Ask most buyers what a home is going to cost them, and they'll tell you the purchase price. Maybe the down payment too. Almost nobody mentions closing costs — the pile of smaller fees and taxes due on closing day that sit on top of everything else. It's not a small oversight either. On a $650,000 home, that pile can easily run $10,000 to $16,000. Sellers have their own version of this surprise: watching commission, legal fees, and a few other deductions come off the top before they see their actual proceeds. Here's what's really involved, in plain English.
What Are Closing Costs?
Closing costs are everything you pay to actually complete the sale, separate from the price of the home itself. They're due on closing day — usually 30 to 90 days after your offer becomes firm. Buyers pay one set of costs, sellers pay a different set, and almost none of it gets talked about upfront the way the purchase price does.
What Buyers Actually Pay
| Cost | Typical Amount |
|---|---|
| Ontario Land Transfer Tax | See breakdown below |
| Legal fees | $1,200 – $1,800 |
| Title insurance | $200 – $400 |
| Home inspection | $450 – $600 |
| CMHC mortgage insurance (if under 20% down) | 2.8% – 4% of the mortgage, usually rolled into it |
| Property tax and utility adjustments | Varies — you're reimbursing the seller for anything they prepaid |
| Moving costs | $1,000 – $3,000 |
As a rough rule of thumb: budget 1.5% to 2.5% of the purchase price if you're putting 20% or more down, and closer to 3% to 4% if you're using CMHC-insured financing. That's real cash you need on hand, separate from your down payment.
Land Transfer Tax: The Big One
This is the largest single cost buyers pay, and it's not a flat percentage — it's calculated in brackets:
| Purchase Price | Rate on That Portion |
|---|---|
| Up to $55,000 | 0.5% |
| $55,000 – $250,000 | 1.0% |
| $250,000 – $400,000 | 1.5% |
| $400,000 – $2,000,000 | 2.0% |
| Over $2,000,000 | 2.5% |
On a $650,000 home, that works out to roughly $9,725. One nice thing about buying in London instead of Toronto: there's no extra municipal land transfer tax stacked on top here, only the provincial one. See the official Ontario rate schedule if you want to check the exact math yourself.
The Rebate a Lot of First-Time Buyers Don't Realize They're Owed
If it's your first home, Ontario gives you back up to $4,000 of that Land Transfer Tax. That's enough to wipe out the tax completely on homes around $368,000 or less, and it knocks a real chunk off anything above that. On our $650,000 example, it drops the bill from $9,725 to $5,725. It's not automatic, though — your lawyer has to apply for it at closing, so make sure whoever's handling your file knows you qualify.
What Sellers Actually Pay
| Cost | Typical Amount |
|---|---|
| Real estate commission (plus HST) | Negotiated with your broker — commonly 4–5% total with HST |
| Legal fees | $1,000 – $1,500 |
| Mortgage discharge fee | ~$300, if you still have a mortgage to pay out |
| Moving costs | $1,000 – $3,000 |
Sellers catch a break in one way — no Land Transfer Tax, and lighter legal work than buyers deal with. But commission is the big one. On a $650,000 sale at 4–5% including HST, that's $26,000 to $32,500 coming off the top before you see a dollar of proceeds. It's exactly why getting the price and the deal right matters so much. More on that in our guide to selling your home in London Ontario.
The Costs People Forget About
- Property tax and utility adjustments — If the seller prepaid taxes or a utility bill that covers time past closing day, you reimburse them their share. Shows up on your lawyer's Statement of Adjustments, usually a few hundred to a couple thousand dollars.
- Condo status certificate fee — Buying a condo adds a roughly $100 fee for the status certificate your lawyer has to review.
- HST on new construction — Buying a newly built home instead of resale? HST applies to the price, partly offset by a rebate. Talk to your builder and lawyer early — it's a different math problem entirely.
- Appraisal fee — Some lenders want an independent appraisal ($300–$500), though plenty of straightforward deals skip this.
- Mortgage discharge fee — If you're selling and still have a mortgage, your lender usually charges around $300 to release it.
A Real Example
Say you're a first-time buyer picking up a $650,000 home in London with 20% down ($130,000):
- Land Transfer Tax after rebate: $5,725
- Legal fees: $1,500
- Title insurance: $300
- Home inspection: $500
- Moving costs: $2,000
Total: about $10,025, on top of your $130,000 down payment. That's cash you need sitting ready on closing day — not something to figure out the week before.
How to Actually Budget for This
Don't wait until you've found a home to think about this. Build it into your budget from day one. Our closing costs calculator lets you plug in your own numbers — purchase price, whether you're a first-time buyer, financing details — and see exactly what you're looking at. Pair that with a mortgage pre-approval and you'll have a real, complete picture of what you can afford, not just what a lender says you qualify for.
Just starting to plan a purchase? Our first-time buyer guide walks through the whole process. Thinking about selling and want to know your real take-home number? Start with a complimentary home evaluation.
Want to run your specific numbers with someone who'll give it to you straight? Reach out to Justin — this is exactly the kind of conversation worth having before you're already under contract.
Frequently Asked Questions
How much are closing costs when buying a home in Ontario?
Budget 1.5% to 2.5% of the purchase price if you're putting 20% or more down, or 3% to 4% if you need CMHC mortgage insurance. That covers Ontario Land Transfer Tax, legal fees ($1,200–$1,800), title insurance ($200–$400), a home inspection ($450–$600), and moving costs. On a $650,000 home, that's roughly $10,000 to $16,000 above your down payment.
Do sellers pay Land Transfer Tax in Ontario?
No, only buyers pay it. Sellers instead pay real estate commission (typically 4–5% with HST), legal fees ($1,000–$1,500), and a mortgage discharge fee (around $300) if they still have a mortgage to pay out.
How much is the Ontario first-time buyer Land Transfer Tax rebate?
Up to $4,000 off. That's enough to fully wipe out the tax on homes around $368,000 or less, and it still knocks a meaningful amount off the tax on anything pricier. Your lawyer applies for it directly at closing — it's not automatic.
Is there a municipal land transfer tax in London Ontario?
No. Toronto charges both a provincial and a municipal land transfer tax — London only has the provincial one. That difference alone can save a London buyer thousands compared to buying the same home in the GTA.
What closing costs do people forget to plan for?
Property tax and utility adjustments (reimbursing the seller for anything they prepaid), condo status certificate fees, HST on new construction, and mortgage discharge fees for sellers. These don't show up on generic checklists because they only apply in certain situations, which is exactly why people get blindsided by them.
Sources & Data
Justin Skrypnyk
Real Estate Broker | Sutton Group Chapman Realty Inc., Brokerage | Oakridge, London Ontario
Justin Skrypnyk is a Real Estate Broker serving Oakridge and West London. He writes regularly about the London Ontario market to help buyers and sellers make well-informed decisions.