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Closing Costs ~ Some Of The COSTS You Need To Consider

Tuesday Mar 30th, 2021


Closing costs are the additional fees that you need to pay on the closing date. The closing date is when the transaction is finalized and you officially become the new homeowner. They include land transfer tax, legal fees, and the fees your lawyer has already paid on your behalf. 


These are costs that have to be paid at the time of purchase, on top of the down payment. They usually range from 2% to 5% of the purchase price of the home. It is crucial to factor closing costs into your budget when buying a property. Below are some of the costs you need to consider.


Land Transfer Tax: When you buy a property in Ontario you must pay a land transfer tax to the provincial government. The land transfer tax is calculated as a percentage of the purchase price of the home, this is a provincial tax. In the City of Toronto, there is also a municipal land transfer tax. Land transfer tax is paid when the deed to the new home is transferred to your name, on closing day. If you are a first-time buyer there are LTT rebates available at both the municipal AND provincial levels. 


Legal Fees: In Ontario, it is mandatory to have a lawyer when purchasing a home. The fees vary depending on the amount of work that needs to be done and the difficulty of the work required. Legal costs can include a variety of services, including: 

-registering the property transfer 

-registering the mortgage

-facilitating the purchase of the title insurance

-disbursements, which are any fees that the lawyer has paid for on your behalf


Mortgage Default Insurance, also known as CMHC insurance is mandatory if your down payment is less than 20% of the purchase price of a home. It protects the lender in case the borrower is unable to make payments on the loan. The premiums must be paid in full by the borrower at the start of their mortgage.


Appraisal fee: Although appraisals are technically mandatory in Ontario a lender may ask you to commission an appraisal of the home you are buying. The appraisal confirms the market value of the property. It can cost anywhere between $150 and $500.


Closing Day

Your lender will provide the mortgage funds to your lawyer/notary.

You must provide, your down payment less the deposit, to your lawyer/notary along with the closing costs.

Your lawyer/notary pays the previous owner, registers the home in your name, and gives you the deed and keys to your new home.


Congratulations! You are ready to move into your new home.

This information should not be relied on as legal advice, financial advice, or a definitive statement of the law in any jurisdiction. For such advice, please consult your own legal counsel or financial representative.


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