Closing costs클로징 비용

What are they?

Closing costs are all the extra amounts you must pay on closing (the day you pay the balance and the home becomes yours) on top of the price and your down payment: taxes, legal fees, insurance and adjustments with the seller.

You cannot add them to the mortgage, so you need them in cash. Buyers who save only for the down payment can come up short right before closing. CMHC (Canada’s housing agency) suggests planning for about 1.5% to 4% of the price.

The list for Ontario buyers

• Land transfer tax (a provincial tax you pay when you buy a home): graduated rates from 0.5% to 2.5% by price bracket (the higher parts of the price are taxed at higher rates). Your lawyer pays it when the transfer is registered.
• Toronto municipal land transfer tax (MLTT): for a home inside the City of Toronto you pay a second, municipal tax on top of the provincial one. The brackets are almost the same, and from April 1, 2026 homes over $3,000,000 pay higher graduated rates. There is also an administration fee of $102.56 + HST.
• First-time buyer refunds: if you qualify, up to $4,000 of the Ontario tax and up to $4,475 of the Toronto tax are refunded (usually taken off at registration). See “First-time buyer land transfer tax refund”.
• Legal fees and disbursements: the lawyer’s fee plus out-of-pocket costs such as registration fees, title search fees and wire fees. Fees vary by firm, so get a quote in advance.
• Title insurance: a one-time policy that protects your ownership against title defects, fraud and survey problems. Many lenders require it; your lawyer arranges it.
• Adjustments: money you repay the seller for property tax, condo fees, heating oil and similar items the seller prepaid past the closing date. See “Statement of adjustments”.
• Tax on the mortgage insurance premium: with less than 20% down, a mortgage insurance premium applies. The premium can be added to the loan, but Ontario’s 8% retail sales tax (RST) on it cannot, so you pay it in cash on closing.
• Appraisal: if the lender wants a valuation of the home, there may be a fee. Some lenders cover it.
• Home inspection: the cost of inspecting the home’s condition as a condition of your offer, paid before closing.
• Condo status certificate: the package on a condo’s finances and rules. By law the fee is capped at $100 including taxes. The buyer usually requests and pays for it.
• HST on a new home: when you buy a new home from a builder, 13% HST applies. The price usually has the HST and rebate built in, but the rebate rules change if you rent the home out instead of living in it. See “HST new housing rebate”.
• Moving, utility hookups, changing the locks: small items that add up.

How much is land transfer tax?

Ontario’s land transfer tax rates (for registrations since January 1, 2017). The price is split into brackets and each bracket is taxed at its own rate.

Inside the City of Toronto you pay the municipal tax again with the same bracket structure (2.5% from $2,000,000 to $3,000,000, and 4.40% to 8.60% above $3,000,000 from April 1, 2026). Foreign buyers also pay the 25% provincial NRST and Toronto’s 10% MNRST.

Worked example (Toronto condo, $900,000)

Assumes a 10% down payment ($90,000), a buyer who is not a first-time buyer, and a September 16 closing.

Estimates for reference only. A first-time buyer would save $8,475 through the Ontario ($4,000) and Toronto ($4,475) refunds. Outside Toronto (Markham, Richmond Hill, Vaughan, Mississauga and so on) there is no municipal tax, so about $14,590 drops off.

The seller’s closing costs

• Real estate commission plus 13% HST on it: the rate is set in the listing agreement and is deducted from the sale proceeds on closing. See “Commission”.
• Legal fees and disbursements, including the cost of registering the discharge of the old mortgage.
• Mortgage prepayment penalty: if you sell before your mortgage term ends, the lender charges a penalty. The amount depends heavily on your mortgage contract. See “Prepayment penalty”.
• Adjustments: prepaid property tax or condo fees come back to you; unpaid amounts are deducted.
• A non-resident seller may have part of the sale proceeds withheld under section 116 of the federal Income Tax Act. See “Non-resident seller withholding”.

When and how do you pay?

Your lawyer combines most closing costs on the statement of adjustments. Land transfer tax, legal fees, title insurance, adjustments and the tax on the insurance premium are usually sent to the lawyer’s trust account with the balance a day or two before closing.

The home inspection, appraisal and status certificate are paid separately before closing. Moving and hookups come after.

Can you reduce closing costs?

• First-time buyer refunds (up to $4,000 Ontario, up to $4,475 Toronto): check your eligibility early and tell your lawyer.
• With 20% or more down there is no mortgage insurance premium and no 8% tax on it.
• Just outside the Toronto boundary (Vaughan, Markham, Mississauga and so on) there is no municipal land transfer tax. For the same budget the difference is large.
• Compare two or three quotes for legal fees and title insurance. Choose a lawyer who does a lot of real estate work rather than simply the cheapest.