The down payment is the number everyone plans for. The costs on top of it are what catch people out, and they are almost entirely predictable if you list them early.
Land transfer tax
Ontario charges land transfer tax on the purchase price, on a sliding scale that rises with the price. A property inside the City of Toronto is charged a second, municipal land transfer tax on top of the provincial one, which roughly doubles this line. It is due on closing and cannot be added to the mortgage.
The first-time buyer refunds
Ontario offers a refund of provincial land transfer tax for eligible first-time buyers, and Toronto offers its own refund against the municipal tax. They are claimed at closing through your lawyer, and both have eligibility conditions on residency, age and whether you have owned a home anywhere before.
The rest of the list
- Legal fees and disbursements, typically in the low thousands.
- A home inspection, where you are having one.
- Title insurance.
- Adjustments to the seller for property tax or utilities already paid past the closing date.
- Moving costs, and the first set of bills at the new address.
What lenders expect you to have
On an insured mortgage a lender will normally want to see that you have funds beyond the down payment to cover closing, commonly around one and a half percent of the purchase price. Showing it up front avoids a condition arriving late in the file.
Land transfer tax rates and refund amounts are set by the province and by the City of Toronto and do change. Confirm the current figures with your lawyer before you budget to the dollar.
Sources
- Ontario land transfer tax
- Ontario land transfer tax refunds for first-time homebuyers
- City of Toronto municipal land transfer tax
Your next useful step
Turn what you just read into a purchase range using your income, down payment and timing.
