Closing costs are the fees and expenses required to finalize a real estate transaction. They cover various services and administrative processes, ensuring the legal transfer of property ownership. These costs could be between 1.5% and 4% of the purchase price and may include appraisal, home inspection, land transfer taxes, title insurance, and legal fees. We will discuss these fees below:
Appraisal Fees: The cost of determining the property’s market value. Your mortgage approval depends on the appraised value. If your mortgage down payment or equity is less than 20%, the appraisal is paid for by the mortgage default insurer (CMHC, Canada Guaranty, or Sagen).
Legal Fees: Charges for services provided by a real estate lawyer, the only person authorized to register a mortgage on your title.
Title Insurance: Protects against potential title disputes. This is a mandatory item for most mortgages.
Land Transfer Taxes: Government fees for transferring property ownership, even transfers between family members.
Mortgage Origination Fees: Costs associated with processing your mortgage application, especially if your mortgage is from a trust company, sometimes a credit union, and always from a private lender and are unavoidable if your income is low or if your credit is lower than those acceptable by a traditional lender,
How to Lower Closing Costs
Closing costs can feel overwhelming and typically constitute a set percentage of your mortgage. However, there are ways to minimize them:
Shop Around for Services: Compare quotes from appraisers, home inspectors, and real estate lawyers. While you may not always choose your appraiser, ask your mortgage broker to recommend multiple options for appraisers and lawyers so you can conduct due diligence.
Leverage Offers: Programs like the Sunlite Mortgage Closing Cost Offer reimburse your appraisal and legal fees, making it easier to save money. Check with your lender or broker for similar incentives.
Negotiate Seller Contributions: In rare cases, sellers may agree to cover a portion of your closing costs during the negotiation process.
Time Your Closing: Closing near the end of the month can reduce interest adjustment costs. For example, if your mortgage closes on March 5, you will owe interest for nearly a month from March 5 to April 1. Closing closer to March 31 minimizes this cost, as regular payments begin the following month.
Difference Between Closing Costs and Down Payment
It is common to confuse closing costs with the down payment, but they are separate financial obligations:
Down Payment: A percentage of the home purchase price paid upfront, reducing the amount borrowed.
Closing Costs: Additional fees are required to complete the transaction. These include appraisals, legal fees, taxes, property transfer costs, and lender or broker fees for mortgages where the lender doesn’t compensate the broker for their time and securing the mortgage.
Both are essential to budget for when buying or refinancing a home.
Closing Costs for Refinancing a Mortgage
Refinancing a mortgage incurs closing costs, which differ slightly from purchasing a property. Common fees include:
Appraisal Fees: Necessary to reassess your property value.
Title Insurance: New policies may be required to protect against potential title issues.
Legal Fees: Ensures that the loan terms are correctly modified.
Discharge Fees: Charged by your existing lender to close out the current mortgage.
These costs can often be rolled into your loan amount or offset through Sunlite Mortgage\u2019s programs.
Are Closing Costs Tax Deductible?
In Canada, closing costs for residential properties are generally not tax deductible. However, there are exceptions:
Investment Properties: Legal and appraisal fees may be deductible for earning rental income.
Moving Expenses: Relocating for work or business purposes may qualify for deductions.
Consult a tax professional to determine eligibility for these deductions.
Sunlite Mortgage Closing Cost Offer
At Sunlite Mortgage, we are dedicated to making your homeownership journey more affordable. By applying for a Traditional or Private Mortgage through one of our agents, you can have your appraisal and legal fees reimbursed, covering critical closing costs. We also connect you with trusted real estate lawyers and appraisers to streamline the process. Plus, you will receive up to $6,156.00 after your mortgage closes!
How It Works
Apply for and fund a Traditional or Private Mortgage through a Sunlite Mortgage agent by March 2, 2025 and close by June 30th, 2025.
You can take advantage of this offer by purchasing, refinancing, renewing, or switching your mortgage using a Sunlite Mortgage agent.
Eligibility Requirements
Your mortgage must meet the following criteria:
A Traditional Mortgage with a minimum three-year closed-to-prepayment term or
A Private Mortgage with a minimum one-year closed-to-prepayment term.
A new principal amount of $100,000 or more.
The transaction must be completed through a Sunlite Mortgage agent.
What You Will Receive
Reimbursement of appraisal and legal fees of up to $600, legal costs of $1,456.00 and a lender closing fee of $4,100.00*after closing.
A cash bonus of up to $2,056 will be sent via e-transfer five business days after your mortgage closes.
Lender Cash bonus will be mailed after the second mortgage payment or 60 days, whichever is later.
Why Choose Sunlite Mortgage?
Competitive mortgage rates tailored to your needs.
Expert advice from experienced mortgage brokers.
Seamless coordination with trusted real estate lawyers and appraisers.
Important Notes
This offer is subject to meeting Sunlite Mortgage and its lenders’ credit-granting criteria.
The offer does not apply to business lending.
It cannot be combined with other offers unless specified.
Sunlite Mortgage reserves the right to change or withdraw this offer anytime.
Take the first step toward savings. Apply and fund your Residential Mortgage by March 2, 2025, and let Sunlite Mortgage help with your closing costs.
