Your down payment gets you the mortgage. Closing costs get you the keys. They’re due on the day the home becomes yours, and in most cases they can’t be added to your mortgage, so they need to come from savings.
The main costs
| Cost | Typical amount | What it’s for |
|---|---|---|
| Land transfer tax | Rises with the price | Ontario’s tax on buying property. Toronto adds its own. |
| Legal fees | $1,500 to $2,500 | Your lawyer or notary completes the purchase |
| Home inspection | $400 to $700 | An independent check of the home’s condition |
| Title insurance | $200 to $400 | Protects against title problems |
| Appraisal | $300 to $600 | Sometimes paid by the lender |
| Adjustments | Varies | Property tax or fees the seller already paid |
Land transfer tax is the big one
In Ontario, land transfer tax is usually the largest closing cost. It’s calculated on the purchase price in tiers, so it rises faster on more expensive homes. If you buy in Toronto, the city charges a second land transfer tax on top of Ontario’s, which roughly doubles the bill.
First-time buyers can get a refund of some or all of Ontario’s tax, and Toronto has its own rebate. You can’t have owned a home anywhere in the world to qualify. Your lawyer applies the refund at closing, but check you qualify before you count on it.
Costs people forget
Moving costs, utility connection fees, basic furniture and early repairs all arrive around the same time. If your down payment is under 20%, Ontario’s 8% sales tax on your mortgage insurance premium is also due in cash at closing.
How much to set aside
A common rule of thumb is 1.5% to 4% of the purchase price, higher in Toronto, and lower if you qualify for a first-time buyer refund. Ask your mortgage professional for an estimate based on the home you’re considering, and keep a small cushion on top.
