Closing Costs When Buying A House In Ontario 

It is crucial to budget closing costs when purchasing a residential property. However, the term ‘closing costs’ is inherently vague and can vary from purchase to purchase.

Nevertheless, there are minimum closing costs the purchaser(s) can account for when creating a budget regarding their transaction, they are as follows:

• Land Transfer Tax for the Province of Ontario
• Municipal Land Transfer Tax (ONLY for properties located in Toronto)
• Lawyer’s fees and disbursements
• Title insurance

When budgeting closings costs, the aforementioned expenses range in price and are usually affected by the purchase price and the complexity of the closing. Let us take a closer look as to what this means.

Land Transfer Tax

Land Transfer Tax will most likely be your biggest expense to account for on closing. It is calculated against the value of your property, which is commonly the purchase price. Every purchase in Ontario is required to pay this tax on closing- aside from several exemptions (blog coming soon regarding these exemptions!). Furthermore, purchaser(s) who are buying in Toronto will not only need to pay a Provincial Tax, but also a Municipal Tax if the property is situated in Toronto.

Fortunately, for first time homebuyer(s) there is a rebate of up to $4,000 and the rebate for the Toronto municipal land transfer tax is up to $4,475.

Click here to calculate your Land Transfer Tax!

Lawyer’s Fees and Disbursements

A lawyer is an essential part in assisting purchaser(s) in closing the transaction! Legal fees can vary, therefore, it is important to do your research and choose a legal representative you feel secure and comfortable with! At Swiderski Law, we consistently remain candid with all our legal fees and provide our clients with a comprehensive breakdown of expenses to expect on closing.
A lawyer’s role during closing will be to review all documents with precision, conduct a search of the property’s title to make sure a ‘clean title’ will be conveyed to the purchaser(s).

On a standard transaction, the purchaser(s) can budget $1,500 to $1,800 inclusive of the legal fee, disbursements and HST.

Title Insurance

Title insurance provides protection to lenders and homebuyers from defects in a title to a property. Although this insurance is not mandatory, if a homebuyer(s) is/are acquiring a mortgage, the lender will specify that this insurance MUST be obtained. Title insurance may run a homebuyer anywhere from$160 to just over $1,000. When speaking with your lawyer, you can always request a quote.

Although costs on closing vary widely, homeowners can plan to have a fairly accurate budget on closing by obtaining costs on the above-mentioned expenses.

EXAMPLE OF CLOSING COST  BREAKDOWN

Purchaser buys a home outside of Toronto, in Ontario, valued at $500,000.

Land Transfer Tax: $6,475

Legal Fee + Disbursements ($1,500 inclusive of HST at Swiderski Law)

Title Insurance: FCT Quote (with mortgage and 20% down payment) $405

Total Closing Costs: $8,380