What are real estate closing costs in Ontario?

Buying a home can be costly in Ontario! And closing costs can be deceiving if you aren’t prepared for what to expect.

When your home closes, the legal and administrative costs you’re required to pay total 1.5% to 4.1% of your selling price.

Examples of common closing costs are:

  • The Down Payment

Which is the portion of the purchase price you pay upfront. The minimum down payment in Canada is 5% of the property purchase price.

  •  Land Transfer Tax

This is calculated as a percentage of the purchase price of your home. In Ontario, it is between 0.5% to 2.5% of the purchase price. Toronto also has a municipal land transfer tax, meaning property buyers in Toronto have two land transfer taxes to pay. 

  • Legal Fees and Disbursements 

A real estate lawyer is required to close on any property purchase or sale. Average costs in Ontario for a standard home closing attorney are between $1,000 - $2,000. 

  • Title Insurance

Title insurance protects lenders against property ownership disputes. It costs anywhere from $100 to $300. Title insurance is purchased through your real estate lawyer. 

  • Home Inspection 

A home inspection is a professional service that determines the condition of your home’s major functioning systems. The average cost of a home inspection in Ontario is approximately $500.

  • Appraisal

Your mortgage provider will have hired an independent appraiser to determine the value of the property and whether it meets its lending criteria. Often times the mortgagee will cover this expense.

  • Property Taxes

Property taxes are calculated as a percentage of the value of your property. These taxes vary by municipality and must be paid each year. Property taxes in Canada generally range between 0.5% – 2.5%. 

  • Home Insurance

Home insurance covers both your property and the contents inside of it from unexpected loss or damages. Mortgage providers require you have homeowner’s insurance to ensure property damage to your home are repaired.

  • CMHC or Mortgage Default Insurance

If you buy a house with a down payment of less than 20%, you must purchase mortgage default insurance, otherwise known as CMHC insurance. This insurance protects the lender in the event the buyer fails to repay the loan. CMHC insurance is added to the total mortgage amount and amortized over the life of your mortgage. It is important to know that the provincial sales tax on the CMHC premiums cannot be incorporated in the mortgage and the buyer has to pay the PST out of pocket at the time of closing. CMHC premium is between 2.8 and 4 percent of the mortgaged amount.

  • An Estoppel Certificate
      This required indicating the condominium corporation's financial well-being and legal state. An            estoppel certificate costs approximately $100.