Buying a home is one of the largest financial steps most people ever take, and the purchase price is only part of the story. Before the keys change hands, buyers must also pay a collection of one-time charges known as closing costs, which can add thousands of dollars to the amount needed on closing day. Getting clear, early advice from a Real Estate Lawyer Oakville home buyers rely on can help you understand each of those charges and plan for them in advance.
In Ontario, closing costs typically fall between 1.5% and 4% of the purchase price, on top of your down payment. On a $700,000 home, that means budgeting roughly $10,500 to $28,000. This guide explains the main costs one by one.
What Are Closing Costs?
Closing costs are the fees, taxes and adjustments you pay to complete a property purchase and register the transfer of ownership in your name. Some go to the government, some to your lawyer, lender or insurer, and some settle amounts owed between you and the seller. They are paid on or before the closing date, and your lawyer gathers them and reports to you before you sign.
Land Transfer Tax
For most Ontario buyers, land transfer tax is the single largest closing cost. The province charges it on the value of the property, on a graduated scale, and the City of Toronto adds its own municipal land transfer tax on top for homes inside the city. First-time buyers may qualify for a provincial rebate of up to $4,000, which can remove this tax entirely on lower-priced homes. Because the tax is calculated on the purchase price, a more expensive home means a much larger bill, so budget for it from the start.
Legal Fees and Disbursements
Your real estate lawyer handles the title search, reviews the agreement of purchase and sale, prepares and registers the transfer and mortgage documents, and makes sure the money moves safely between the parties. Legal fees for a straightforward purchase generally range from about $1,000 to $2,500 plus tax, depending on the region and the complexity of the deal. On top of the fee, you will pay disbursements: the out-of-pocket costs your lawyer pays on your behalf, such as title search fees, registration fees and courier charges. Ask for a written estimate early.
Title Insurance
Title insurance is a one-time premium, usually a few hundred dollars, that protects you against problems with the property’s title after closing. It can cover issues such as an undisclosed lien, a boundary dispute, title fraud or a defect in the ownership records. Many lenders require it, and even when it is optional, it is one of the least expensive protections in the whole transaction. Buy it once, and the coverage lasts for as long as you own the home.
Appraisal, Inspection and Registration Costs
Before your lender advances the mortgage, it usually orders an appraisal to confirm the home is worth what you are paying for it. The appraisal fee, typically a few hundred dollars, is often charged to the borrower. A home inspection is optional, but a few hundred dollars can reveal a failing roof, faulty wiring or water damage before you commit. Finally, your lawyer pays government registration fees to record the transfer and any mortgage against the property title — another modest cost that is easy to overlook.
Utility and Tax Adjustments
On closing day, your lawyer prepares a statement of adjustments that settles the sharing of costs between you and the seller. If the seller prepaid property taxes or the heating contract for a period that extends past closing, you reimburse them for your share. Fuel and utility amounts are adjusted the other way. You may also need to arrange a deposit or set up new accounts with the municipality and with your gas, water and electricity providers, and some charge a small activation fee.
Status Certificates for Condominiums
If you are buying a condominium, your lawyer will review a status certificate — a document produced by the condominium corporation that describes the building’s finances, its reserve fund, any special assessments, legal claims and the rules you must follow as an owner. Ordering the certificate costs around $100, and your lawyer will also want time to review it before the condition period expires. It can save you from buying into a building with serious financial trouble.
Development Levies on New Builds
Newly built homes come with a set of extra closing costs that resale buyers do not face. Builders pass on development and education levies, the cost of connecting the home to water, hydro and gas, and sometimes part of the HST on the purchase. Your agreement of purchase and sale sets a cap, if any, on how much of these levies the builder can pass on to you, so check the cap carefully and confirm the amounts with your lawyer. Together, these levies can add thousands of dollars to the closing bill.
How to Budget for Closing Costs
As a rule of thumb, budget 1.5% to 4% of the purchase price for closing costs, in addition to your down payment. On an $800,000 home, that is $12,000 to $32,000 set aside before moving day. List every item in this guide, get quotes from your lawyer and mortgage broker, and check the latest property tax bill so your adjustments are accurate. Keep a small cushion beyond your estimate, because the numbers can move as the closing date approaches.
Final Thoughts
Closing costs are not a surprise you can avoid, but they are a surprise you can plan for. Once you know the main charges — land transfer tax, legal fees, title insurance, appraisal and registration costs, adjustments, status certificates and new-build levies — you can budget in the 1.5% to 4% range with confidence and arrive at closing day with the right amount ready. Get the numbers in writing early, and keep your closing-cost budget separate from your down payment and moving expenses.
Estofa Law is a real estate law firm in Burlington serving home buyers, sellers and homeowners across Oakville, Milton, Burlington and the Greater Toronto Area, with residential and commercial purchases and sales, refinancing and title transfers.
Estofa Law, 107 – 5500 N Service Rd, Burlington, ON L7L 6W6, Canada | +1 (289) 678-1744 | [email protected]
