by When buying or selling a home in Ontario, one of the most common surprises—especially for first-time buyers—is just how much closing costs can add to the bottom line. These are the final fees and expenses due at the end of a real estate transaction, and while they’re essential to understand, they’re often overlooked in early budgeting.
Let’s break down what closing costs are, what’s typically included, and how much you should expect to pay in Ontario.
What Are Closing Costs?
Closing costs are the legal, administrative, and financial fees that buyers and sellers must pay when a property changes hands. These are separate from your down payment and vary depending on the property price, location, and services involved in the transaction.
For buyers in Ontario, closing costs can range from 1.5% to 4% of the purchase price, while sellers may have fewer but still significant costs to consider.
Typical Closing Costs for Buyers in Ontario
Here’s what most buyers in Ontario should prepare for:
1. Land Transfer Tax
This is often the largest closing cost. Ontario charges a provincial land transfer tax, and if you’re purchasing in Toronto, there’s an additional municipal tax.
➡️ Example: On a $700,000 home outside Toronto, expect to pay about $10,475 in provincial land transfer tax.
First-time homebuyers may be eligible for a rebate of up to $4,000 in Ontario, which can significantly offset this cost.
2. Legal Fees and Disbursements
You’ll need a real estate lawyer to handle the legal aspects of the transaction, such as reviewing the Agreement of Purchase and Sale, conducting a title search, and registering the deed.
➡️ Budget: $1,000–$2,000
3. Title Insurance
This protects you and your lender from title-related issues. It’s a one-time fee.
➡️ Cost: $250–$500
4. Home Inspection (optional but recommended)
Though not legally required, a home inspection can help you avoid unexpected issues after closing.
➡️ Cost: $400–$700
5. Appraisal Fee
If you’re getting a mortgage, your lender might request an appraisal to confirm the property’s value.
➡️ Cost: $300–$500
6. CMHC Insurance (for high-ratio mortgages)
If your down payment is less than 20%, you’ll pay a mortgage default insurance premium, which can be rolled into your mortgage. However, PST on the premium must be paid at closing.
➡️ Cost varies depending on the mortgage amount and down payment.
7. Prepaid Expenses
If the seller has prepaid property taxes or utilities, you may need to reimburse them for your share.
➡️ This amount will be calculated in your final statement of adjustments.
Closing Costs for Sellers
Sellers typically have fewer closing costs, but they’re still important:
1. Real Estate Commission
This is usually the largest expense and is split between the listing and buyer’s agents.
➡️ Typically 5% + HST of the final sale price
2. Legal Fees
Just like buyers, sellers need a lawyer to close the transaction.
➡️ Cost: $900–$1,500
3. Mortgage Discharge Fees
If you’re paying off a mortgage, your lender may charge a fee to discharge it.
➡️ Cost: Varies – typically $200–$400, but early discharge penalties may apply
4. Moving Costs
Not exactly a legal closing cost, but worth budgeting for! Whether you’re hiring movers or renting a truck, plan accordingly.
Final Thoughts
Closing costs can sneak up on you if you’re not prepared, which is why I always walk my clients through them early in the process. Whether you’re a first-time buyer, upgrading, or downsizing, planning for these costs will help ensure a smoother, stress-free closing day.
Thinking about buying or selling in Innisfil, Simcoe County, or surrounding areas? I’m happy to provide a detailed estimate of your closing costs and walk you through the entire process, start to finish.
Let’s connect and make your next move seamless.
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