Closing Costs When Buying a Home in Calgary: What to Budget For

When you're saving to buy a home in Calgary, it's easy to focus on the down payment and forget about closing costs. These are the extra expenses that come due on or around possession day, and planning for them early can make your move much less stressful. Here's a plain-language look at what to expect.

How much should you set aside?

Canada Mortgage and Housing Corporation (CMHC) describes closing costs as costs on top of the purchase price, such as legal fees, transfer fees and disbursements, and notes they typically range from 1.5% to 4% of a home's selling price. The exact amount depends on the property, your mortgage and the professionals you work with, so it's smart to build a cushion into your budget rather than plan to the last dollar.

Alberta's land titles registration fees

Alberta doesn't have a land transfer tax like some other provinces. Instead, you pay registration fees when the Land Titles Office registers the transfer of the property into your name and registers your mortgage. According to the Government of Alberta, the value-based portion of these fees is $5 per $5,000 of value for both land transfers and mortgage registrations. Your lawyer will calculate the full amount and include it in your statement of adjustments.

Other common costs to plan for

• Legal fees and disbursements: In Alberta, a real estate lawyer handles the paperwork, title search and transfer of funds. Ask for a quote up front so you know what's included.
• Home inspection: Highly recommended for resale homes so you understand the condition of the property before you firm up your offer.
• Property tax and utility adjustments: If the seller has prepaid property taxes or other costs for the year, you may reimburse them for the days you'll own the home.
• Home insurance: Your lender will usually want proof of insurance before closing.
• Condo documents review: If you're buying a condo, budget for having the condo documents reviewed, and ask about condo fees and any upcoming special assessments.
• GST on new homes: Newly built homes can be subject to GST. Ask the builder whether it's included in the price and whether any rebates may apply to you.
• Moving and setup: Movers, utility hookups and a few first-week essentials add up quickly.

Tips to avoid surprises

Speak with a lender early to get pre-approved and to ask how mortgage default insurance, appraisal or other fees may apply to your situation. Ask your lawyer for an estimate of their fees and the land titles costs before you write an offer. And keep some savings set aside after closing day for those little things every new homeowner runs into.

This article is general information only and isn't legal, tax or mortgage advice. Please speak with your lender and real estate lawyer about your own situation.

Ready to start your search?

If you're thinking about buying in Calgary, you can search homes for sale anytime. Planning to sell first? Get a free home value estimate to see where you stand. I'm always happy to walk you through the numbers and answer your questions, in English or Arabic, so reach out anytime.

— Hani Shihab, Century 21 Bravo