If you are looking to buy a home, financial preparation is vital. However, one common mistake that buyers overlook is closing costs. When budgeting for a home purchase, it is important to factor in these costs since they give a clear picture of the total costs that must be paid.

Confused about how much you should pay for closing costs when buying a house in Ontario? Let’s explore factors that affect the closing costs and how you can estimate this to avoid unpleasant surprises. 

What are closing costs? 

Closing costs are fees paid by a real estate buyer once they decide to buy a home. They are an umbrella term for fees that are mandatory before a home purchasing process is complete. This is why it’s vital to have an estimate of these costs to allow for financial preparation. 

While closing costs range between 3-4% of the final purchase price of real estate properties, they can be an unwelcome surprise for buyers who do not have sufficient information on the costs.  

Factors that determine closing costs in Ontario

One of the most common questions posed by buyers is: how much are closing costs when buying a house? There is no one standard closing cost figure that applies to all homes. Rather, the amount for closing costs depends on various factors, including: 

  • The value of the property (the higher the value of the property, the higher the closing amount)
  • The location of the real estate property
  • Whether the buyer is a first-time homebuyer
  • The type of financing

What are the most common closing costs in Ontario?


Land Transfer Tax 

This is one of the highest closing costs when buying a house in Ontario. It must be paid by the buyer to the provincial government or the municipality. This tax is based on the value of the property. 

For high-value properties, the land transfer tax can even go beyond $10,000. The cost of the land transfer tax is uniform across Ontario except for Toronto and is based on a tax-bracket system. For instance, properties valued at $500,000 in Ontario incur $6,475 in land transfer tax.

Luckily, first-time homebuyers in Ontario enjoy some perks such as land transfer tax rebates which can significantly reduce the tax amount. A first-time buyer who is a Canadian citizen or a permanent resident will pay $2,475. This means that the first-time buyer enjoys a $4,000 rebate. 

Property survey fee

Before you purchase a property, your lawyer and mortgage provider will require a property survey certificate. The cost of a property survey varies depending on the type of property, legal issues that may be involved, the location, and any geographical complications. This cost ranges between $350 and $600. 

Lawyer and legal fees

A lawyer can protect you if complications arise or help avoid such complications altogether. If purchasing a property in Ontario, it is mandatory to have a lawyer. Buying a property is a complex process. The cost of legal fees paid depends on the agreement made between the buyer and the lawyer, as well as the complexities of the buying process. It ranges between $500 and $1,500. 

Government registration fees

This is the cost paid by a property lawyer to the authorities on behalf of the property buyer. The fees differ based on the type of property, document, and location. While most lawyers often include this in the legal fees, the estimated amount paid for the government registration fee is $200.

Property appraisal fees

A property appraisal confirms that the value of the property is per the market rate. This is a requirement by mortgage lenders. The average cost of property appraisal ranges between $300 and $500 and is often negotiable between the buyer and the lender. 

Home inspection

This is a vital process that ensures that the property is in good condition before purchase. A home inspector will take note of any necessary repairs and use that to negotiate for better prices. While most home buyers may see the home inspection fee as an unnecessary cost, it can help save a buyer a lot of money or prevent home accidents. If you are carrying out a home inspection in Ontario, you can expect to pay an estimated cost of $500. 

Title Insurance

Title insurance is often a requirement by real estate lenders. The title insurance acts as protection against losses and damages that may be incurred after purchase. The cost of title insurance ranges between $100 and $300. 

Who is responsible for paying closing costs? 

A buyer is responsible for closing costs in Ontario. However, the seller can offer to pay closing costs when the market is saturated and many people are trying to sell their homes. 

How to reduce closing costs when buying a house in Ontario 

  • The power of negotiation- Some closing fees, such as taxes, may be non-negotiable. However, other fees, such as legal fees and home inspection, can be negotiated. 
  • Get the best mortgage rate- Do not be too quick to settle for the first mortgage company that offers you a loan. Ensure to shop around for the best mortgage rates and terms. 

How much are closing costs when buying a home in Ontario? 

As we mentioned, the closing costs when buying a house in Ontario depend on various factors. For this reason, we cannot give a one-suit-all estimate. Also, if the person purchasing the home is a first-time homebuyer, the costs will be lower. 

Further, the cost will depend on the negotiations between the parties involved. If you do not have a real estate agent to help in cost estimation, closing costs calculators help estimate the expected closing costs. 

That said, buyers need to clearly understand the closing costs before completing the home buying process.