The Closing Cost Surprise
First-time buyers in Ontario consistently underestimate closing costs. On a $700,000 purchase in Toronto, closing costs can total $25,000–$35,000+ beyond the down payment. If you don't budget for these, you may find yourself short on closing day — and that creates serious legal and financial problems.
Ontario Land Transfer Tax
This is your largest closing cost. Ontario's LTT is calculated on a sliding scale:
- 0.5% on the first $55,000
- 1.0% on $55,001 to $250,000
- 1.5% on $250,001 to $400,000
- 2.0% on $400,001 to $2,000,000
- 2.5% on amounts over $2,000,000
On a $700,000 purchase: approximately $11,475. First-time buyers are eligible for a rebate of up to $4,000, reducing this to approximately $7,475.
Toronto Municipal Land Transfer Tax
If you're buying within the City of Toronto, you pay an additional municipal LTT at similar rates. On a $700,000 purchase: approximately $8,163. First-time buyers can claim a rebate of up to $4,475, reducing this to approximately $3,688.
Combined LTT for a first-time buyer purchasing at $700,000 in Toronto: approximately $11,163 after rebates. For a non-first-time buyer: approximately $19,638.
Legal Fees
Your real estate lawyer handles title search, document preparation, mortgage registration, and fund transfers. Expect to pay $1,500–$2,500 for a standard residential purchase. Complex transactions (new construction, estate sales, title issues) may cost more.
Title Insurance
Title insurance protects you against defects in the property's title that were not discovered during the title search — fraud, survey errors, zoning violations, and encroachments. Cost: $300–$500 for most residential properties. Your lawyer will arrange this.
Home Inspection
$400–$600 for a standard residential property. You pay this before closing, typically during the conditional period. Some buyers get a pre-offer inspection to strengthen their offer in competitive situations.
Appraisal Fee
Your lender may require a property appraisal to confirm the home's value supports the mortgage amount. Cost: $300–$500. Some lenders waive this fee or include it in their mortgage package.
Property Tax Adjustment
If the seller has prepaid property taxes beyond the closing date, you'll reimburse them for the prepaid portion. This is calculated by your lawyers and adjusted on closing. Budget $1,000–$3,000 depending on the property's assessed value and closing date.
Mortgage Insurance (CMHC)
If your down payment is less than 20%, you must pay mortgage default insurance through CMHC, Sagen, or Canada Guaranty. The premium ranges from 2.8% to 4.0% of the mortgage amount, depending on your loan-to-value ratio. On a $700,000 purchase with 10% down, the CMHC premium is approximately $19,950 — added to your mortgage balance.
Moving and Setup Costs
Budget $1,000–$3,000 for movers, utility setup, mail forwarding, lock changes, and immediate necessities. These aren't technically "closing costs" but they're due immediately after you take possession.