Closing Costs of a Mortgage
If you’re thinking of buying a home in Alberta, it’s important for you to budget for more than just your down payment – you’ll also need to pay for your closing costs. Closing costs can add up to anywhere from 0.5 to 4% of the purchase price of a home and must be paid for with cash between the time you make an offer to the day that you close. Here are some of the most common closing costs a buyer will face in Alberta.
When you’re ready to make an offer on a home, your agent will ask you to provide a deposit with the offer. Your deposit proves to the seller that you are serious about buying the home. In Alberta, most buyers put down a 1% deposit. That amount must be paid when you accept and sign the Offer to Purchase and is held in trust until closing day.
Home Inspection Fee
One thing all buyers should consider is hiring an Alberta home inspector to complete a home inspection, before they move forward with the purchase. While home inspections are optional, the report that follows often helps homebuyers decide whether or not they want to buy the home. As the home inspection industry is regulated in Alberta, you can expect to pay up to $500 for a home inspection.
Land Transfer Tax
In Alberta, homebuyers fortunately don’t have to pay the hefty land transfer taxes that other provinces in Canada do. Instead, the province levies a much smaller fee, in order to complete the land title transfer. Your land title transfer fees can be paid to the Alberta Land Titles Office when you register and submit your legal documents.
Whenever you buy, sell or refinance property, you need to hire an Alberta real estate lawyer to deal with all of the legal aspects of the transaction. It’s your lawyer’s job to conduct a title search, get title insurance in place, register all documents in your name and facilitate your final transaction. In Alberta, you can expect to pay at least $1,500 for legal fees, disbursements and title insurance.
Additional Closing Costs to Consider
While we have listed most of the closing costs Alberta homebuyers pay for when buying a home, there are a number of additional costs that may come up. These costs may include: reimbursement of prepaid utilities, taxes or condo fees, GST on a new home, a new home warranty enrollment fee, an appraisal fee or a land survey fee.
Understanding the different closing costs is important and, if you’re considering buying a home, knowing these costs will help you plan your finances accordingly. By budgeting for your closing costs ahead of time, you will be better prepared for all the expenses that may come up at closing.