What Are Closing Costs and Why They Matter
When you buy a home in Ontario, the purchase price is just the beginning. Closing costs are the fees and taxes you pay on top of the property price to complete the transaction. For most Ontario buyers, closing costs range from 1.5% to 4% of the total purchase price. On a $700,000 home in the GTA, that's anywhere from $10,500 to $28,000—money you need to have available beyond your down payment.
Many first-time buyers are caught off guard by these costs. Understanding what's included helps you budget accurately and avoid surprises at the closing table.
The Ontario Land Transfer Tax: Your Biggest Closing Cost
The Ontario Land Transfer Tax is the single largest closing expense for most buyers. This provincial tax is calculated on a sliding scale based on your purchase price:
- Up to $55,000: 0.5%
- $55,001 to $250,000: 1.0%
- $250,001 to $400,000: 1.5%
- Over $400,000: 2.0%
On a $600,000 purchase, you'd owe approximately $9,475 in transfer tax alone. Some municipalities, including Toronto, add a municipal land transfer tax on top of the provincial amount, which can add another 0.5% to 1.5% depending on the property value.
First-time homebuyers may qualify for a rebate on the Ontario Land Transfer Tax—up to $4,000 if your property costs $368,000 or less. Your real estate lawyer can confirm your eligibility when they review your purchase agreement.
Legal Fees, Inspections, and Title Insurance
Your real estate lawyer handles the legal paperwork, title search, and registration of your property. Expect to pay $800 to $1,500 in legal fees, depending on the complexity of your transaction and the lawyer's experience.
A home inspection—highly recommended—costs $300 to $500 and gives you a detailed assessment of the property's condition before you commit. If the inspection reveals issues, you may negotiate repairs or credits with the seller.
Title insurance protects you against disputes over property ownership. A one-time premium of $200 to $400 is standard and provides coverage for the life of your ownership.
Mortgage Insurance, Appraisals, and Other Lender Costs
If your down payment is less than 20%, your lender requires mortgage default insurance (CMHC, Sagen, or Canada Guaranty). The premium—typically 2% to 4% of your mortgage—is usually added to your mortgage balance, so you pay it over time.
Lenders also order a property appraisal ($250–$400) to confirm the home's value supports your mortgage amount. If you're switching lenders, you may pay early discharge fees on your current mortgage, usually $100 to $400.
Utilities, Property Taxes, and Final Adjustments
At closing, you and the seller adjust property taxes and utility costs based on your ownership period. If the seller prepaid taxes or utilities, you reimburse them for the portion you're responsible for. These adjustments are calculated to the closing date and are typically settled on the statement of adjustments your lawyer prepares.
Some lenders also require title insurance; survey fees (if ordered); property tax certificates; and condo documents review if applicable. Condo buyers in the GTA should budget extra time and costs for reviewing reserve fund studies and status certificates.
Budgeting and Planning Ahead
Create a closing cost estimate early in your purchase process. Ask your real estate agent and mortgage broker for a detailed breakdown based on your property price and down payment. Many closing costs are negotiable—title insurance, home inspections, and even some legal fees can vary by provider.
Don't forget to factor in immediate post-closing expenses: property taxes (due semi-annually), home insurance (required by lenders), and any repairs or updates your inspection flagged.
Working with an experienced real estate professional and lawyer in your area—whether you're buying in Toronto, Mississauga, or Brampton—ensures you understand every line item and avoid costly mistakes. Ready to take the next step? Browse available homes and start your Ontario homebuying journey with confidence.