What are closing Costs and How much are they?
It’s important to know how much you’ll need for closing costs. Typically lenders will want to see at least 1.5% of your total mortgage amount available – just for closing costs – although your closing cost could be more or less. The following points will help you in the right direction to avoid any surprises, and it’s important to note that your lawyer will have a ‘down to the penny’ expense statement available for you to review before your closing.
- Lawyers’ fees often run in the $1000 – $1,500 range for a basic close.
- Higher government registration costs or complications can potentially lead to more expense at the lawyers.
- The land transfer tax on a home purchase can be a very sizable cost and should always be considered as well. Please note the costs and how they gradually increase as the purchase price moves higher. This is a graduated tax system so you would always be taxed with in the ranges noted – or in other words you would not be fully taxed within just one rate unless your purchase price is $55,000 or lower. Also note that a separate Land Transfer Tax applies in the City of Toronto.
| Purchase range | Ontario Land Transfer Tax | Toronto Surcharge |
| $0 – $55,000 | 0.5% | 0.5% |
| $55,000 – $250,000 | 1% | 1% |
| $250,000 – $400,000 | 1.5% | 1% |
| $400,000 + | 2% | 2% |
Example:
For a $350,000 property purchase –the tax would be calculated:
On the first $55,000 = $275
On $55,000 – $250,000 range = $1,950
On the $250,000 – $350,000 remainder of the purchase price: $1,500
Total LTT Cost for this purchase: $3,725
*Please note that the additional charge would only apply in the City of Toronto.
- If your mortgage is CMHC insured, there is HST on the insurance fee. While the insurance fee itself is included in the mortgage, the HST is not and must be paid as a closing cost.
For Example:
- A 2.4% CMHC fee in a $100,000 mortgage is $2,400 if there is a minimum 10% for down payment.
- The CMHC fee is added into the mortgage to make it $102,400.
- 13% HST is charged on the CMHC Fee as a closing cost: $2,400 * 13%= $312 closing cost.
Knowing your closing costs well ahead of time will help you avoid unwanted surprises, and help ensure a smooth close.
