Closing Costs: What First-Time Buyers Should Know
Saving for a down payment is only part of the equation when buying your first home in Ontario. You also need to account for closing costs — the one-time expenses you’ll pay on or before closing day.
Common Closing Costs
- Land Transfer Tax (LTT): Charged by the province of Ontario, and if you’re buying in Toronto, there’s an additional municipal LTT. First-time buyers may qualify for rebates.
- Legal Fees and Disbursements: Lawyers handle the title search, registration, and paperwork. Fees vary depending on the transaction.
- Title Insurance: Protects you and your lender from issues like fraud or defects in the title.
- Appraisal & Inspection: An appraisal may be required by your lender. A home inspection is optional but strongly recommended.
- Adjustments: You may need to reimburse the seller for prepaid items such as property taxes, utilities, or condo fees.
- Mortgage Insurance Premium PST: If your mortgage is insured through CMHC, Sagen, or Canada Guaranty, the premium is added to your mortgage, but the provincial sales tax (PST) on that premium must be paid at closing in Ontario.
How Much Should You Budget?
A good rule of thumb is to set aside 1.5% to 3% of the purchase price for closing costs. For example, on a $500,000 home, you’ll want between $7,500 and $15,000 available in addition to your down payment.
The Bottom Line
Closing costs often catch first-time buyers by surprise, but with smart planning, you can budget ahead and avoid last-minute stress.
