Closing Costs Explained in Ontario | A List of Home Closing Costs Selling and Buying

Lama Law Admin Jan 23, 2026

Closing Costs Explained

The first question I receive when potential clients call my office is how much will it cost them in legal fees for me to process their transaction. The second most important questions asked is, “Are there any other costs that I need to budget for?”. The answer is yes, you must budget for closing costs. So what are closing costs? They are mandatory costs associated with processing your real estate transaction and they differ based on whether you are buying or selling a home. Closing costs extend beyond the purchase price of your home and should be taken into account when budgeting.

Below is a list of closing costs applicable when buying a home:

Legal Fee: Lawyers fee to process your real estate transaction. Applicable HST and disbursements will be in addition to the quoted legal fee for most law firms. Out-of-pocket expenses incurred by your lawyer to process the transaction are called disbursements. Often between $1,500.00 to $3,000.00 depending on the complexity of the transaction.

Land Transfer Tax: Provincial land transfer tax is applied onto every purchase of a home in Ontario and the tax is calculated on the purchase price or fair market value of land. Municipal land transfer tax is also applicable if purchasing in the City of Toronto. Potential rebates may apply.
Title Insurance Premium: This is a one-time policy premium paid for on closing that protects your title interests as buyer and protects title interest of the lender. Often between $250.00 to $3,000.00 depending on the property price, mortgage amount and type of lender.
Mortgage Related Fees: Some lenders will charge a fee to fund or process your mortgage. This can also include the cost of default insurance plus PST which is deducted from your mortgage advance. Default insurance is required if your down payment is less than 20% of the purchase price.
Home Inspection: Often times buyers will have an inspection as a condition of their purchase which will be arranged by the buyers before closing. Often between $350.00 to $750.00 depending on the location of the home.
Appraisal Fee: Often times the lender will require an appraisal at the time you are negotiating your mortgage terms and conditions. The appraisal fee is deducted from the mortgage advance on closing. Often between $300.00 to $500.00 depending on the location of the home.
Property Tax Adjustment: Annual property tax is prorated on closing based on the amount the sellers have paid to date and the date of closing.
Utility and Common Expense Adjustment: Utility accounts are prorated based on the day of the month you take possession. A portion of the monthly common expense will be due to the seller based on the day of possession.

Below is a list of closing costs applicable when selling a home:

Legal Fee: Lawyers fee to process your real estate transaction. Applicable HST and disbursements will be in addition to the quoted legal fee. Out-of-pocket expenses incurred by your lawyer to process the transaction are called disbursements. $1,000.00 to $3,000.00 depending on the complexity of the transaction.
Property Tax Adjustment: Annual property tax is prorated on closing based on the amount the sellers have paid to date and the date of closing.
Utility and Common Expense Adjustment: Utility accounts are prorated based on the day of the month you take possession. A portion of the monthly common expense will be due to the seller based on the day of possession.
Real Estate Commission Fee: This is usually a percentage fee based on the sale price of your home and any outstanding balance due is paid to the brokerage on closing by your real estate lawyer. Average percentage charged by the brokerages is between 3% and 5% of the sale price split between the buyer’s and seller’s agents.
Debt Payments: If there is an outstanding mortgage on the property, you will be responsible to pay this in full on closing. This may include a prepayment penalty if you are paying out the mortgage before it’s maturity date. Other items may be required to be paid from your sale proceeds like a bridge loan, credit card payments or property tax arrears.