What Closing Costs Actually Look Like
What Closing Costs
Actually Look Like
in Ontario
The purchase price or the sale price is not the number that actually determines what you walk away with, or what you need to bring to the table. Closing costs are real, they add up and most buyers and sellers consistently underestimate them. This post covers both sides honestly, with approximate ranges where they are available and clear direction on who to call when the number varies.
A few important caveats before we start. Closing costs in Ontario vary significantly depending on your purchase price, your lender, your lawyer and your specific circumstances. Every number in this post is clearly labelled as an estimate. The exact amounts for each cost will be disclosed on your lawyer's Statement of Adjustments, which you typically receive a few days before closing. That said, knowing which costs exist and which ones vary is key to planning ahead so there are no surprises when that statement arrives.
When sellers think about what they will net from a sale, most start from the sale price and subtract the mortgage. The actual picture includes several costs that come off before you see any proceeds. Here is what to expect.
Real Estate Commission
Commission is paid by the seller and comes off the sale proceeds at closing. Every agent charges a different amount depending on the services and package being provided, so it is worth understanding exactly what you are getting before you sign a listing agreement.
The listing agent sets the total commission and determines what portion to offer out as a co-operating commission to the buyer's brokerage. For example, a listing agent may charge 4% total commission and offer 2% to the buyer's agent if they bring a buyer. The split and the total rate vary by agent and situation. Commission is most commonly calculated as a percentage of the final sale price, though some agents offer a flat fee structure instead. Where a percentage is used, the exact dollar amount is not known until the home sells. On a $750,000 sale, even a 1% difference represents $7,500.
Legal Fees
You need a real estate lawyer to handle your closing. Their fee covers reviewing the Agreement of Purchase and Sale, discharging your mortgage, preparing closing documents and transferring title to the buyer. The fee varies significantly between lawyers and law firms, so it is worth getting quotes from two or three before selecting one. Price is not always a reliable indicator of quality, but there is a meaningful range in the market.
Your lawyer's fee will typically be accompanied by disbursements: costs they incur on your behalf such as title search, registration fees and courier charges. Ask for a full quote that includes both the legal fee and estimated disbursements.
Mortgage Discharge Penalty
This is the cost that blindsides sellers more than any other. If you are breaking your mortgage before the end of your term (which most sellers are), your lender will charge a prepayment penalty. The size of this penalty can range from a few hundred dollars to tens of thousands of dollars depending on whether you have a variable or fixed rate mortgage, how much time remains on your term and your specific lender's calculation method.
Variable rate mortgages typically incur a penalty of three months' interest, usually around $2,000–$5,000 on a typical Waterloo Region mortgage. Fixed rate mortgages use an Interest Rate Differential (IRD) calculation that can produce a significantly larger penalty, particularly if rates have dropped since you took out your mortgage. Some lenders are more aggressive in their IRD calculations than others.
There is also a mortgage discharge fee, a separate administrative fee charged by the lender to remove the mortgage from title, typically $200 to $400.
Closing Adjustments
On closing day, the statement of adjustments calculates what each party owes the other for costs that have been prepaid or not yet paid. The most common adjustment is property tax. If you have paid property tax beyond your closing date, the buyer owes you a credit for that portion. If you have not yet paid taxes owing up to closing, you owe the buyer a credit.
The net effect for sellers can go either way depending on timing; you may receive a credit or owe one. The amounts are usually modest (a few hundred to a couple of thousand dollars) but they affect your net proceeds and should be anticipated. Your lawyer prepares the statement of adjustments and will walk you through it before closing day.
For condo sellers, condo fee adjustments work the same way; the monthly fees are prorated to the closing date.
Moving Costs
Not a closing cost in the legal sense, but a real cost that comes out of the proceeds of your sale. Professional movers for a typical Waterloo Region family home move within Cambridge or to a neighbouring city typically run $1,500–$3,500 for a half-day to full-day move. Larger homes, longer distances or peak season (spring and September) will push costs higher. Get at least two quotes.
The mortgage discharge penalty is the one cost that can genuinely surprise sellers, and the one worth knowing before you list, not on closing day. Call your lender first.
Everything else can be anticipated and planned for with quotes from your agent and lawyer.
Buyers consistently underestimate how much cash they need beyond the down payment. The rule of thumb in Ontario is to budget an additional 1.5% to 4% of the purchase price for closing costs on top of your down payment. On a $750,000 home that works out to $11,250 to $30,000. Here is where it goes.
Land Transfer Tax: The Big One
Land Transfer Tax (LTT) is a provincial tax paid by the buyer on every property purchase in Ontario. It is calculated on a sliding scale based on purchase price and is due on closing day. This is consistently the closing cost buyers most underestimate, and it is not optional.
On a $700,000 purchase the Ontario LTT is approximately $9,475. On an $800,000 purchase it is approximately $12,475. On $1,000,000 it climbs to approximately $16,475. These are meaningful numbers that need to be in your budget before you make an offer.
First-time home buyers in Ontario receive a rebate of up to $4,000 on their LTT, effectively eliminating LTT on purchases up to approximately $368,000 and reducing it on purchases above that threshold. The rebate applies to Canadian citizens or permanent residents who have never owned a home anywhere in the world.
Legal Fees
Buyers pay their own real estate lawyer to review the Agreement of Purchase and Sale, conduct a title search, arrange title insurance, handle the mortgage registration and transfer ownership on closing day. The same flat fee advice applies on the buyer side: a lawyer who charges a flat fee gives you cost certainty regardless of how the transaction unfolds. Buyer-side legal fees tend to run slightly higher than seller-side because of the additional work involved in the title search and mortgage registration. Disbursements are on top of the legal fee.
For condo purchases, your lawyer will also review the status certificate, a document package that contains the condo corporation's financials, rules, bylaws and any known issues. Status certificate review is typically included in the legal fee or charged as a modest add-on. Never buy a condo without having a lawyer review the status certificate.
Title Insurance
Title insurance protects you against losses arising from defects in the title to your property, such as fraud, encroachments, survey issues or outstanding liens that were not discovered before closing. It is a one-time premium paid at closing and most lenders require it. Unlike other insurance, it has no annual renewal.
Most buyers have never heard of title insurance until their lawyer mentions it. It is not expensive and it provides genuine protection. Your lawyer arranges it as part of the closing process.
Home Inspection
A home inspection is conducted during the conditional period and gives you a professional assessment of the property's condition, covering structure, roof, mechanical systems, electrical and plumbing. It is paid directly to the inspector and is not included in your legal or agent fees. The cost varies by the size of the home and the inspector, but $500–$600 is typical for a standard Waterloo Region detached home.
A home inspection is not mandatory but it is strongly recommended. In a competitive market, some buyers have waived inspection conditions, a decision that carries meaningful risk. In the current Waterloo Region market, most transactions include an inspection condition.
CMHC Mortgage Insurance
If your down payment is less than 20% of the purchase price, your mortgage must be insured through CMHC (or a similar insurer). The premium is calculated as a percentage of the mortgage amount and is added to your mortgage rather than paid as a lump sum at closing, but it is still a real cost that increases your total borrowing.
The premium rate depends on your down payment percentage: 5% down attracts a 4.00% premium, 10% down a 3.10% premium and 15% down a 2.80% premium. On a $650,000 home with 5% down ($32,500), the CMHC premium would be approximately $24,700 added to your mortgage.
Note: as of December 2024, the federal government increased the insured mortgage limit to $1.5M, expanding CMHC eligibility to more buyers. Confirm current rules with your mortgage broker.
Closing Adjustments
Just as the seller may have prepaid property tax beyond the closing date, the buyer may owe the seller a credit for that prepaid amount. This is calculated on the statement of adjustments and comes due on closing day. The amount depends on where your closing falls in the tax billing cycle. Your lawyer prepares the statement of adjustments once the closing date is confirmed.
Moving Costs
Same reality as the seller side. Professional movers, packing materials, utility connection fees and any immediate purchases for the new home (appliances, window coverings) add up. Budget at least $1,500 for a modest local move and more for a larger home or a move from out of the area. Get quotes from at least two movers before committing.
$15,000–$23,000
On top of your down payment. The LTT is the largest single line item. First-time buyers receive up to $4,000 back. calculate yours here →
“The number that goes in your offer is not the number that determines what you need at the bank. Budget your closing costs before you start looking, not after you fall in love with a home.”
Who to Call: and When
Many of the costs in this post cannot be calculated precisely until you have a confirmed closing date, a specific property and a specific mortgage in place. That is not a reason to skip the planning; it is a reason to start the conversations early.
Before you list (sellers): Call your lender and ask for a written prepayment penalty disclosure. This is the number that can most significantly affect your net proceeds, and it needs to be known before you set your list price.
Before you make an offer (buyers): Get pre-approved. Use the LTT Calculator and the Mortgage Calculator to model your full cost. Know your closing cost budget before you start touring homes.
As soon as your offer is accepted: Contact your real estate lawyer. They will prepare the full picture of what is due on closing day and give you the exact figures well before the date arrives.
When you have a confirmed closing date: Book your movers. Do not wait.
For more on the selling process from start to finish, the Seller FAQ covers every question sellers commonly ask. For buyers starting out, the First-Time Home Buyer Guide walks through the full process including how to get pre-approved and what to expect at closing.
