Buying Home in Ontario What Are the Closing Costs

By: Sylvia Smith

Buying Home in Ontario What Are the Closing Costs


You probably spent quite a bit of time upfront determining how much you can afford and how much money you will need for the down payment and deposit.  But don’t forget that when your offer gets accepted on that perfect home you will need to also budget for closing costs on closing day.  The guidance on what to budget for in Ontario is anywhere between 1.5% - 4% of the purchase price.  Closing costs can come as a huge surprise if you haven’t put enough money aside to pay for these additional costs.

Here are 8 closing costs that you need to budget for:

Property Appraisal Fee

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Your lender may require a property appraisal to determine whether your purchase price is reasonable for the market.  A recognized home appraiser will provide your lender with a professional opinion confirming the market value of the home you have purchased.


You should budget anywhere between $400 – $600 depending on the location of the home and this fee is paid to the lender to arrange an appraisal.


Title Insurance

Title insurance

Title insurance protects you against real estate title fraud and any defects of title to the property.   

You should budget around $400 for title insurance.


Legal Fees and Disbursements


You will need to hire a lawyer to transfer the title of the home to your name.  Lawyers conduct a title search, draft the title deed, and prepare the mortgage.   


In addition, there will be other disbursements such as seller prepaid property taxes, utility bills, and other charges to keep in mind.  These are sometimes known as adjustments.  The property taxes and utility costs that the seller has pre-paid must be reimbursed to the seller.  

You should budget anywhere between $1,500 - $2000.


Property Insurance

Home Insurance, closing costs


Your lender will not issue a mortgage without proof that you have property insurance and the insurance policy must be in effect on closing day. .  You must ensure your home against fire or significant damage for at least its replacement cost and it is also recommended that you obtain adequate insurance coverage for your home contents such as furniture, electronics, clothing, and jewelry against loss, damage or theft. 


The cost of property insurance will vary based on home value and coverage types.  Insurance payments may be paid monthly, quarterly, or annually.  Reach out to your insurance agent or broker to get a quote.


Mortgage Default (Loan) Insurance


If your down payment is less than 20% your lender will require mortgage default (loan) insurance.  The amount of the insurance premium is normally added to the mortgage but there is also an option to be paid in full upon closing.


The cost of this insurance is normally in the range of 0.6% to 6.5% of the loan amount.  Your lender will provide you with the specific amounts for your situation.  Please keep in mind that your lender will also require that you have a minimum of 1.5% of the purchase price for closing costs in addition to your down payment in order to qualify for this insurance.


Land Transfer Tax (Provincial and Municipal)


When purchasing a property in Ontario you will also be required to pay a land transfer tax.  If you are purchasing a property in Toronto there is also a municipal land transfer tax which in essence doubles the land transfer tax you will be required to pay on closing.


Visit my land transfer tax calculator to get a validation of the land transfer tax due on closing.


Moving Expenses

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Once you have taken possession of your home don’t forget that you may need extra money for movers.  Or you can save some money doing it yourself and asking family and friends to help.  However, if you have a lot of heavy items to move or you need to move quickly hiring movers maybe your best option.  Local movers can provide you with a quote based on the size of your home and the distance of the new home.


Extra Post-Move Costs


Don’t forget that there may be some additional miscellaneous moving costs such as redirecting your mail, utility hook-ups, new appliance, painting, appliances, cleaning supplies, window treatments, etc. 


Are you considering making a move?  Reach out and let’s chat.