In Ontario, real estate buyers must pay closing costs, a one-time fee if they decide to purchase the property. Many costs are included within this umbrella, and it is crucial to include them in your budget when deciding to buy a property.
We recommend you keep a budget of 3 to 5% of your purchase price that will go into the closing costs. Our real estate lawyer in Ontario has created a detailed guide to help you understand these costs, whether you are buying or selling a property.
You can also use our website’s real estate closing cost calculator to determine your estimated closing costs directly.
What are Real Estate Closing Costs in Ontario?
Closing costs in Ontario encompass the administrative and legal-related real estate expenses you must pay to complete the sale or purchase of your home.
Please note that the average closing cost can range between 1 and 4% of the actual price of your home. You will have to pay this amount on the property’s closing date.
You will also have to submit some important documents during closing, which we have listed in this guide.
How to Calculate Closing Costs in Ontario: Closing Cost Calculator Example
Because closing costs in Ontario vary so much, it is best to take an example to understand how much you will pay. So, let’s say you buy a house in Ontario for $500,000. We recommend you set aside between $7,500 and $20,000 to cover your closing costs in Ontario.
Here is a table with a breakdown to help you understand how much you can expect to calculate and pay:
| Closing Cost | Estimated Cost |
| Property Appraisal | $300 to $600 |
| Land Transfer Tax | Percentage of the purchase price. Read more about how to calculate land transfer tax in Ontario here. |
| Real estate lawyer fees | $1,000 to $3,000 |
| Mortgage Default Insurance | 2.8% to 4% of the mortgage |
| Title Insurance | $250 and $5,000 |
| Property Taxes | Percentage of your home value |
| Provincial Sales Tax | 8% on mortgage default insurance |
| GST/HST | 6% to 13% when you buy or build a new home or condo |
| Home Inspection Fees | Around $100 |
| Property Survey Fees | $1,500 to $6,000 |
| Title Registration Fees | $200 |
| Estoppel Certificate Fee | $100 |
So, total closing costs in Ontario will be $10,000 or even more. However, the costs can go higher or lower than this, depending on the property and the area you live.
For more information, you can consult with our real estate attorney.
10 Most Common Types of First-Time Home Buyer Closing Costs in Ontario
When you decide to purchase a home, there are different types of closing costs you will have to pay for. The ones you pay for will depend on your specific situation.
However, here are the most common closing costs in Ontario for home buyers:
1. Real Estate Lawyer Ontario Fees – $1,100 to $1,800 and more
Whether you are a first-time home buyer in Ontario or a seasoned buyer, you must still opt for the services of a real estate lawyer in Ontario. A real estate lawyer will protect your interests and ensure that all the documents are reviewed and completed accurately.
Doing this will guarantee that you close the purchase on the right note. The fee will depend on the real estate lawyer in Ontario, their experience, and other such factors.
Lawyer fees vary greatly, but you can expect to pay anywhere between $1,100 and $1,800 and more to help you with a real estate closing.
2. Land Transfer Tax – Cost Based on Property Value
When you purchase any property, you will have to pay an LTT (Land Transfer Tax). This is the provincial tax in Ontario, and it will cover the biggest portion of your closing costs.
If you are a first-time home buyer in Ontario, you can also benefit from land transfer tax rebates. Your real estate lawyer in Ontario will help you understand this in much more detail to help save your costs.
The total amount you will pay will depend on the value of your home. However, the rate is capped at 2.5% for more than $2 million home values. 0.5% for the first $55,000 of the home’s value and 1% of any additional value between $55,000 and $250,000.
3. Property Appraisal Fee – Between $300 and $600
Another of the most common closing costs in Ontario is the property appraisal fee. Your lender will probably require a home appraisal to confirm the market value before you purchase the home.
It will certify the property’s resale value if you default on your mortgage payments later. Typically, the mortgage lender requires the professional appraiser to confirm the home’s value to determine how much they can lend you.
They can also arrange the appraisal themselves. The property appraisal fee will vary between $300 and $600 depending on the property’s location.
4. Home Insurance – Depends on Insurance Provider
Insurance is one of the most important elements when purchasing a home, making it one of the most common closing costs in Ontario for home buyers.
Your lender will need proof of insurance in case of property damage, such as a fire. The cost of home insurance will vary depending on the coverage you select and the deductible.
We recommend that you contact multiple insurers to find a suitable and competitive rate that will not break the bank. You can also bundle various insurance policies together to lower your costs.
5. Home Inspection Fee – Around $100
The home inspection fees are an optional cost, but we recommend you make the purchase offer conditional on a positive home inspection. This will guarantee that the inspection can uncover any hidden problems in the home that could have negative consequences in the future.
This is one of the top closing costs in Ontario, and it is optional but highly recommended by our real estate lawyers. The estimated home inspection fee is around $500.
However, this is a small price compared to the thousands of dollars you might have to spend repairing major issues within the house. After the inspection, you can also request the seller to give the repair costs as a discount or credit to the agreed-upon sale price or cancel the contract if there is a significant issue after the inspection.
6. Property Survey – Between $1,500 and $6,000
While completing the property purchase, you might need to provide a current property survey to your real estate lawyer or mortgage provider. It offers correct information on the shape and size of the land that makes up the entire property.
Typically, the seller provides the property survey. However, in some provinces in Canada, it is optional.
Our real estate lawyer still recommends getting a property survey to ensure you know what you are getting for what you are paying. The survey will also confirm the land boundaries.
On average, you can expect to pay between $1,500 and $6,000 for the property survey.
Please note that surveys are unnecessary when purchasing property within an apartment building or condominium.
7. Government Registration Fees – Around $200
When your real estate lawyer files official documents on your behalf to purchase the house, they also pay the government registration fees. This fee includes costs for:
- Services related to the title registration of the land
- Title searches
- Plan or description
- Registering/depositing an instrument
- Defects and omissions in a deposited plan or registered document
- Correcting errors
- And more
The total fee will depend on the property type, documents, province, etc. It will be adjusted annually.
8. Title Insurance – Between $250 and $5,000
Title insurance is a policy that will protect you if you are a commercial or residential property owner and your lender against any loss related to the ownership or title of the property.
This cost will also help simplify the real estate closing process for the lawyer, saving you time and money. It is one of the most common real estate closing costs in Ontario, and it can range between $250 and $5000.
However, if your property is incredibly expensive, then this cost will be even higher for you.
9. Estoppel Certificate Fee – $100
You must pay this fee if you are buying a strata unit or condo. The certificate comes with the condo corporation’s financial statements and will let you know the common fee for the unit you have bought, the status of the seller’s payments, the reserve fund, and more.
Please note that your real estate lawyer in Ontario will need this document to proceed with the closing transaction of your property purchase. They will review the financial statements and let you know if there are any shortcomings.
The estimated cost of this certificate fee can reach $100. So, be sure to add this to your closing costs in Ontario.
10. CMHC Fees – Depends on the Insurer
CMHC fees are one of the closing costs in Ontario that is only applicable to people planning to purchase a home with a down payment of less than 20%. If you plan on doing this, you will have to pay for the CMHC insurance.
Alternatively, you can purchase mortgage default insurance from Canada Guaranty or Sagen. For this, you will only have to pay the sales tax on the insurance premium upfront.
You can add your insurance premium to your mortgage balance. People living in Ontario will also have to pay the provincial sales tax on the CMHC premium at the rate applicable to their province.
Finally, if your down payment is 20% or more, you will not have to pay for mortgage default insurance. So, it will not be part of your closing costs in Ontario if the down payment is more than 20%.
You can calculate the down payment of your home using our down payment calculator in Ontario here.
Closing Costs in Ontario When Selling a Property
Closing costs in Ontario can occur whether you buy or sell a property. We discussed the closing costs when you are buying a property in detail.
However, if you are planning on selling a house in Ontario, then these are some costs you might incur:
- Fees of a real estate lawyer in Ontario
- The commission of your realtor
- Charges of the mortgage payout
The most significant cost you will incur while selling a property will be your realtor’s commission. Typically, they charge 3 to 5% of the property value.
After this, the cost of a real estate lawyer in Ontario will be the highest. They don’t charge as high as the realtor’s commission, but it will add to your total real estate closing costs.
If the mortgage on your property is not ready to be renewed, then you will have to pay for breaking the terms of your mortgage. The amount you pay will depend on the contract terms and the financial institutions.
Typically, you can pay at least three months of interest or a maximum of a few thousand dollars. We recommend you contact the financial institution and ask them about the charges that would apply if you break the mortgage contract before completion.
Once you have this information, you will have a much better idea of these closing costs in Ontario.
Closing Costs in Ontario When Refinancing a Property
Another scenario where you might have to pay closing costs in Ontario is when you plan to refinance a property. These can include costs such as:
- Fees of your real estate lawyer in Ontario
- If you are going through a B-lender, you will have to pay a commission to the mortgage broker
- Registration of refinancing charges
- Title insurance
- Any existing payouts such as line of credit, credit, mortgage, and more
- Law Society Levy
You can discuss these closing costs in Ontario with our real estate lawyer in Ontario if you are deciding to refinance a property. They will give you a much better idea of the accurate costs you will incur.
Statement of Adjustments Explained
Whether you are buying or selling a property, the statement of adjustments is one of the most important documents for your real estate transaction.
This document will ensure that both the buyer and seller can see how deposits, fees, property taxes, and other costs determine the total amount that the buyer will owe to the seller to complete the purchase.
If you want to learn more about this financial statement, you can discuss it with your real estate lawyer in Ontario.
Can You Avoid or Reduce the Closing Costs in Ontario?
If you are a first-time home buyer in Ontario, you can get rebates on your land transfer taxes. However, there are some other ways you can save on your closing costs in Ontario when buying a home, which can include the following:
- You can negotiate with the seller to determine if they can help you cover some real estate closing costs.
- Make a down payment of 20% or more so you don’t have to pay mortgage default insurance.
- Do your homework before hiring a real estate lawyer in Ontario to find an affordable one and save costs.
- Opt for a mortgage that will offer you a cash rebate if you have the option.
- Consider using the HBP (Home Buyer’s Plan) to put $35,000 from your RRSP towards your home purchase by using them for closing costs in Ontario.
These are the top five ways to reduce your closing costs in Ontario. Your real estate lawyer in Ontario can let you know even more ways you can reduce costs, depending on your specific situation.
FAQs
What are typical closing costs in Ontario?
Typical closing costs in Ontario include legal fees, land transfer tax, title insurance, home inspection fees, and much more.
What are the biggest closing costs usually paid by buyers?
Buyers pay the biggest closing costs, which include land transfer tax, appraisal, down payment, mortgage insurance, and more.
How much are lawyer fees when buying a house in Ontario?
You can expect to pay between $1,200 and $2,500 when hiring a lawyer to buy a house in Ontario. However, legal fees can greatly vary, depending on the lawyer you choose.
Who pays closing costs in Canada?
In Canada, the closing costs are shared by the buyer and the seller. The buyer pays most of the closing costs, while the seller also pays some.
Schedule a Free Consultation with Our Real Estate Lawyer in Ontario
Whether you are buying or selling a home in Ontario, you can contact our trusted real estate lawyer. Athena Narsingh is well-versed in real estate law and can help you save on real estate closing costs while ensuring a seamless process.
For more information, schedule a free consultation with our real estate lawyer today.
Author Profile
- Athena Narsingh is a trusted and knowledgeable lawyer in Scarborough. Her expertise spans real estate law, family law, adoptions and fertility law. A lawyer by profession and a humanitarian by heart, Athena Narsingh wants to help people become more familiar with the legal system and be well-informed to make important legal decisions.
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