Closing Costs Explained
Closing Costs Explained: What Canadian Buyers Actually Pay
For first-time buyers and even seasoned homeowners, one of the biggest surprises during the home-buying process is closing costs. These are the fees you must pay on top of your down payment when finalizing your mortgage and taking ownership of your home.
Closing costs in Canada typically range from 1.5% to 4% of the home’s purchase price, depending on your province, lender, and the type of property you’re buying. Understanding these expenses upfront helps you budget properly and avoid any last-minute stress at the lawyer’s office.
Here’s a full breakdown of the closing costs Canadian buyers actually pay — and which ones you can prepare for in advance.
1. Land Transfer Tax (LTT)
One of the largest closing costs.
Ontario Example:
Applies to all home purchases
Ranges from 0.5% to 2.5% of the purchase price
Toronto buyers pay an additional municipal land transfer tax (MLTT)
First-Time Buyer Rebates
Up to $4,000 in Ontario
Up to $8,475 in Toronto
2. Legal Fees & Disbursements
Lawyers handle:
Title transfer
Reviewing the agreement
Registering mortgage documents
Title searches
Typical cost: $1,200 – $2,000 including disbursements.
3. Title Insurance
Protects you (and the lender) from title issues such as fraud, boundary disputes, or liens.
Lender title insurance: Required
Owner title insurance: Optional but highly recommended
Cost: $200 – $400
4. Home Inspection (Optional but Important)
Helps identify issues before you purchase.
Cost: $400 – $600
For older homes or rural properties, specialty inspections may be needed (septic, well, foundation).
5. Appraisal Fee
Lenders often require an appraisal to confirm market value.
Cost:
Urban areas: $350 – $500
Rural: $500 – $800
Some lenders cover this cost for insured mortgages.
6. CMHC, Sagen, or Canada Guaranty Mortgage Insurance Premium
If your down payment is under 20%, default insurance is required.
While the premium is added to your mortgage, the sales tax on the premium must be paid at closing in Ontario.
7. Adjustments at Closing
These are prorated amounts the seller already paid that you must reimburse.
Examples:
Property taxes
Condo fees
Utilities (prepaid)
Oil or propane in the tank
Typical range: $300 – $1,000+ depending on timing.
8. Property Tax Setup & Utility Connection Fees
Municipalities and utility companies may charge setup or account activation fees.
Estimate: $100 – $300
9. Fire/Home Insurance
Required before your lender will release mortgage funds.
Cost: approx. $800 – $1,500/year (prorated at closing).
10. Moving Costs (Not a lender requirement but essential for budgeting)
Movers: $500 – $2,000
Truck rental: $100 – $300
Storage: $100 – $400/month
11. New Construction Closing Costs
Buying pre-construction? Expect additional fees, such as:
Development charges
Tarion warranty enrollment
Utility connection fees
HST (for some buyers)
Legal costs for builder adjustments
These can range from $5,000 to $20,000 depending on your builder and project.
How Much Should Buyers Budget in Total?
Resale Home:
1.5% – 4% of purchase price
Pre-Construction Home:
$8,000 – $20,000+ in builder adjustments + standard closing costs.
Toronto Buyers:
Expect higher totals due to municipal land transfer tax.
Tips to Reduce Closing Costs
✔ Use first-time buyer rebates
✔ Ask your lender for appraisal credits
✔ Shop around for legal fees
✔ Avoid homes with unexpected builder adjustments
✔ Confirm all costs in advance with your mortgage broker
Final Thoughts
Closing costs are a normal part of buying a home in Canada — but they can catch buyers off guard if you’re not prepared. Understanding these fees early in the process helps you budget confidently and avoid surprises on closing day.
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Learn the true closing costs Canadian home buyers pay. Understand land transfer tax, legal fees, insurance, adjustments, and more to budget confidently for your purchase.
