Fees & costs

Closing costs

The one-time costs you pay on or before the closing date, on top of your down payment: land transfer tax, legal fees and disbursements, title insurance, adjustments (such as property tax the seller prepaid), the home inspection and, on some files, an appraisal. A common planning range is 1.5% to 4% of the purchase price.

The biggest line is almost always land transfer tax, and in the City of Toronto you pay it twice (provincial plus municipal). Legal fees and disbursements commonly run about $1,500 to $2,500 and title insurance a few hundred dollars; these are market estimates, so get quotes.

On an insured purchase, Ontario provincial sales tax on the mortgage default insurance premium is also due in cash at closing; it can't be added to the mortgage. New-build purchases can carry extra closing charges (for example development-charge or utility-connection adjustments), so read the agreement's adjustment schedule.

Closing costs are separate from your down payment and must be shown as available: lenders commonly look for about 1.5% of the price in funds on top of the down payment. First-time buyers can recover part of the land transfer tax through the Ontario refund (up to $4,000) and, in Toronto, the municipal rebate (up to $4,475).

Our closing-costs and land-transfer-tax calculators give a line-by-line estimate for your price and city.

Worked example

Illustrative: a $700,000 resale home in Ottawa (no municipal land transfer tax), repeat buyer.

Ontario land transfer tax: $275 + $1,950 + $2,250 + 2% × $300,000 ($6,000) = $10,475.

Plus assumed legal fees and disbursements ~$2,000, title insurance ~$400, home inspection ~$500 and adjustments ~$1,000: total roughly $14,375, about 2.1% of the price.

Illustrative figures only, rounded; not a quote or current rate. See today’s rates on our live board.

Sources

Calculating land transfer tax (Government of Ontario)
Land transfer tax refunds for first-time homebuyers (Government of Ontario)
Municipal Land Transfer Tax rebate opportunities (City of Toronto)
CMHC mortgage loan insurance cost (CMHC)

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IRD

Interest Rate Differential

Interest Rate Differential: a prepayment penalty on closed fixed-rate mortgages that approximates the interest the lender loses when you break early. It's roughly your balance × (your rate − a comparison rate for the time left in your term) × the years remaining. On a fixed mortgage you usually pay the greater of the IRD or three months' interest.

Land transfer tax

LTT

A tax paid by the buyer when land changes hands. In Ontario it's charged on a marginal scale from 0.5% to 2.5% of the price; homes in the City of Toronto also pay a municipal land transfer tax (MLTT) with the same brackets up to $2 million and higher rates on luxury tiers.

Mortgage default insurance

Insurance the lender takes out (you pay the premium) when your down payment is under 20%. Provided by CMHC, Sagen, or Canada Guaranty. Protects the lender if you default — you do not get insurance proceeds.

Prepayment penalty

The charge for paying off or breaking a closed mortgage before the end of its term (or prepaying more than your privileges allow). Closed variable: usually three months' interest. Closed fixed: usually the greater of three months' interest or the interest rate differential (IRD). Your contract sets the exact formula.

Title insurance

A one-time insurance policy, usually bought through your lawyer at closing, that protects the owner and/or lender against covered losses from problems with the property's title: for example title fraud, undisclosed liens or work orders, survey issues or encroachments. In Ontario the premium is typically a few hundred dollars on a residential purchase.

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