At Key, since day one, our goal has been to provide those who’ve been locked out of the real estate market the opportunity to become a homeowner. We have created an innovative co-ownership model which allows you to become an Owner-Resident for an initial payment starting at just 2.5% of the value of your suite and no required mortgage.

We reduced the barriers to entry further by changing and simplifying yet another aspect of homeownership, closing costs. Although sometimes overlooked, during the home buying process, these costs can add up, and struggling home-buyers can run out of options to foot the bill.

Closing costs refer to a range of expenses a buyer incurs during a sale. It usually includes legal and other one-time fees like land transfer tax, real estate lawyer fees, and more. Closing costs are incurred on top of a down payment and can usually add up to be a large amount.

Mortgage closing costs in Canada

In Canada, mortgage closing costs are usually around 4-6% of the purchase price, which can be a sizable amount for most homes. For example, on a condo that costs $800,000, closing costs can be up to $48,000. On top of mandatory closing costs, there are additional cash outlays that buyers need to consider, which can make the mortgage process not only tedious but very expensive. Here are the primary closing costs to consider:

  • Property Evaluation Fee – To evaluate the value of your property, the lender usually hires an appraiser to determine the fair market value of the property which is then charged on your account. Usually costs $300 or more.
  • Land & Municipal Transfer Tax – It’s calculated as a percentage of the purchase price and all provinces have their own Land Transfer Tax with cities like Toronto imposing their own Municipal Transfer Tax as well.
  • Legal Fees & Disbursements – In order to facilitate a smooth transfer, a minimum of $500 is expected to incur in legal fees for document preparation with disbursements referring to additional expenses incurred by the lawyer.
  • Title Insurance – This prevents you from real estate title fraud, and disputes arising from property ownership. Lenders require this and it usually costs around $400.
  • Fire/Property Insurance – Property insurance protects the home against fire and other issues. It’s usually mandated by the lender (bank) for the property’s replacement value.

A few other costs to consider include home inspection fees, PST on CMHC insurance, water tests, Condo/Estoppel Certificate Fee, GST/HST, prepaid property taxes, utility bills, and moving expenses.

Key’s closing costs as a co-owner

Closing costs can be a source of anxiety for many, especially those who’ve already struggled to save for the 20% down payment, endured the high pressure experience of finding the perfect home, and navigated the tedious mortgage approval process. With this in mind, Key applied its signature craftsmanship in creating innovative real estate solutions to streamline closing costs when you become a co-owner.

When Owner-Residents become co-owners with Key, they only pay a 1% transaction fee on all equity invested and withdrawn. For example, if they invest 2.5% on a $500,000 condo, they pay a 1% transaction fee on the $12,500, which would be only $125. The 1% transaction fee applies to any future equity purchases, and equity withdrawals.

At Key, our goal is to make homeownership a source of freedom and prosperity for everyone, and we couldn’t allow closing costs to get in the way of that mission.

If you choose the purchase the suite using a conventional mortgage after 3 years

After three years, if an Owner-Resident chooses to take on a mortgage and purchase the full suite the conventional way, they will need to pay the traditional closing costs associated with buying and selling real estate, you can learn more about them here.

You can learn more about how Key compares to traditional homeownership here, and visit our FAQ page to learn more about our model.