home in Canada, you’ve probably braced yourself to pay a pretty penny.

But the price you see on Zillow is far from the amount you’ll have to shell out.

Taxes, fees, and other closing costs can add up to tens of thousands of dollars over the the listing price — potentially up to 25% more.

That doesn’t include the amount you’ll likely pay above asking.

The sad reality is few homes in Canada’s hottest real estate markets go for the price they’re listed at.

This list also doesn’t include moving fees.

Whether you rent a van or hire a moving company, you’re probably going to spend some extra cash on getting your things in place.

1. Realtor Fees

The average real estate agent fee in Canada is about 5% of the home’s value.

It can be higher or lower than that depending on the province, real estate agency, and the agent’s experience.

There are no standardized rates.

Maybe you’ve chosen to forge your own path.

But most people buy a home with the help of a real estate agent.

They dig up listings, do research on neighbourhoods, negotiate on your behalf, and generally make the house hunting process smoother.

2. Appraisal Fees

You’ll likely have to pay between $300 and $500 for a home appraisal in Canada — though there’s a chance your lender will cover it.

Home appraisers confirm how much the house is worth on the market.

This enables your mortgage lender (the bank) to confirm that the price matches up with the mortgage they’re about to extend to you.

However, if you buy a house outright – i.e., with no mortgage – you don’t need an appraisal.

Depending on the lawyer, legal fees for home purchases in Canada start at about $500 and can run up to a couple thousand dollars.

A lawyer will need to do a title search on the house, draft the title deed, and set up your mortgage with the bank on your behalf.

It’s also a good idea to get them to review the sale terms to make sure everything is onside.

Relaxing after buying and moving into new home

4. Property Survey Fees

Land survey fees can cost between $300 and $1,000, depending on the size and location of your property, and how it’s shaped.

A property survey, also called a land survey, will measure the plot the home sits on, and the exact positions of the building and other structures on it.

This is a good idea for peace of mind if a neighbour has a dispute over the property line.

5. Home Inspection Fees

Expect to pay $300 to $600 for a home inspection before you buy a house.

It’s a good idea to have a professional inspect your home before you buy it.

You never know what serious problems the previous owner may have not disclosed or not noticed — including issues with the plumbing, electrical, insulation and much more.

Did You Know?

House flippers are notorious for covering up hastily done, often dangerous renovations that will need to be fixed later. There are a ton of great examples on TikTok — just search “home inspector” and prepare to cringe.

6. Hook-Ups

Utility and service fees for cable and internet, hydro, gas, oil, and storm water can run you hundreds of dollars each.

Check what’s already hooked up, and what you’ll need to connect when you move in.

Rural properties sometimes have septic tanks, which can cost thousands of dollars to install, if you need a new one.

7. New Home Warranty Cost

If you’re buying a brand-new home, expect to pay between a few hundred and a couple thousand dollars for a warranty.

In British Columbia, Ontario, and Quebec, new home warranties are mandatory.

In others, like Manitoba, Saskatchewan, and the Atlantic provinces, they’re optional.

Either way, homebuilders will pay the warranty fee, but that cost will be passed onto you, the buyer.

What your new home warranty covers will vary on the provider.

But you can usually expect it to cover defects in the construction and utilities; building code violations; water leakage; structural defects and other stuff that would be a huge problem without insurance.

8. Insurance Costs

Home insurance is necessary for most homebuyers to secure a mortgage.

And it’s a no-brainer for many homebuyers to get fire and insurance on the contents of their house, in case of burglary.

But there are other types of insurance you should think about.

Title insurance proves that you are the legal owner of the property, and can help you out with ownership disputes, fraud, boundary assessment errors, and more.

It’s usually required by the lender if you have a mortgage on the property.

Mortgage default insurance, commonly known as CMHC Insurance, is mandatory if you made a down payment of less than 20%.

This will cost up to 4% of the mortgage’s value.

Mortgage life insurance will cover the cost of your mortgage in the event of your unexpected demise.

Just remember that you’ll the coverage may not transfer if you move your mortgage to another lender.

9. Land Transfer Tax

The Land Transfer Tax (LTT) is a one-time fee in most provinces of between 0.5% and 2.5% of the home’s value.

Some municipalities such as Toronto charge an additional LTT of their own.

Alberta, Saskatchewan, Yukon, and Nunavut do not have land transfer taxes.

If you’re a first-time homebuyer in Ontario, British Columbia, and Prince Edward Island, you might be able to get a refund for all or part of the LTT through provincial government programs.

10. Annual Property Taxes

Each year, you can expect to pay a percentage of your home’s value in taxes.

The amount is different depending on where in Canada you are.

Property taxes vary by municipality.

The cheapest are under 0.3%, and the most expensive are around 2%.

You’ll also have to pay a similar amount in school taxes, which vary by municipality and province.

Some cities and towns include additional taxes.

For example, Toronto takes a City Building Fund Levy, which increases the amount you pay on property taxes by 1.5% every year.

Don’t forget that these taxes can change every year based on municipal and provincial budget needs.

Toronto’s City Building Fund Levy was 0.5% in 2019, and didn’t exist before 2017.

Frequently Asked Questions

  • Who pays for closing costs?
  • How much additional money should I keep aside when buying a home?

Jack Hauen is a freelance writer and journalist. He has talked to full-time dungeon masters about how they made D&D their full time job, and explained the "crushing sadness" of the downtown Toronto renting experience. His reporting has appeared in Canada's top publications, including the Globe and Mail, Toronto Star and National Post.

If you meet him at a party he might try to explain the ins and outs of credit card churning but will not be offended if you slowly back away. When he's not lurking r/PersonalFinanceCanada, he can often be found in the Algonquin backcountry, already gassed after the first portage of the day.