You've scraped together your down payment and gotten approved for a mortgage—only to discover you need another $15,000 for "closing costs." What are these fees, and how do you budget for them? Here's everything that goes into closing on a Canadian home beyond the purchase price. What Are Closing Costs? Closing costs are the fees and expenses you pay when finalizing your home purchase, beyond the down payment and mortgage. They typically range from 1.5% to 4% of the purchase price. For a $500,000 home: Budget $7,500 to $20,000 in closing costs. The Major Closing Costs Land Transfer Tax (Provincial) Most provinces charge a tax on property purchases: Ontario: Tax Rate Up to $55,000 0.5% $55,001 - $250,000 1.0% $250,001 - $400,000 1.5% $400,001 - $2,000,000 2.0% Over $2,000,000 2.5% Ontario First-Time Buyer Rebate: Up to $4,000 BC: Tax Rate Up to $200,000 1.0% $200,001 - $2,000,000 2.0% Over $2,000,000 3.0% BC First-Time Buyer Exemption: Full exemption up to $500,000 Other provinces vary. Use our Land Transfer Tax Calculator for your specific situation. Toronto Municipal Land Transfer Tax If you're buying in Toronto, you pay an additional municipal tax that mirrors the provincial rates—effectively doubling your land transfer tax. Toronto First-Time Buyer Rebate: Up to $4,475 Legal Fees and Disbursements Your real estate lawyer handles: Title search and registration Document preparation Mortgage registration Trust account management Typical cost: $1,500 - $2,500 (including disbursements) Title Insurance Protects against: Title defects Survey issues Encroachments Fraud Typical cost: $300 - $500 Home Inspection Conducted before closing (or before your offer is firm): Typical cost: $400 - $600 Appraisal Fee Sometimes required by your lender: Typical cost: $300 - $500 (may be covered by lender) Additional Closing Costs Property Tax Adjustment If the seller has prepaid property taxes beyond closing, you reimburse them: Example: Seller prepaid full year, you close July 1st = you pay 6 months of taxes Condo Costs (If Applicable) Status certificate: $100 - $200 Reserve fund contribution: Varies First month's condo fees: Due at closing Utility Hook-Ups Hydro/electricity deposit Water/sewer connection fees Gas connection fees Typical cost: $50 - $200 each Moving Expenses Often overlooked but necessary: DIY move: $200 - $500 (truck rental) Professional movers: $800 - $3,000+ Home Insurance Required before closing: Typical annual cost: $1,000 - $2,500+ Closing Costs Summary by Province Alberta Land transfer tax High High Low Legal fees $1,500-$2,500 $1,500-$2,500 $1,200-$2,000 Title insurance $300-$500 $300-$500 $200-$400 Total estimate 2-4% of price 2-4% of price 1-2% of price First-Time Buyer Programs to Reduce Costs First Home Savings Account (FHSA) Tax-deductible contributions Tax-free growth and withdrawals Up to $40,000 lifetime contribution Can be used for down payment AND closing costs RRSP Home Buyers' Plan Withdraw up to $35,000 from RRSP Repay over 15 years Available for first-time buyers (or after 4 years without owning) Land Transfer Tax Rebates Ontario and Toronto offer rebates for first-time buyers—potentially saving $8,475 combined. Tips to Minimize Closing Costs 1. Compare Legal Fee Quotes Get quotes from 2-3 real estate lawyers. Fees vary significantly. 2. Ask About Lender Credits Some lenders offer cashback or cover certain costs (appraisal, legal fees). 3. Negotiate with the Seller In buyer's markets, sellers may contribute to closing costs. 4. Time Your Closing Close at month-end to minimize property tax adjustments. 5. Bundle Insurance Get quotes for home and auto together for discounts. When Are Closing Costs Due? Your lawyer will provide a "statement of adjustments" a few days before closing, showing exactly what you owe. Funds must be delivered (usually by certified cheque or wire transfer) on or before closing day. What's Next Closing costs can catch buyers off guard. Get pre-approved and work with our team to budget accurately for your complete home purchase costs. Ready to Get Started? Contact us today for personalized mortgage advice and competitive rates. Get Pre-Approved Call (416) 822-7357 Frequently Asked Questions What Are Closing Costs? Closing costs are the fees and expenses you pay when finalizing your home purchase, beyond the down payment and mortgage. They typically range from 1.5% to 4% of the purchase price. For a $500,000 home: Budget $7,500 to $20,000 in closing costs. When Are Closing Costs Due? Your lawyer will provide a "statement of adjustments" a few days before closing, showing exactly what you owe. Funds must be delivered (usually by certified cheque or wire transfer) on or before closing day. Q: Can I roll closing costs into my mortgage? A: Generally no. You need to pay closing costs from savings or other sources. Some programs allow adding CMHC premiums to the mortgage. Q: What if I don't have enough for closing costs? A: You may need to delay your purchase. Some buyers use lines of credit or family gifts. Q: Are closing costs tax-deductible? A: Not for your principal residence. Some costs may be deductible for investment properties. Q: What's the difference between closing costs and down payment? A: Down payment goes toward the home purchase. Closing costs are the additional fees for completing the transaction. Q: Do I pay GST/HST on a home purchase? A: GST/HST applies to NEW homes, not resales. Partial rebates may apply.
