Mortgages: How much does taking out a mortgage in Canada cost?

Many people think that once they have saved their down payment, the deal is done when theybuy a property. However, this is far from being the case. Often the additional costs can range from 1.5% to 4% of the total purchase price of your home. You will have to pay administrative and legal fees in the final stages before closing on your home. In addition to these closing costs, there are other expenses that must be considered. It is up to you to determine if they are required for your situation.

Mandatory closing costs for home buyers

Home inspection

It is always strongly recommended that potential buyers, once their offer has been accepted, have the house inspected to assess the condition of the property. This is often a condition that is part of your offer on a property. A home inspector will write a report on the condition of the property you are considering, which should reveal anything you may not have known about it. For example, it may be discovered that you do not actually own the land on which your garage is located, which would be a reason to forego the purchase of a property. A home inspection should cost about $500.

Down payment

A down payment can be a guarantee to the seller that you are committed to buying their property. The deposit you provide will be part of the down payment on the property. If you plan to make a down payment, it must be made as part of your offer to purchase. The down payment is often used to demonstrate to the seller that you have the financial means to purchase the property at your offer price and that you are willing to assume an element of risk during the process of closing the sale of the property. There is no minimum deposit required.

Mortgage costs

The main cost associated with your mortgage is mortgage default insurance (CMHC insurance). It is only mandatory for those who make a down payment of less than 20% of the total purchase value of the property. Your down payment determines the size of this cost, and you will pay a higher percentage if your down payment is lower. The purpose of this cost is to give the lender additional protection when accepting borrowers who do not have the ability to provide larger down payments. This fee will be added to your monthly mortgage payments.

Costs covered by the buyer

Land Transfer Tax

This tax is calculated as a percentage of the total purchase price of the property and is payable at closing. The amount of this tax varies depending on the province of Canada in which you live. Some cities, such as Toronto, also have a municipal land transfer tax to keep in mind.

Title insurance

Most lenders require title insurance. This protects against loss in the event of a dispute over ownership of the property. Generally, you can purchase it through your attorney and it should cost between $100 and $300.

Legal fees

Legal fees can be significant, and you should expect them to be at least $500. Legal fees will be paid for a lawyer or notary to prepare official statements during the home buying process. It is recommended that you have a residential real estate attorney in mind before you even begin making offers on properties.

Water analysis

If the property you are buying has a well, you may want to test the water quality and supply. This may be part of your offer with the landlord and they may cover the cost.

Septic tank

If the property has a septic system, it should be assessed by a professional to confirm that it is in working order and that there are no significant problems. The cost of this operation may be negotiated with the seller as part of your offer.

Fees charged by the lender

Your lender may also charge its own fees when the mortgage closes, such as administration, property appraisal or legal document preparation fees. These amounts vary from one lender to another, including between a traditional bank and an online mortgage lender. A lower rate can therefore be partly offset by higher fees.

As of September 2026, a federally regulated lender, such as a bank, must disclose certain information to you in a disclosure statement included with your application or mortgage agreement. It shows, among other things, the annual percentage rate (APR) and the total cost of borrowing, which includes charges such as administration, broker, appraisal or inspection fees. The Financial Consumer Agency of Canada lists this required information.

Before choosing between two offers, ask each lender these questions:

Lender fees: which fees are added on top of the rate when the mortgage closes?
Legal services: does the lender require its own lawyer, notary or closing service, and who pays for it?
Your lawyer or notary: does their fee change depending on the lender you choose?