Closing costs are the additional expenses over and above the price of the property that buyers and sellers incur to complete a real estate transaction. For first-time homebuyers in Edmonton, Alberta, these costs may come as a surprise, but understanding them upfront can help you budget appropriately and avoid unexpected financial strain.
Here are the key closing costs you need to know about:
Land Transfer Taxes:
While many provinces in Canada charge a land transfer tax (LTT), Alberta is not one of them. Instead, there's a smaller transfer fee and mortgage registration fee, which are typically based on the value of the property and the amount of your mortgage. These fees are often a few hundred dollars but can vary.
Legal fees in Alberta can range widely depending on the complexity of the transaction, but for a standard real estate purchase, you can expect to pay between $1,000 to $2,500 plus GST. This cost includes the lawyer's time, conducting a title search, registering the title, and handling other paperwork. Legal fees can impact your total cost of ownership by increasing the amount you need to pay upfront to secure your home.
Property insurance is a must-have for homeowners and is often a requirement before a mortgage is approved. It covers the cost of replacing your home and its contents in the event of damage. In Edmonton, the cost of home insurance varies depending on the value of the home, its location, its condition, and the amount of coverage you choose. This cost is an ongoing yearly expense that needs to be factored into your home ownership budget.
Home Inspection Fees:
A home inspection is a visual examination of the physical structure and systems of a home. While not mandatory, it's highly recommended to identify any potential problems with the property. In Edmonton, home inspections typically cost between $400 and $600 but can vary based on the size of the home. This is an upfront cost that can save you money down the line by identifying necessary repairs or issues before you finalize the purchase.
While the home price is the most significant expense, it's not the only one. These closing costs can add up to several thousand dollars and significantly impact the total cost of owning a home in Edmonton. It's important to budget for these costs in advance to ensure a smooth and successful home buying process.