Closing Costs in Quebec: What Every Buyer Needs to Know

When planning a property purchase in Quebec, it is essential to budget 3% to 5% of the purchase price for closing costs, in addition to the down payment. For a $400,000 property, this represents $12,000 to $20,000 in additional expenses. These costs cannot be financed through the mortgage (with the exception of the loan insurance premium) and must come from your own funds. A first-time buyer who neglects to plan for these costs may find themselves short on cash at closing.

Breakdown of Major Closing Costs

1. Notary fees ($1,500 to $3,000): The notary prepares the deed of sale and mortgage deed, performs title searches at the Quebec Land Register, verifies the absence of problematic charges or servitudes, reviews the certificate of location and publishes the deeds at the register. Fees vary by transaction complexity and region. For a first purchase with a mortgage, budget $1,500 to $3,000 including taxes.
2. Transfer duties (welcome tax): Transfer duties are calculated in progressive tiers on the higher of the purchase price or municipal assessment. The tiers are: 0.5% on the first $58,900, 1% from $58,900 to $294,600, 1.5% from $294,600 to $500,000 and 3% above $500,000. For a $400,000 property, duties amount to approximately $4,875. The municipality sends the bill weeks or months after the transaction, with a 30-day payment deadline. Montreal applies an additional tier of 3.5% above $1,000,000.
3. Property tax adjustments: The seller has typically paid property taxes for the full year or a portion of it. The buyer must reimburse the seller for the portion of taxes corresponding to the period after the possession date. This amount is calculated pro-rata by the notary and deducted from the balance owed to the seller. Depending on the municipality and property value, this adjustment can range from a few hundred to several thousand dollars.
4. Home insurance ($800 to $2,500 per year): Home insurance is mandatory and must be in effect before the mortgage is disbursed. The lender requires proof of insurance covering at minimum the building's replacement value. Cost varies by property type, location, replacement value and chosen coverages. Shop around with multiple insurers and consider bundling with your auto insurance for a discount.
5. Certificate of location ($1,500 to $2,000): The certificate of location is a document prepared by a land surveyor illustrating property boundaries, building placement and servitudes. It must be current (less than 10 years old, or consistent with the property's current state). If the seller cannot provide a valid certificate, the buyer will need to cover the cost of $1,500 to $2,000.

Mortgage Loan Insurance

If your down payment is less than 20% of the purchase price, mortgage loan insurance is mandatory in Canada. This insurance protects the lender (not the borrower) in case of payment default. Three insurers are authorized: the Canada Mortgage and Housing Corporation (CMHC), Sagen (formerly Genworth) and Canada Guaranty. The premium is calculated as a percentage of the borrowed amount and varies by loan-to-value ratio.

• Down payment of 5% to 9.99%: premium of 4.00% of the loan amount
• Down payment of 10% to 14.99%: premium of 3.10% of the loan amount
• Down payment of 15% to 19.99%: premium of 2.80% of the loan amount
• Down payment of 20% or more: no loan insurance required

Other Costs to Anticipate

Beyond direct closing costs, several additional expenses accompany a first home purchase. The pre-purchase inspection costs $500 to $1,000. A property appraisal, if required by the lender, may cost $300 to $500. Moving ranges from $500 to $3,000 depending on distance and volume. Finally, set aside an emergency fund for unexpected repairs and adjustments after moving in: changing locks, minor repairs, purchasing basic equipment (lawnmower, tools, maintenance products). An amount of 1% to 3% of the property value is recommended as an annual maintenance reserve.

Planning Your Closing Cost Budget

To avoid unpleasant surprises on closing day, first-time buyers should prepare a detailed closing cost budget well in advance. Start by obtaining quotes from at least two notaries in your area to compare fees. Ask your mortgage broker to calculate the exact CMHC premium and provincial tax based on your specific down payment and purchase price. Contact your municipality to understand transfer duty timelines and payment requirements. Begin shopping for home insurance at least 30 days before your expected closing date, as some insurers require inspections for older properties. When calculating your total cash needs, add up the down payment, all closing costs and a reserve fund, then subtract any funds available through the HBP or FHSA. This gives you the total amount you need to have available in liquid savings. Your mortgage broker can prepare a comprehensive cost breakdown tailored to your specific transaction, ensuring you are fully prepared financially when the closing date arrives.