Toronto Realty Blog Post - Are you Aware of these Closing Costs? - featuring a family saving money
March 24, 2023 | Buying

Are you aware of these closing costs?

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You’ve decided you’re ready to buy a property. Congratulations! This is exciting.

Perhaps you’ve taken care of the first steps. You’ve had a conversation with a mortgage broker (if you need a referral, we’d be happy to direct you to the best!) , and determined what you can spend.

Once you’ve got an idea of your budget, using our mortgage calculator you’d determine what you’re required down payment and monthly carrying costs will be. Perhaps this makes you adjust your budget, maybe not. I do always tell my clients though, there’s often a difference between what you can spend and what you are comfortable spending. In any event, you’ve got that sorted out.

You’ve even done your research. Reading our Buyer’s Guide, you know everything there is to know about the process. You feel like you’re ready.

Despite all that preparation, if you’re like many buyers across this city and province, you may be wondering about the “other” closing costs associated with the purchase.

What are closing costs?

Closing costs are the fees and expenses that you’ll need to pay when you finalize the sale of a property. They can include everything from legal fees to land transfer taxes, and they can add up quickly. Over the next few hundred words, we’ll go over the most common closing costs of Real Estate in Toronto and give you some tips on how to prepare for them.

Image of money being saved for closing costs in buying a house

Land Transfer Tax

Almost certainly the most financially significant of your closing costs, in Ontario you’re required to pay a land transfer tax when you purchase a property. The tax is calculated as a percentage of the purchase price, and the rate varies depending on the value of the property. It’s also important to know, if you’re purchasing within the city of Toronto you will pay an additional tax to the municipality.  For example, if you purchase a property in Toronto for $1,000,000, you’ll need to pay $32,950 in land transfer tax. That same property for $1,000,000 in another part of the province would pay half that at $16,475. Keep in mind that first-time homebuyers may be eligible for a rebate, depending on certain factors. Chris goes into that rebate, as well as other first-time home buyer benefits in the most recent blog post.

Legal Fees

Another important consideration when purchasing a property in Ontario is hiring a lawyer, and that comes with associated legal fees. A lawyer will handle the legal aspects of your purchase and closing of the sale, including the preparation of the closing documents and the transfer of funds. Legal fees vary depending on the complexity of the transaction, but you can expect to pay $1,500 to $3,000 for legal services.

Home Inspection

While not a mandatory closing cost, it’s highly recommended to have a home inspection done on the property you are buying, to identify any potential issues with the property. In Toronto, these are usually done well before closing, either by the seller and listing agent prior to the property coming to the market, or as part of a condition to an Agreement of Purchase and Sale, between the time a deal is agreed upon and the waiving of the condition to create a firm deal. The cost of a home inspection can vary depending on the size and age of the property, but if you are doing your own inspection you can expect to pay between $500 to $800 for a comprehensive inspection.

Title Insurance

Title insurance is an insurance policy that protects you against any issues that may arise with the title of the property. For example, if there’s a dispute over ownership or a lien on the property, title insurance can help cover the costs associated with resolving the issue. The cost of title insurance varies depending on the value of the property, but you can expect to pay between $250 to $500.

Closing Adjustments

Closing adjustments are coordinated by the buyer and seller’s lawyers and are the costs associated with the transfer of ownership of the property. They can include property taxes, utility bills, and other fees. These costs are prorated based on the date of the sale, so you’ll only be responsible for the portion of the cost that applies to the time you’ll own the property. The cost of closing adjustments can significantly vary depending on the property and the time of year, but you can expect to pay anywhere from a few hundred dollars to a few thousand dollars.

Moving Costs

Image of boxes being packed for moving, which is another closing cost to consider when buying a house

It costs money to move also, and while not technically a “closing cost”, it is a cost associated with the closing of a property that applies to many. Getting your belongings to your new property safely is important to many, and can cost up to a few thousand dollars for professional movers, or the cost of a case of beer and a U-Haul rental to incentivize your friends to help you, depending on your circumstances.

Preparing for Closing Costs

Ultimately, closing costs can add up, and failing to prepare for them ahead of time can make for an unpleasant experience on what should be an exciting day.

Make sure you have a thorough understanding of the closing costs associated with your purchase, and I’d recommend liberally setting aside funds in advance to cover these costs. Worst case scenario, you have some extra cash for the housewarming party. If you’re feeling unsure about the total costs, I’d recommend asking your real estate agent or lawyer to help estimate, so you have a better idea of what to expect. We’ve seen it all before!

In Conclusion

Closing costs are important and unavoidable. Make sure you’re prepared for these costs by understanding what they entail and setting aside funds in advance. Trust me, you’ll thank me later! By doing so, you’ll be able to complete your purchase with confidence and avoid any surprises along the way. Transacting Real Estate in Toronto can seem difficult and confusing enough, don’t make things more difficult by failing to do the proper preparation!

If you have further thoughts or questions about closing costs or are feeling prepared and ready to give purchasing a property a shot, check out our Buyer’s Guide where we cover these closing costs and more. For any other questions, reach out to us. We love to hear from you, and love to help!

Written By

Matthew Morrison


p: 647.308.4767


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