Closing Costs in Canada (2025): What Every Homebuyer Should Know

Here’s what we’ll cover:

• What Are Closing Costs?

• Why Closing Costs Catch People Off Guard

• Complete List of Closing Costs You Might Face

• Real-Life Example: Jaspreet’s Homebuying Journey

• How Much Should You Budget for Closing Costs?

• Provincial Differences (Land Transfer Tax)

• Tips to Avoid Surprises

• Final Advice from a Mortgage Expert

You’ve saved for your down payment, hunted for the perfect home, and finally signed the offer. It feels like the hardest part is done, right? But then, just before closing day, you’re hit with extra charges you didn’t plan for — legal fees, taxes, title insurance… what’s going on? Welcome to the world of closing costs. These one-time expenses can easily surprise first-time buyers if they’re not prepared. In this guide, we’ll walk through every cost you should know, and how to plan for them in 2025.

What Are Closing Costs?

Closing costs are all the additional fees and expenses you need to pay when finalizing the purchase of your home. They’re separate from your down payment and are required before you get the keys. Think of them as the behind-the-scenes costs that cover everything from legal paperwork to government taxes. If your home costs $500,000, you might end up paying another $10,000–$20,000 in closing costs, depending on where you live.

Why Closing Costs Catch People Off Guard

The biggest reason people are surprised by closing costs is simple: no one talks about them upfront. Real estate ads focus on listing prices and monthly payments, but rarely mention the extra 1.5% to 4% you’ll need at closing. And since these costs often come all at once, just before you take possession of the home, they can feel like a financial punch to the gut if you’re not prepared.

Complete List of Closing Costs You Might Face

Let’s go through the main ones you should be ready for:

• **Land Transfer Tax:** A provincial tax you pay when a home changes hands. Ontario, BC, and Quebec have the highest rates. Toronto even charges a second municipal LTT on top.

• **Legal Fees:** Lawyers or notaries are required to handle closing documents, title searches, and mortgage registration. Expect to pay between $800 to $2,500 depending on the complexity.

• **Title Insurance:** Protects you against fraud or issues with the title. One-time cost of $250–$400.

• **Home Inspection Fees:** Not mandatory, but smart. Usually $300–$600.

• **Appraisal Fees:** If required by your lender, you might pay $300–$500 to confirm the property’s value.

• **Mortgage Insurance:** If your down payment is under 20%, CMHC or similar insurance premiums apply — and provincial sales tax on those premiums may be due at closing.

• **Prepaid Property Taxes & Utilities:** You may need to reimburse the seller for bills they’ve already paid in advance.

• **Moving Costs:** Truck rental, movers, and setup fees for new internet/utilities.

Real-Life Example: Jaspreet’s Homebuying Journey

Jaspreet, a 32-year-old first-time buyer in Mississauga, finally landed a condo for $525,000. He had budgeted for his 5% down payment — around $26,000 — but forgot to plan for closing costs. Just days before moving in, he discovered he owed nearly $15,000 in fees: $6,500 in land transfer tax, $2,000 for legal work, $400 for title insurance, and $500 in prepaid utilities. Thankfully, his parents stepped in to help, but he admitted later, ‘I had no idea closing would cost this much.’

How Much Should You Budget for Closing Costs?

A good rule of thumb is to budget 3% to 4% of your home’s purchase price for closing costs. So if you’re buying a $600,000 home, aim to have at least $18,000 to $24,000 set aside. For first-time buyers, some of this may be offset by rebates, but the safest plan is to be over-prepared rather than short at the last minute.

Provincial Differences (Land Transfer Tax)

Land transfer tax is the biggest variable across Canada when it comes to closing costs. Here’s a quick comparison:

• **Ontario:** 0.5%–2.5% depending on home price. Toronto adds a second municipal LTT.
• **British Columbia:** 1%–3% plus an extra 2% on homes over $2 million.
• **Quebec:** Calculated by ‘Welcome Tax’ formula — generally 0.5%–1.5%.
• **Alberta/Saskatchewan/Nova Scotia:** No land transfer tax — only registration or nominal admin fees.

Tips to Avoid Surprises

1. **Ask your lawyer or agent early for a cost estimate.** Don’t wait till the last week.
2. **Keep an extra 3% of your budget untouched.** This is your closing cost cushion.
3. **Look into rebates.** Ontario, BC, and PEI offer land transfer tax refunds for first-time buyers.
4. **Include home inspection, insurance, and moving in your plan.** It all adds up quickly.

Final Advice from a Mortgage Expert

As someone who’s seen thousands of mortgage journeys, here’s my honest advice: always over-prepare for closing costs. It’s heartbreaking when clients scrape together just enough for a down payment — only to be blindsided with fees they didn’t know about. Build that 3–4% cushion into your savings from the start, and you’ll walk into your new home with confidence, not anxiety. That’s how you enjoy the moment fully — not with last-minute panic.