Closing costs in Alberta typically range from 1.5% to 4% of a home’s purchase price and include legal fees, land transfer costs, title insurance, and property tax adjustments. These expenses are due on the closing day—when the property officially transfers ownership—and are separate from your down payment. Many first-time buyers do not realize these extra costs. These costs can add thousands to the total needed to buy a home.
What Are Closing Costs?
Closing costs are the final expenses that come with transferring ownership of a property. They ensure all legal, administrative, and financial details are properly handled before you receive the keys. Unlike your down payment, which goes toward your mortgage, closing costs cover the professionals and services involved in finalizing the sale.
Common Closing Costs in Alberta
Here’s a breakdown of what most buyers can expect to pay:
- Legal Fees and Disbursements: Your lawyer handles the paperwork, title transfer, and funds exchange. Expect to pay between $1,000–$1,500.
- Title Insurance or Title Registration: Protects you and your lender from potential ownership disputes—usually $200–$400.
- Property Tax and Utility Adjustments: You may need to reimburse the seller for prepaid property taxes or utilities on the home.
- Home Inspection (Optional but Recommended): Typically $400–$600, providing peace of mind before final purchase.
- Appraisal Fee: Sometimes required by lenders to confirm property value, generally $300–$500.
- Land Transfer Costs: Alberta does not charge a traditional “land transfer tax,” but you’ll pay small land title registration fees based on property value.
- Insurance Premiums: If your down payment is under 20%, CMHC insurance is added to your mortgage; however, you’ll also need home insurance before possession day.
What First-Time Buyers Often Miss
Many new buyers focus solely on their down payment and forget that these fees can’t be rolled into their mortgage. Here are common oversights:
- Underestimating legal fees or assuming the seller covers them.
- Forgetting about adjustment costs for taxes and utilities.
- Skipping title insurance, which can cause serious problems later.
- Not budgeting for moving expenses or final walkthrough issues that may need repair.
Planning ahead ensures your purchase goes smoothly and avoids last-minute surprises.
How to Budget for Closing Costs
A good rule of thumb is to set aside at least 2% of your home’s purchase price for closing expenses. For example, on a $400,000 home, budget an extra $8,000 to cover all fees comfortably. Your mortgage broker or lawyer can help you get a precise estimate before you sign.
Summary
Understanding closing costs early helps you buy with confidence. By planning ahead for these often-overlooked expenses, you’ll avoid financial surprises and ensure a seamless transition into your new home.
If you’re preparing to buy your first home in Alberta, a trusted Lethbridge mortgage broker can walk you through each step—from pre-approval to closing day—so you know exactly what to expect.
