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Summary: A real estate transaction in Ontario carries costs on both sides of the deal. A buyer pays the down payment, mortgage default insurance, legal fees and disbursements, title insurance, property insurance, and land transfer tax; a seller pays the mortgage payout (and any penalties), real estate commission, legal fees, and any rental-appliance buyouts. This guide covers the full set, for buyers and sellers.
If you're buying or selling a home in Ontario, there are a number of costs to plan for beyond the obvious ones. This is an overview of the key expenses on both sides of a transaction, so you can budget with no surprises whether you're a first-time buyer or a seasoned investor. It covers the full transaction, the costs a buyer carries and the costs a seller carries.
What costs come with a buying or selling a home in Ontario?
Costs fall into two groups: what a buyer pays to complete a purchase, and what a seller pays to close a sale. Some, like legal fees, appear on both sides; others are specific to one. Here's the split at a glance:
Buyer pays | Seller pays |
Down payment | Mortgage payout + any prepayment penalty |
Mortgage default insurance (if under 20% down) | Real estate commission |
Mortgage broker fees (if any) | Legal fees and disbursements |
Legal fees and disbursements | Rental-appliance buyouts (furnace, water heater, etc.) |
Title insurance | Discharge / discharge-statement fees |
Property (fire, flood, liability) insurance | |
Land transfer tax |
The sections below walk through each side.
What does a buyer pay?
A buyer's costs run from the down payment through to land transfer tax on closing. The biggest variables are your down payment and the land transfer tax.
Down payment. Paid from your own savings or a non-refundable family gift. The minimum depends on price: 5% if the price is under $500,000; 5% on the first $500,000 plus 10% on the portion above $500,000 for homes between $500,000 and $1 million; and at least 20% for homes over $1 million.
Mortgage default insurance. Required if you put down less than 20% and borrow from a major bank (a lender may also require it for poor credit or self-employment). It costs roughly 0.6% to 4.5% of the mortgage, paid upfront or added to the mortgage, plus HST on the premium.
Mortgage broker fees. If a broker found your lender and charges you directly, the fees are disclosed in the mortgage commitment or a separate agreement. Ask about them before you sign.
Legal fees and disbursements. Your lawyer charges for reviewing the agreement of purchase and sale, the title search, preparing and registering documents, and moving funds. Disbursements (costs your lawyer pays on your behalf) can add up to as much as the legal fees, so budget for both.
Title insurance. Usually required when you fund with a mortgage. It's a one-time premium paid at closing, generally based on the purchase price and normally under $2,000 for an average home; title issues can raise it. See our guide to title insurance for what it covers.
Property insurance. Fire, flood, and liability coverage naming your lender as loss payee, which the lender requires before advancing funds. Premiums are ongoing and based on the home's value and an inspection.
Land transfer tax. Paid when title transfers (see the breakdown below).
How is land transfer tax calculated in Ontario?
Ontario land transfer tax is paid by the buyer when title transfers, calculated on the purchase price in brackets under the Land Transfer Tax Act:
0.5% on the first $55,000
1.0% on the amount from $55,000 to $250,000
1.5% on the amount from $250,000 to $400,000
2.0% on the amount from $400,000 to $2,000,000
2.5% on the amount over $2,000,000
For a $300,000 home, that's $275 (0.5% of $55,000) + $1,950 (1.0% of $195,000) + $750 (1.5% of $50,000) = $2,975. You can estimate yours with the Ontario land transfer tax calculator, and check the official rates on ontario.ca. First-time buyers may qualify for a full provincial rebate up to $4,000, and a property in Toronto also pays the municipal land transfer tax.
What does a seller pay?
A seller's costs come out of the sale proceeds at closing, and the mortgage payout and commission are usually the two largest.
Mortgage payout. Generally the biggest line. You repay the outstanding balance, plus any prepayment penalty if you break the mortgage before maturity, plus a discharge fee and sometimes a charge to prepare the discharge statement.
Real estate commission. As the seller you typically pay the commission for both the listing and buyer agents, generally 4% to 5% of the price, plus HST. Factor this in when weighing offers.
Legal fees and disbursements. Your lawyer reviews the agreement, responds to the buyer's lawyer's requisitions, prepares and registers documents, and moves funds; disbursements again can rival the fees.
Rental-appliance buyouts. If a furnace, water heater, or air conditioner is rented and the rental company has registered its interest against title, you may have to buy out the contract on closing unless the buyer agrees to assume it in the agreement of purchase and sale. The buyout is often higher than the appliance's retail value.
How do these costs get finalized?
Every transaction is unique, so there may be costs specific to yours. Your real estate lawyer prepares a statement that itemizes exactly what's owed and what's credited at closing, so you see the full picture before funds move. To understand the closing-day mechanics those costs flow through, see what actually happens on closing day.
Frequently asked questions
Who pays land transfer tax in Ontario, the buyer or the seller?
The buyer. Land transfer tax is paid by the purchaser when title transfers, calculated on the purchase price. Sellers do not pay it.
What's the difference between legal fees and disbursements?
Legal fees are what your lawyer charges for their work; disbursements are out-of-pocket costs your lawyer pays on your behalf (such as registration and search costs) that you reimburse. Together they make up your legal bill.
Who pays the real estate agent's commission?
The seller typically pays the commission for both the listing and the buyer's agents, generally 4% to 5% of the price plus HST, out of the sale proceeds.
Do I need title insurance, and is it a recurring cost?
If you're financing with a mortgage you'll usually need it. It's a one-time premium paid at closing that lasts as long as you own the home, not a recurring charge.
What costs can surprise a seller at closing?
Mortgage prepayment penalties and rental-appliance buyouts are the two that catch sellers off guard, since both can be larger than expected and are settled out of the sale proceeds.
About the author
Benjamin Berry is a co-founder and principal lawyer at Ownright. He works on Ontario residential real estate transactions and writes to make the costs and mechanics of buying and selling a home clear for the people going through it.
At Ownright, we focus entirely on Ontario residential real estate law. We help buyers and sellers with purchase closings, sales, refinancing, and status certificate reviews, pairing a digital platform that gives you a clear summary of every cost with an in-house legal team you can reach by chat, email, or video call. You can start your closing online or get in touch with any questions.
Legal references: Land Transfer Tax Act, R.S.O. 1990, c. L.6.
Important note: This article is not legal advice. No one should act, or refrain from acting, based solely on the information in this post or any linked materials without first seeking appropriate legal or professional advice.
