What No One Tells You About Closing Costs

When buying a home, most people focus on the down payment and mortgage approval, but few truly understand the full scope of closing costs. These are the additional expenses that come into play at the end of a real estate transaction—and they can catch buyers off guard if not properly prepared.

Here’s what no one tells you about closing costs—especially here in Ontario—and what you can do to avoid unpleasant surprises.

🏡What Are Closing Costs?

Closing costs refer to the various fees and expenses (above the purchase price of the property) that buyers and sellers need to pay to finalize a real estate deal. While the amount can vary depending on the type of home and its location, most homebuyers in Ontario can expect to pay anywhere between 1.5% to 4% of the purchase price in closing costs (source: Canada Mortgage and Housing Corporation).

💸The Unexpected Breakdown of Closing Costs 

Here's a closer look at some of the hidden closing costs that don’t always get talked about:

1. Land Transfer Tax (LTT)

In Ontario, buyers must pay a Land Transfer Tax based on the property’s value. If you're buying in Toronto, be prepared to pay both a provincial and municipal land transfer tax. However, first-time homebuyers may be eligible for a rebate, which is something to ask your real estate financial advisor about. (source: Government of Ontario)

2. Legal Fees and Disbursements

You’ll need a real estate lawyer to close the deal. Legal fees typically range from $1,000 to $2,500, depending on the complexity of the transaction. These fees cover title searches, registering the home, and more. (source: RE/MAX Canada)

3. Title Insurance

Not mandatory, but often recommended. Title insurance protects you from ownership issues like fraud or encroachment. It usually costs a few hundred dollars and is a one-time fee.

4. Home Inspection and Appraisal Fees

Even before closing, you may pay home inspection fees ($400–$600) and appraisal fees (if required by your lender). These are vital for making sure the property is in good condition and worth the agreed price. (source: RE/MAX Canada)

5. Prepaid Property Taxes and Utilities

Sometimes, sellers have prepaid their property taxes or utility bills beyond the closing date. As a buyer, you may have to reimburse them, which adds to your closing expenses.

💳Why You Should Budget More Than You Think

Many buyers are caught off guard because closing costs are often underestimated. Unlike the down payment, which is top of mind, these costs can sneak up quickly and put strain on your finances if you haven’t planned for them.

It's recommended to set aside at least 3–4% of your purchase price for closing costs—even if you don’t end up needing it all, it's better to be safe than short. (source: Canada Mortgage and Housing Corporation).

✅Pro Tip: How Your Real Estate Agent Can Help

A good real estate team (like Team Metherall!) will walk you through all the details of your transaction—including the hidden fees and closing costs that others might overlook. We can help connect you with trusted legal and financial professionals who won’t leave you in the dark.

If you're buying your first home—or even your third—closing costs can be confusing and stressful. But with the right guidance and preparation, you can approach your real estate transaction with confidence.

At Team Metherall, we're here to make sure you're not just prepared for the purchase price—but for every dollar it takes to make your house a home.

TeamMetherall.com

(905) 476-6060