Buying or selling a home comes at a higher cost than the price of the home itself. There are fees associated with purchasing a property that must be considered before the sale of the home is finalized. Closing costs consist of the legal, administrative and other expenses required to finalize the purchase or sale of your home. You will need to pay these fees on the closing day. 

For Buyers 

Typically, closing costs will be about 1-4% of a home’s purchase price. The fees will vary depending on where the home is located; for example, in Toronto, there is a Municipal Land Transfer Tax in addition to the standard Ontario Land Transfer Tax. 

Fees can include but are not limited to: 

  • Land Transfer Tax: Ontario’s tax for land transfer. This tax will make up a large chunk of the closing costs. 

  • Legal fees and disbursements: Lawyer fees and disbursements. 

  • Title insurance: Your legal proof of ownership. This will cover you if there is a title dispute after the sale. 

  • Home insurance: Getting home insurance is mandatory if you’re applying for a mortgage. 

  • Appraisal fees: A home appraisal is not always mandatory, but some lenders will prefer to have the home appraised before granting a loan. 

  • Home inspection fees: Once you’ve submitted an offer on a home, it’s a very good idea to have an inspection done to ensure that the home is in good shape. Read more about what to expect from home inspections in our article here.

  • Condo certificate fees: When purchasing a condo, your lawyer will need to review the condo status or strata certificate to check that the condo is free from any liens, fees, and charges. 

  • GST/HST (if buying a newly built home) 

It is important to keep track of what fees you will need to pay when your home closes—your lawyer can help advise you on which fees you will need to pay. 

For Sellers 

For the most part, closing fees for sellers typically consist of three things: 

  • Realtor commission 

  • Lawyer fees 

  • Mortgage payout charges 

As a seller, your biggest closing cost will be paying the commission of the real estate agents. Commissions in Ontario are usually about 5% of the sale price of the property, split between the selling and listing agent. You will have to pay HST on the commission. 

You will also have to pay your real estate lawyer’s fees, though these are not as high as the realtor commissions. 

Finally, if your mortgage is not up for renewal, you may have to break your mortgage contract. Typically, the charge for this is three months’ worth of interest, but it can vary depending on the institution. If you’re considering selling your home and breaking your mortgage contract, it is a good idea to reach out to your lender to find out about the charges beforehand. 

Whether you’re buying or selling a home, always check with your lawyer to see what closing costs you’ll be facing when finalizing the sale. 

Posted by Victoria Kim on


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