To close an average real estate transaction will cost you approximately 2-3% of the purchase price.  To budget for closing costs, the following needs to be taken into account:

  • Land transfer taxes
  • Moving expenses
  • HST
  • Lawyer fees
  • Title insurance

Land transfer taxes

When purchasing a property in Ontario, you are subject to paying Ontario Land Transfer tax. As a first time buyer, there are rebates available from both levels of Government.

For Ontario: click here

For Toronto: click here

At this point the total rebates one is eligible for is $2,000 from the Ontario LTT and $3750 from the Toronto LTT

HST- Harmonized Sales Tax

If you transaction includes CMHC insurance, closing cost will also include the HST on the insurance charge.  Insurance premium is added to mortgage amount but HST (13%) is part of closing cost and your lawyer will calculate it as part of expense you have to cover.   

Title insurance

Title insurance is an insurance policy that protects you, the home owner, against challenges to the ownership of your home and required by all lenders at the time of closing. The policy provides coverage against losses due to title defects, even if the defects existed before you purchased your home.

Title insurance policies protect you for as long as you own the property. These risks include following:

  • Fraud and forgery, including someone taking your title through fraud or forgery
  • Encroachments that would be disclosed by a new survey
  • Someone other than the home owner having interest (i.e. a previous owner of the property not being discharged from title)
  • Zoning non-compliance
  • Easements