What Are Closing Costs? A Guide for First-Time (and Repeat) Buyers.

Congratulations — whether you're buying your very first home or upsizing to something new, it's an exciting milestone! You've likely already thought carefully about your down payment, but there's another piece of the financial puzzle that catches many buyers off guard: closing costs.

As a general rule of thumb, closing costs typically run between 1.5% and 4% of the purchase price, on top of your down payment. Here's a breakdown of what to expect.

Land Transfer Tax

This is usually the largest closing cost. In Ontario, you pay a Provincial Land Transfer Tax on every purchase — and if you're buying in Toronto, you also pay a Municipal Land Transfer Tax on top of that.

Both taxes are calculated based on your purchase price. The easiest way to estimate your amount is to use the Land Transfer Tax Calculator from the Toronto Regional Real Estate Board.

For example, on a $1,000,000 property in Toronto, the combined land transfer taxes come to $32,950 ($16,475 provincial + $16,475 municipal). If you qualify as a first-time homebuyer, you may be eligible for rebates that bring that total down to approximately $24,475 — a significant saving worth understanding before you buy.

Legal Fees & Title Insurance

In Ontario, both buyers and sellers are required to retain a real estate lawyer. Your lawyer will handle title searches, registration of the transfer, mortgage documentation, and more. Budget approximately $2,000–$2,500 in legal fees.

It's also strongly recommended — and often required by your lender — to purchase title insurance, which protects against issues like title fraud, survey errors, and undisclosed liens. Title insurance typically costs around 0.5%–0.7% of the purchase price, and it's a one-time premium paid at closing.

Adjustments

At closing, your lawyer and the seller's lawyer will calculate any financial adjustments between the two parties. These are credits or debits to account for costs the seller has already prepaid (or that the buyer owes a portion of).

A common example: if you're buying a condo and closing mid-month, but the seller has already paid the full month's maintenance fees, you'll need to reimburse them for the remaining days. Similar adjustments can apply to property taxes, utilities, and other prepaid expenses. The amounts are usually modest but can vary — it's smart to keep a small buffer in your budget for these.

Utility Account Setup Fees

When you set up new accounts for electricity, gas, and water in your name, most service providers charge a one-time account registration or connection fee. These typically range from $50–$100 per utility — small individually, but worth factoring in.

Moving Costs

Moving costs can vary widely depending on the size of your home and how much help you need. Professional movers typically run $1,000–$2,000 or more for a local move. Of course, there's always the DIY option — a rented truck, a few willing friends, and a couple of pizza boxes can go a long way!

When Are Closing Costs Due?

A few days to a week before your closing date, your lawyer will provide a final statement showing the exact amount you need to deposit into their trust account. This will include your down payment, land transfer taxes, legal and registration fees, and title insurance.

It's a good idea to make sure these funds are accessible and not locked into investments that require notice to redeem.

Have Questions?

I'd love to help! I offer a free presentation for first-time homebuyers (and experienced buyers who want a refresher) that walks through the entire buying process from start to finish. Reach out anytime — no question is too small.