Closing Costs in Ontario: The Full Guide

Closing costs are the fees, taxes and bills you pay when you take ownership of a home. In Ontario, the biggest one is usually land transfer tax. Next come legal fees, title insurance and a few smaller items. You pay most of these in cash on or just before closing day. You cannot roll them into your mortgage, so you need to plan ahead.

This guide walks through each cost in plain words. It shows what is extra for condos and new builds. It also helps you build a cash budget that holds up on closing day. Ask your own lawyer for exact amounts, since fees change by lawyer, lender and property.

Closing Costs Versus Your Down Payment

Your down payment goes toward the home. It lowers the amount you borrow. Closing costs do not. They pay for taxes, legal work and paperwork. Once you pay them, they are gone.

Many first-time buyers save for a down payment and forget the rest. Then they hit a gap days before closing. That gap can delay or even sink a deal. Build the closing budget at the same time as your down payment plan.

Land Transfer Tax

Land transfer tax, often called LTT, is a tax you pay when title moves to you. It is the largest closing cost for most buyers.

The province charges it in brackets. Each slice of the price is taxed at its own rate. The rate rises as the price goes up. A higher price means a higher tax rate overall.

There is good news for buyers in Halton and Peel. Oakville, Burlington, Milton and Mississauga only charge the provincial tax. There is no second city tax, as there is in Toronto. That can save you thousands of dollars on closing day.

First-time buyers may also get a rebate. The Ontario rebate gives back up to $4,000 of the tax. For many entry-level homes, it covers most of the tax or all of it. Your lawyer applies it on closing day. That cuts the cash you bring.

Use an online land transfer tax calculator with your target price. Then check the result with your lawyer.

Your Real Estate Lawyer

In Ontario, you need a lawyer to close a purchase. They register your deed and your mortgage. You pay legal fees and disbursements. Disbursements are out-of-pocket costs your lawyer pays for you, such as registry fees and searches.

Your lawyer does much more than sign papers. Here is what they handle.

• Title search. They check the history of the property. They look for liens, unpaid bills and line disputes.
• Agreement review. They check that the offer terms protect you.
• Mortgage work. They work with your lender to move funds and register the loan.
• Condo review. They study the status certificate if you buy a condo.
• Final accounting. They prepare the statement of adjustments, which lists every credit and charge between you and the seller.

Ask for a quote before you hire. Ask what is included and what is extra. A clear quote prevents surprises.

Title Insurance

Title insurance protects you and your lender if there is a problem with ownership. It covers things like title fraud, past work done without a permit, and boundary issues. It is a one-time payment at closing.

The law does not force you to buy it. But almost every lender requires it before they release the mortgage money. Your lawyer arranges it.

A title search is thorough, but it cannot catch everything. Title insurance covers what a search can miss. That gives you peace of mind from day one.

Home Inspection

An inspection is not a closing cost in the strict sense. But you pay for it before closing, so it belongs in your budget. It is a smart choice for almost every resale home.

Some buyers skip it to make an offer look stronger. That adds big risk. A hidden problem can cost far more than the inspection.

Condo buyers should not skip it either. A status certificate tells you about the building's money. It does not tell you the condition of your own unit. An inspector checks things you are responsible for. That includes heating and cooling, the electrical panel, plumbing and appliances. They also look for signs of moisture. See our Home Inspection Guide for Ontario Buyers for what to expect.

Lender Appraisal

An appraisal is a report on what the home is worth. Your lender may order one before they approve the loan. They want to be sure the property supports the price.

If the appraisal comes in lower than your price, you face a gap. You must cover the difference in cash or renegotiate. Some lenders pay for the appraisal themselves. Others pass the fee to you. Ask your mortgage broker which one applies.