If you are borrowing more than 80% of the purchase price of the home, you will need to obtain mortgage insurance from the Canada Mortgage and Housing Corporation. The CMHC's scale is as follows:
- 80–85% of purchase price: 1.75% of mortgage, plus PST
- 85–90%: 2% plus PST
- 90–95%: 2.75% plus PST
- over 95%: 3.1% plus PST
If you are arranging your mortgage through a mortgage broker, you may be charged a finder's fee as well; usually, the lender pays this fee to the broker, but if you are considered a high-risk mortgagee, it may apply to you as well.
All mortgage companies require you to carry home insurance, and if you ever have a fire or major theft, you'll be thankful for it. The cost varies widely depending on your coverage and the company you insure with; just as with car insurance, it's worth shopping around to get the best price. Some companies offer discounts if you insure both your home and car with them.
There are a slew of miscellaneous but necessary legal documents that a house sale generates, which can only be processed by a lawyer. However, by law the maximum a lawyer can charge you for his services is 1% of the purchase price or $1,200, plus GST and disbursement costs (more about that in a moment). The lawyer will generate the following searches and documents for you:
- Title Search, which verifies that the vendor legally owns the property and can sell it;
- Searches with the utilities, tax departments and building department to verify that there are no liens on the property;
- Registering the title deed and mortgage;
- In the case of a rural property, septic tank and potable water searches.
On top of the lawyer's fee, there are also disbursement costs, which are the miscellaneous fees of doing the search, such as office faxes, phone calls and mail costs, and other costs of doing business.
Title insurance is not mandatory, but most lawyers highly recommend it these days to protect you against mortgage fraud, identity theft and forgery, a growing crime especially in large urban areas. As Clapp notes, many computerized municipal records are surprisingly vulnerable to fraudulent hackers. The cost on a $450,000 home is a few hundred dollars.