When you are buying a home, your down payment is only one part of the money you need to have ready. There are several other expenses that can come up on or before your closing date. These are known as closing costs.
As a general guideline, it is a good idea to set aside 1.5% to 4% of the purchase price to help cover these additional expenses. The actual amount can vary depending on where you are buying, the type of property, your mortgage details, and the services needed before closing.
Here are some of the common closing costs to be aware of when buying a home in Nova Scotia.
Deed Transfer Tax
Deed transfer tax is a one-time tax paid when a property changes ownership. In Halifax Regional Municipality, the deed transfer tax is 1.5% of the purchase price.
Rates can vary by municipality across Nova Scotia, so it is important to confirm the rate for the area where you are buying before closing.
If you are not a Nova Scotia resident, a provincial Non-resident Deed Transfer Tax may also apply. As of April 1, 2025, this tax is 10% for qualifying residential property transfers. There may be exemptions in some situations, so it is important to get proper advice if this could apply to you.
Home Inspection
A home inspection is strongly recommended before buying a property. It can help identify potential issues with the home before you complete the purchase.
The cost of a home inspection can vary depending on the size, age, location, and condition of the property. Additional inspections or testing may also be needed. This can include radon testing, septic inspection, well water testing, sewer line inspection, or other property-specific checks.
Legal Fees and Disbursements
You will need a real estate lawyer to handle the legal side of your home purchase. This can include reviewing documents, searching title, registering the deed, working with your lender, and helping complete the closing process.
In addition to legal fees, there may be disbursements. These are extra costs related to the transaction, such as registration fees, title searches, courier fees, and title insurance.
Appraisal Fee
In some cases, your lender may require an appraisal to confirm the property’s value. This can depend on the property, purchase price, down payment, mortgage type, and lender requirements.
Not every mortgage approval requires an appraisal, but it is a cost to be aware of during the buying process.
Property Tax and Utility Adjustments
On closing, you may need to reimburse the seller for certain prepaid expenses. These can include property taxes, water charges, fuel oil, propane, or other utilities that have been paid beyond the closing date.
These adjustments can vary from one property to another. The time of year, property type, and local billing schedules can all affect the final amount.
Title Insurance
Title insurance is often required by lenders and is commonly arranged through your lawyer. It helps protect against certain title-related issues, such as title defects, registration errors, fraud, or other covered risks.
This is usually a one-time cost paid at closing.
HST
Nova Scotia’s HST rate is 14%. HST does not usually apply to the purchase price of most resale homes. However, it can apply to taxable services connected with the purchase, such as legal services, home inspections, appraisals, and other professional fees.
HST can also be an important factor when buying a newly built or substantially renovated home from a builder. If you are buying a new build, it is important to confirm whether HST is included in the purchase price, whether a rebate may apply, and how that rebate is being handled.
Home Insurance
Your lender will usually require proof of home insurance before closing. The cost depends on the property, location, coverage, claims history, and insurer.
If you are buying an older home, rural property, waterfront property, or a home with oil heat, it is a good idea to look into insurance early. This can help avoid delays or surprises before closing.
Mortgage Default Insurance
If your down payment is less than 20%, mortgage default insurance is usually required. This is often called CMHC insurance, although other mortgage insurers may also be involved.
The premium is usually added to the mortgage amount rather than paid upfront. Your mortgage broker can explain how this affects your total mortgage amount and monthly payment.
For Nova Scotia buyers, mortgage default insurance should not be confused with provinces that charge provincial sales tax on the insurance premium. CMHC currently lists Quebec, Ontario, and Saskatchewan as provinces where provincial sales tax applies to mortgage loan insurance premiums.
Moving Costs and Other Expenses
There may also be other costs to plan for, including moving expenses, utility hookups, repairs, furniture, appliances, and immediate maintenance after you move in.
These costs are easy to overlook, but they can add up quickly. It helps to leave some room in your budget instead of putting every available dollar into the down payment.
Plan Ahead Before Closing
Closing costs can vary quite a bit from one buyer to another. A home in Halifax may have different costs than a home in another Nova Scotia municipality. A resale home may have different costs than a new build. A rural property may require additional inspections, insurance review, or utility adjustments.
I can help you review these costs early so you have a clearer idea of what to expect before your closing date.
Buying a home is exciting, but it is much easier when the numbers are clear. Let’s review your down payment, closing costs, and mortgage options so you can move forward with more confidence.
References