Fees & costs

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.

Title insurance covers defined title risks that a standard search might miss or that a survey would have revealed. It's a single premium paid at closing, not an annual cost, and the policy terms and exclusions set exactly what's covered.

Many lenders require a lender's title policy (or an equivalent lawyer's opinion on title) as a funding condition. An owner's policy protects you directly and is often bought at the same time; your lawyer can explain what each policy covers.

It's different from home (property) insurance, which covers physical damage. In Ontario, title insurers and the agents who sell insurance are regulated by FSRA.

Worked example

Illustrative: after closing, a buyer learns that a construction lien from a previous owner's renovation was missed. If the owner's policy covers that risk, the insurer handles the lien and related legal costs instead of the owner paying out of pocket.

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

Sources

Understanding title insurance (FSRA)

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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.

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.

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