February 22, 2024 | Buying

Navigating Closing Costs: A Comprehensive Guide for Home Buyers and Sellers

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In this comprehensive guide on closing costs associated with buying and selling a home in the GTA and surrounding areas; we’ll explore the essential details you need to know. As a Realtor with many years of experience, my mission is to provide you with valuable information to make your real estate journey as smooth as possible. Whether you’re a buyer or a seasoned seller, understanding closing costs is crucial to ensure you’re financially prepared for your next real estate transaction.

Part 1: Understanding Closing Costs for Buyers

Let’s begin by dissecting the various closing costs that buyers in the GTA and surrounding areas, typically encounter when purchasing a new home. It’s essential to have a clear picture of these expenses to budget effectively for your real estate venture.

Legal Fees ($1,000 – $2,500)

Legal fees are a non-negotiable part of any real estate transaction. Buyers need a lawyer to handle various legal aspects, such as title searches, preparing documents, and facilitating the closing process. Legal fees can vary depending on the complexity of the transaction and your chosen lawyer but typically range from $1,000 to $2,500.

Land Transfer Tax (Varies)

In Ontario, buyers are required to pay a land transfer tax when acquiring a property. This tax is calculated based on the purchase price of the home. First-time homebuyers may qualify for a rebate, which could partially or fully offset this expense. It’s essential to consult with your real estate agent or lawyer to understand the specific tax implications based on your situation. Feel free to use our land transfer tax calculator here.

Home Inspection Costs ($400 – $600)

A thorough home inspection is crucial to ensure the property is in good condition and doesn’t hide any major issues. Home inspection costs typically range from $400 to $600. Investing in a quality inspection can save you from unexpected repair costs down the road. At Urban Group Realty we cover one inspection for our clients. Helping to make this process that much easier and affordable.

Appraisal Fees ($300 – $500)

Your lender may require an appraisal of the property to determine its market value. Appraisal fees can vary but generally range from $300 to $500. Some lenders may absorb this cost, while others pass it on to the buyer.

Title Insurance ($300 – $500)

Title insurance is designed to protect you from potential title defects or issues with the property’s ownership history. Title insurance fees vary but generally cost around $300 to $500.

Mortgage Application Fees (Varies)

When applying for a mortgage, some lenders may charge an application fee, while others may waive it as part of a promotional offer. Be sure to inquire about any fees associated with your mortgage application.

Home Insurance ($1,000 – $2,000 annually)

Home insurance is essential to protect your investment. Premiums vary based on the property’s location, size, and other factors. On average, expect to pay between $1,000 to $2,000 annually for home insurance.

Property Tax Adjustments (Varies)

Depending on when you close the deal, you may need to reimburse the seller for property taxes paid in advance. Your lawyer will calculate these adjustments and inform you of the amount owed.

Utility and Service Hook-Up Fees (Varies)

When moving into your new home, you’ll need to set up utilities and services like electricity, water, gas, and internet. Be prepared for connection fees that can add up to several hundred dollars.

Moving Costs (Varies)

Don’t forget the costs associated with physically relocating your belongings. Whether you hire professional movers or rent a truck, moving expenses can vary widely depending on your circumstances.

Professional moving costs can vary widely based on several factors, including the distance of the move, the volume of belongings, and the specific services required. Here’s a typical professional moving cost range to provide you with a general idea:

Local Moves (within 60 Km):

Small Apartment: $1000 – $2000+

2-3 Bedroom Home: $2500 – $4,500+

4+ Bedroom Home: $4,500 – $7,500+

Please note that these are rough estimates and actual costs can vary significantly depending on factors such as the distance, the weight of your belongings, the time of year, and whether you opt for additional services like packing and unpacking.

It’s essential to obtain quotes from multiple reputable moving companies to get a more accurate estimate tailored to your specific needs. Additionally, some movers offer in-home estimates, which can provide a more precise cost assessment based on your belongings and the layout of your current and new homes.

Additional Costs

Depending on your specific transaction, you may encounter other expenses such as condominium fees (for condo buyers), home warranty fees, or fees related to obtaining a survey or zoning compliance certificate. It’s essential to consult with your real estate agent and lawyer to identify any additional costs applicable to your situation.

Can I roll the costs into my mortgage?

In some cases, buyers can include certain closing costs in their mortgage amount. This option is typically available for expenses like the land transfer tax and mortgage insurance premiums. However, it’s crucial to keep in mind that not all closing costs can be rolled into your mortgage, and there are specific criteria to consider:

Loan-to-Value Ratio (LTV): Lenders often have restrictions on the maximum loan-to-value ratio they are willing to approve. This ratio represents the percentage of your home’s purchase price that the lender is willing to finance. If including closing costs pushes your LTV beyond the lender’s limit, you may need to cover some costs out of pocket.

Mortgage Insurance: If your down payment is less than 20% of the purchase price, you will likely require mortgage insurance. In some cases, the premium for this insurance can be rolled into your mortgage, effectively spreading the cost over the life of the loan.

Affordability: Rolling closing costs into your mortgage can increase your monthly mortgage payments. It’s crucial to ensure that these higher payments fit comfortably within your budget and won’t strain your finances.

Interest Costs: By financing your closing costs through your mortgage, you are essentially borrowing this money, which means you will pay interest on it over the life of your loan. This can result in higher overall costs in the long run.

Lender Policies: Different lenders may have varying policies regarding which closing costs can be included in the mortgage and under what conditions. It’s essential to discuss this with your lender or mortgage broker to understand your specific options.

In summary, while it is possible to roll some closing costs into your mortgage, it’s a decision that should be made carefully and with a clear understanding of how it will impact your overall financial situation. It’s advisable to work closely with your lender and real estate agent to determine the most suitable approach for your specific circumstances, ensuring that you can comfortably manage your mortgage payments while covering essential closing costs.

Part 2: Understanding Closing Costs for Sellers

Now, let’s shift our focus to the closing costs that sellers in Burlington, Ontario, should be aware of when parting ways with their property. These costs can impact your net proceeds from the sale, so understanding them is crucial.

Real Estate Commission (4% – 5%)

The largest closing cost for sellers is typically the real estate commission, which is a fee paid to your real estate agent for their services in marketing, negotiating, and facilitating the sale. Commissions are typically based on a percentage of the final sale price and can vary from 4% to 5%. It’s crucial to discuss commission rates with your chosen real estate agent upfront.

Legal Fees ($800 – $1,500)

Sellers also need legal representation to handle the legal aspects of the sale. Legal fees for sellers tend to be slightly lower than those for buyers, ranging from $800 to $1,500, depending on the complexity of the transaction.

Mortgage Discharge or Prepayment Penalties (Varies)

If you have an existing mortgage on the property, you may incur penalties for discharging it before the maturity date. These penalties can vary significantly depending on your mortgage terms, so it’s essential to discuss this with your lender.

Home Inspection Repairs (Varies)

If the buyer’s home inspection reveals issues with the property, you may be responsible for addressing and repairing them before closing (depending on what has been negotiated in the contract). The cost of repairs can vary widely, depending on the extent of the issues.

Capital Gains Tax (Varies)

In Canada, capital gains tax may apply to the profit earned from the sale of your primary residence. However, most sellers are exempt from this tax. It’s important to consult with a tax professional to understand your specific tax obligations.

Title Insurance ($300-$500)

As with buyers, sellers may need to purchase title insurance to protect against any unexpected title defects or issues. The cost typically ranges from $300 to $500.

Property Tax Adjustments (Varies)

Similar to buyers, sellers may need to adjust property taxes based on when the sale closes. Your lawyer will calculate the adjustments, and you may need to reimburse the buyer for taxes paid in advance.


Disbursements cover various administrative costs incurred by your lawyer during the sale process, such as courier fees, land title searches, and other related expenses. These typically amount to a few hundred dollars.

Home Staging and Cleaning (Varies)

To make your property more appealing to potential buyers, you may invest in home staging and professional cleaning services. These costs can vary but are essential for showcasing your home in its best light. At Urban Group Realty we provide professional staging services and prelisting cleaning as part of our listing package. It is important to ask your Realtor if they cover some or all of the costs associated with staging before signing any contracts.

Staging costs can vary widely based on factors such as the size of the property, the extent of staging required, and the specific staging company you choose. Staging is an excellent way to enhance a property’s appeal to potential buyers, but it’s essential to understand the cost implications. Here’s a rough cost range for staging services in the GTA based on square footage. These costs are the initial fees and there are ongoing rental costs every month that normally amount to half the cost of the original staging:

Small Spaces (under 1,000 square feet):

Cost Range: $1,500 – $3,500

Medium-Sized Properties (1,000 – 2,000 square feet):

Cost Range: $3,500 – $6,000

Large Properties (2,000 – 3,000 square feet):

Cost Range: $6,000 – $9,000

Very Large Properties (over 3,000 square feet):

Cost Range: $9,000 – $15,000+

Keep in mind that these are approximate cost ranges, and the actual cost may vary depending on factors such as the complexity of the staging, the duration of the staging rental, the quality of furniture and decor used, and any additional services required (e.g., design consultation, destaging).

It’s advisable to ask your realtor if these costs are covered as part of their fees and if not to obtain quotes from several reputable staging companies, as they may offer different packages and pricing structures. Be sure to discuss your specific needs and budget with potential staging providers to find the best fit for your property. Additionally, ask about any additional fees or charges that may apply, such as delivery and setup fees.

Mortgage Payout Penalties

If you have an existing mortgage on the property, you may need to pay penalties for discharging it before the term ends. These penalties can vary widely based on your mortgage terms, so it’s crucial to consult your lender for a precise estimate.

In real estate, closing costs are an inevitable part of the buying and selling process. Understanding these costs and planning for them is essential for a successful and financially sound transaction. Whether you’re a buyer or a seller, being well-informed about the various closing costs can help you make informed decisions and avoid any last-minute surprises.

As your trusted real estate agent specializing in Burlington, Oakville, Hamilton and surrounding areas; my commitment is to provide you with the knowledge and guidance you need to navigate the real estate market with confidence. If you have any questions or need further assistance regarding closing costs or any other aspect of the real estate process, please don’t hesitate to reach out.

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