August 15, 2025

This article aims to clarify the one-time closing costs incurred during real estate transactions and their role in your overall cash-to-close funds required on your completion or closing date. While many home buyers often focus on meeting the precise down payment requirement, they may overlook additional closing costs. This oversight can catch buyers off guard, as these expenses are not always clearly communicated throughout the home buying process, from initial discussions with your realtor to mortgage arrangements. It’s essential for all prospective homebuyers in British Columbia and Alberta to understand and prepare for these closing costs upfront. Often, buyers realize at the last minute during the legal process that they need (substantial) additional funds to cover specific closing costs they were previously unaware of. Below, I outline the key closing costs (other then the obvious down payment) to be aware of when purchasing a property in BC or Alberta.

Property Transfer Tax (for BC property purchases only)

This is a BC provincial tax charged every time a BC property changes hands. The cost is 1% on the 1st $200,000 of value, and 2% thereafter up to $2M, and finally, the tax scales up to 3% on the portion that is greater than $2M (i.e. a $1.5M purchase in Vancouver would result in a property transfer tax of $28,000). There are First Time Home Buyer exemptions and rebates that are available, Click Here to be redirected to the BC Government website for more information, or feel free to contact Marko Gelo to discuss further. Alberta has no such property transfer tax. However, small land title transfer fees and mortgage registration fees are incurred upon purchasing a property in Alberta (Click Here for more information).

GST

If you are buying a newly subdivided lot or a new home, GST will generally be charged at 5% on the full amount of the purchase. A new GST rebate is still pending (as of August 2025) for First Time Home Buyers, Click Here for the most current update to see if the legislation has passed. Click Here to learn about the proposed rebate.

Appraisal

Most lenders will require an appraisal of the property to support the lending value of the property. Commercial appraisals are significantly more expensive and more time consuming to prepare given the complexity of the appraisal required. Generally speaking, if you are purchasing or refinancing a home with a loan-to-value ratio less than 80% (20% down payment or greater), you will require an appraisal as the mortgage is not insured. Most residential appraisals in Canada range from ~$275 to $500 (depending on the city, location, and size of property).

Property Inspection

An inspection is a thorough evaluation of the structure, systems and components of a home. The inspection report is usually multi-paged, and comments on the condition of, but not limited to: foundations, electrical, plumbing, heating, water heaters, appliances, fireplaces, drainage, roof, walls, floors, attic, crawl spaces, patios, etc. An inspection is not required by the lender, but is rather encouraged to the purchaser for assurance, it’s the most common of conditions that are negotiated within the offer . An inspection can cost anywhere between $300-$500 but the cost is well worth identifying any major cost repairs required.

Title Insurance

A form of insurance that protects the lender’s interest in the mortgaged property in the event there is some discrepancy on title that would create a legal problem, many lenders require title insurance. Title insurance is often a less expensive and acceptable alternative to getting a survey prepared for the property. Title insurance is purchased through your lawyer and ranges from $200-$400.

Survey

Lenders may require a survey to support the purchase of a property. A survey is a drawing by a certified surveyor of the property lines and where the building sits on the property. This is done so that the lender can verify exactly what and where they are lending on, and to provide some assurances that the buildings are not illegally encroaching on neighbouring properties, etc. The cost of the survey varies for size/complexity of the property but standard neighbourhood lots have a survey cost of about $270 to $400. 

Mortgage Insurance

The term Mortgage Insurance is used in two different ways, and each have different and specific purposes:

1. Life/Disability Insurance – This insurance is often recommended by lenders to ensure that you are able to meet the mortgage payments should you or your co-borrower become disabled or pass away during the term of your mortgage. Rates and Coverage vary widely depending on age and health. It is worth mentioning that Life/Disability Insurance is not a mandatory requirement from lenders, however, it is aggressively pitched from bankers and brokers during the mortgage closing process.
2. Mortgage Default Insurance – Mortgage default insurance is required on mortgages where the borrower is borrowing more than 80% of the value of the property, it is an insurance premium that is tacked on to your mortgage becoming a part of the overall balance (not an out-of-pocket expense). As of August 2025, there are four main Default Insurance providers in Canada; CMHC, Sagen, Genworth, and Canada Guaranty. Application fees for these programs range anywhere from $100 to $200.

Realtor Commissions

If you are purchasing and use a Realtor to help you, the seller will pay for their Realtor and yours, therefore, there is no realtor fee owing from you. But if you are selling, fees vary, and are often 6 or 7% on the 1st $100,000 and 3 or 4% thereafter. Also be aware that GST is applied to the Realtor commission and is charged to the seller. Oftentimes, sellers forget to account for the subtraction of Realtor commissions from the sales proceeds of the property they are selling and are then left with an unexpected shortfall on the closing date of the property they are purchasing.

Legal fees

If you are selling a property, you will be responsible for legal fees regarding clearing the title for the purchaser. If you are the purchaser, you are responsible for conveyance fees, preparation of statements of adjustment, and mortgage registration. Legal Fees vary depending on the depth and complexity of the transaction, they can range anywhere from $1,200 to +$3,000 for purchase transactions and $800 to +$2,000 for refinance transactions.

Interest Adjustments

This is the interest that you will pay for receiving the mortgage funds for periods outside of standard payment periods. For example, if your completion date was on the 23rd of a 30 day month, you owe 8 days interest for those days before normal payment cycles commence.

Property Tax Adjustments

Generally, property taxes for the calendar year are paid at the beginning of July. If you purchase a property before July 1st, the seller will be paying you for the days they owned the home from January 1st to completion day. You then are responsible for the entire amount to be paid to the municipality on July 1st. If you purchase a property after July 1st, you will pay the seller for the days you own the property from completion day to December 31st, as they will already have paid the entire amount to the municipality on July 1st.

Rental Deposit Adjustments

If the property has a rental suite the vendor must transfer the tenant’s security deposit to the purchaser. If completion takes place mid-month, adjustments must also be made for rent collected by the vendor and pro-rated payment made to the purchaser.

Property Insurance

If you have a mortgage on a property, almost every lender will want to make certain that you have adequately insured the property for loss from fire, flood etc. Note that the insurance must be for the full property value rather than just the mortgage amount. In the event of a loss, it is standard practice mortgaged property generally notes the financial institution as the payee. There is a fee of about $35 for the insurance company to confirm coverage in this manner and is often referred to as a “binder.”

Wondering if you have accounted for everything on your pending sale and/or purchase? Link up directly with Marko for more information (see below, “Connect With Marko”).

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