Closing costs are the fees and expenses you pay on top of your down payment when you finalize a home purchase. For Canadian Muslim homebuyers using halal financing, these costs follow the same general structure as conventional mortgages, with a few differences specific to the shariah structure. Knowing what to expect helps you budget properly and avoid surprises at the closing table.
This guide covers the costs specific to halal home financing in Canada. For a full overview of halal home financing options available in Canada, see HalalWallet's halal home financing hub.
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Legal fees
Legal fees are one of the larger closing cost items in Canada. You'll need a real estate lawyer to review your purchase contract, handle the title transfer, and manage the closing funds. Legal fees typically range from $1,500 to $3,000 depending on your province and the complexity of the transaction. Ontario and British Columbia tend to be at the higher end of this range.
For halal financing, your lawyer will also need to review and execute the shariah-specific contract documents (the musharakah agreement, ijara lease, or murabaha contract depending on which provider you use). Not all real estate lawyers in Canada are familiar with these structures. Confirm with your provider that they can recommend lawyers in your area who have handled Islamic finance transactions before.
Land transfer tax
Land transfer tax is a provincial tax paid by the buyer when property changes hands. Rates vary significantly by province. Ontario charges between 0.5% and 2.5% depending on the purchase price, with Toronto buyers paying an additional municipal land transfer tax. British Columbia charges between 1% and 5%. Alberta and Saskatchewan don't have a provincial land transfer tax. First-time homebuyers get partial or full rebates in some provinces, so confirm your eligibility.
One historical complexity for Islamic finance in Canada: in some provinces, the halal structure requires two title registrations (one for the provider's ownership interest and one for yours), which could trigger land transfer tax twice. This has been largely addressed by providers who have worked with provincial governments to streamline their structures, but confirm with your specific provider how they handle this in your province.
CMHC mortgage insurance
If your down payment is less than 20% of the purchase price, you're required to get mortgage default insurance through CMHC (or Sagen/Canada Guaranty). This premium is added to your mortgage amount, not paid upfront, but it's a real cost. Premiums range from 2.8% to 4% of the insured mortgage amount depending on your loan-to-value ratio.
For halal financing, CMHC has historically been more restrictive in what products they'll insure. Manzil has worked to achieve CMHC-insured status for some of their products. IjaraCDC also has insured options. Confirm with your provider whether their product qualifies for CMHC insurance before assuming you need 20% down.
Appraisal fee
Halal mortgage providers require a property appraisal to confirm the home's market value. Appraisal fees typically run $300 to $600 in Canada, though they can be higher in remote areas or for unusual property types. Some providers include the appraisal in their origination fee; others charge it separately. Ask your provider how they handle this.
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Title insurance
Title insurance protects against title defects, survey issues, and title fraud. It's increasingly standard in Canadian real estate transactions and typically costs $200 to $400. Your lawyer will usually organize this as part of the closing process.
Home inspection
A home inspection isn't technically a closing cost (you pay it before making an offer or removing conditions), but it's a real cost of buying a home. Budget $400 to $700 for a standard inspection, more for larger properties. For halal financing purposes, the inspection is identical to what any homebuyer would order.
Provider-specific fees
Each halal provider has their own fee structure. Manzil, Eqraz, Tjara, and IjaraCDC all charge origination fees that cover their administrative and underwriting costs. These typically range from 0.5% to 1.5% of the financing amount. Get a written fee breakdown from any provider before proceeding so you can compare total costs across options.
Total closing costs to budget
As a rule of thumb, budget 1.5% to 4% of the purchase price for closing costs in Canada, not counting your down payment. On a $600,000 home, that's $9,000 to $24,000. Provinces with land transfer tax and high legal fees tend toward the higher end. Alberta buyers without provincial transfer tax will be closer to the low end.
Frequently asked questions
Do halal mortgages have higher closing costs than conventional mortgages in Canada? Not significantly. The legal fees can be slightly higher due to the complexity of the shariah contracts, and some provinces historically had double land transfer tax issues that providers have worked to resolve. The overall difference is usually small.
Is CMHC mortgage insurance available for halal mortgages? Some halal products in Canada qualify for CMHC insurance. Manzil and IjaraCDC have worked on this specifically. Confirm eligibility with your provider before assuming you need 20% down.
When do I pay closing costs — at closing or before? Most closing costs are paid on closing day through your lawyer. Your lawyer will provide a statement of adjustments showing the exact amounts a few days before closing.
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Do all provinces have the same closing costs? No. Land transfer tax varies significantly. Ontario, BC, and Manitoba have provincial transfer taxes. Alberta, Saskatchewan, and Nova Scotia don't. Legal fees also vary by province and lawyer.
Can I roll closing costs into my halal mortgage? Generally no. Closing costs are typically paid in cash at closing. Some providers may have flexibility on specific fees, but rolling all closing costs into the financing is not standard practice in Canada.
