Understanding Closing Costs When Buying a Home

Every buyer budgets the down payment. The good ones also budget the second bill, the cluster of costs that lands in the final two weeks and must be paid in cash. Plan for roughly 1.5-4% of the purchase price.

The big one: land transfer tax

Ontario's marginal brackets put roughly $11,475 of tax on a $750,000 purchase, and buying inside the City of Toronto doubles it with the municipal tax. First-time buyers claw back up to $4,000 provincially and $4,475 in Toronto. This is the line item that most often ambushes buyers.

The professional fees

• Legal fees and disbursements: $1,500-2,500 for a typical purchase, including registrations and searches.
• Title insurance: $250-500, protecting against fraud and title defects.
• Home inspection: $400-600, optional in name, foolish to skip on resale homes.
• Appraisal: $300-500 when the lender requires one (often covered on promotions).

The adjustments and extras

On closing you reimburse the seller for anything prepaid past the closing date, property taxes, utilities, a filled oil tank. New builds add development-charge caps, Tarion enrolment and HST nuances that deserve their own review. Then come the immediate move-in costs: movers, locks, utility hookups.

Two costs that hide inside the mortgage

If your down payment is under 20%, the CMHC premium itself is financed into the loan, but the Ontario PST on that premium (8%) is cash on closing. A $15,000 premium means $1,200 of PST at the lawyer's office.

Budget it before you offer

The worst time to discover closing costs is between firming up and closing, when your only source of funds is a panicked credit line. Our closing costs calculator itemizes your exact scenario in under a minute, run it before you set your offer ceiling, and the closing table becomes paperwork instead of drama.

← All articles · Next: How to Refinance Your Mortgage in Ontario →