… What You Need to Know About Closing Costs
You’ve found the house you love. Maybe it’s that charming starter home with the cozy front porch, or a slick condo that puts you steps away from your favourite brunch spot. You’ve done the math on your down payment and monthly mortgage payments and think, “Okay, I can swing this.”
But here’s the kicker—closing costs. These are the extra expenses you need to cover in cash before the keys land in your hands. Many buyers don’t see them coming, and I’ve watched more than a few clients scramble at the last minute. The good news? With some planning—and even a few lender programs—you can stay a step ahead.
What I’ll Cover
Legal Fees and Title Insurance
How Cash Back Programs Can Help
Land Transfer Tax (LTT)
In Ontario, this is one of the heftiest closing costs. It’s a sliding scale tax based on your purchase price. And if you’re buying in Toronto, you’ll pay it twice—provincially and municipally. First-time buyers may get a rebate, but it doesn’t always wipe it out completely.
Legal Fees and Title Insurance
Your lawyer will handle the paperwork, registrations, and due diligence, which usually runs $1,500–$2,500. Add another $300–$500 for title insurance, which protects you against things like fraud or title defects. It’s one of those “sleep well at night” costs.
Mortgage-Related Costs
If your down payment is less than 20%, you’ll need mortgage default insurance. The premium gets added to your mortgage, but the PST on that premium has to be paid upfront in cash. Lenders may also request an appraisal (around $350–$500). And with some alternative or private lenders, you might face broker/lender fees—typically 1–2% of the loan amount.
Home Inspection Costs
This one’s optional, but I strongly recommend it. A good home inspection costs $400–$600, and it can save you from buying a lemon.
Adjustments at Closing
On closing day, you’ll need to reimburse the seller for things they’ve prepaid—property taxes, condo fees, even utilities. These vary but can add up quickly.
Insurance and Moving Expenses
Don’t forget your home insurance (required by lenders, usually $1,000–$2,500 annually) and the cost of movers or a rental truck. Even the pizza for your friends who help you move is part of the real cost of closing.
Condo-Specific Costs
If you’re buying a condo, you’ll need a status certificate (around $100) so your lawyer and lender can review the condo corporation’s financial health.
A Story About Closing Costs
A few years back, I worked with a young family—let’s call them Mark and Sarah. They were thrilled about buying their first home in Oshawa. They had scraped together every last cent for their down payment and were convinced they were ready.
Then came the lawyer’s estimate: land transfer tax, legal fees, title insurance, home inspection, and property tax adjustments. All told, the closing costs came to just over $12,000. Their savings were already tied up in the down payment, and suddenly they were short.
That’s when I shared a piece of advice I give all my clients: plan to set aside about 1.5%–4% of the purchase price for closing costs. On a $600,000 home, that could mean $9,000–$24,000. It’s a big range, but better to be over-prepared than scrambling at the eleventh hour. (Contact me so I can give you a much more accurate figure for your situation).
Luckily, because we had discussed cash back mortgage options earlier, Mark and Sarah were able to secure a cash back product that covered the shortfall. Without that, they might have lost the home. The experience taught them—and hopefully teaches you—that closing costs aren’t an afterthought; they’re a make-or-break part of the process.
How Cash Back Programs Can Help
If you’re worried about coming up short on closing day, cash back mortgage programs can sometimes bridge the gap. Here’s how they work: certain lenders offer you a lump sum cash back (usually 1–5% of the mortgage amount) at closing. That money can be used toward land transfer tax, legal fees, or other closing expenses.
Now, it’s not “free money”—typically, the interest rate on a cash back mortgage is slightly higher. But for some buyers, especially first-timers struggling to gather enough cash to cover closing costs, it can mean the difference between getting the keys or hitting pause on their dream home.
Putting It Into Practice
For realtors, this knowledge is power. Imagine walking your client through a property they love and being able to say, “Here’s what the home will cost—and here’s what you’ll need in closing costs.” That kind of honesty earns trust and helps clients make smarter offers.
For buyers, understanding the numbers early helps you budget properly. Instead of maxing out on your down payment, you’ll leave that extra 1.5–4% cushion so you can cover taxes, fees, and all the extras without stress.
Allen’s Final Thoughts
Buying a home is thrilling, but it’s also one of the biggest financial moves you’ll ever make. Closing costs don’t always make the highlight reel when you’re dreaming about paint colours or that perfect backyard, but they’re just as critical as your down payment.
The good news? You don’t have to navigate it alone. As your mortgage agent, I’ll walk you through every cost, explore strategies to cover them, and even set you up with solutions like cash back mortgages if needed. Think of me as your financial wingman—I’ll make sure you’re ready for closing day, keys in hand, without any nasty surprises.
