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The total amount of money you will need when you purchase a home will extend beyond your down payment. In addition, you will need to save the necessary funds to cover the relevant closing costs. The total amount required can vary based on several factors.

Here are the key elements to closing costs in Ontario.

Ontario Closing Costs

  • Land Transfer Tax

  • Legal Fees

  • Title insurance

  • PST

  • Interest adjustments

  • Property tax adjustments

How much are closing costs in Ontario?

Land Transfer Tax is the largest portion of your closing costs will go towards also know as LTT. If you are a first-time homebuyer (have never owned a property), you will receive a rebate on the tax applicable to the first $368,000 in purchase price. For purchase prices above this amount, you will pay tax on the value above this amount. If you have owned a home in the past, you will be required to pay the LTT on the full purchase price value. The LTT varies by province and some cities like Toronto have a municipal LTT.

Legal fees and disbursements. This includes the base fee your Real Estate Lawyer charges as well as search fees etc.

Title Insurance. This protects your home against potential ownership disputes. It is arranged through your lawyer.

PST on hi-ratio insurance. If you have less than 20% down payment you will be required to have an insurance policy on your mortgage contract. This is arranged by the lender through CMHC, Genworth or Canada Guaranty. While the base insurance amount is included in your overall mortgage request, the applicable PST is collected at the time of closing.

Interest adjustment. If you purchase your home on the 15th of the month and the lender requires mortgage payments on the 1st of each month, you will be required to pay an interest adjustment amount for the two-week difference.

Property tax adjustment. If the current homeowners have paid their property taxes, you will be required to reimburse them the pro-rated amount from the date you get the home until the end of the pre-paid date.

Closing costs documents required

Lenders will require all borrowers to show evidence of 1.5% of the purchase price to be made available for closing costs. This must be saved from own resources and not borrowed. This amount is in addition to the required down payment.
If you are refinancing your home, you are not required to pay Land Transfer Tax. You will be required to pay legal fees and disbursements as well as title insurance.

Who manages closing costs in Ontario?

All the mentioned costs are collected by your Real Estate Lawyer prior to closing. They will provide you with a Trust Ledger summary outlining each of these items in detail and the law office will disburse the funds on your behalf. All you must do is show up with a bank draft!

Understanding how much you need for closing costs, in advance of your closing date, is critical to getting the keys to your new home on the scheduled date.

For more information or to book a no obligation consultation, please contact [email protected].