When are closing costs due? In Ontario, some costs are paid before closing, but the final amount needed to complete the purchase is normally delivered to your real estate lawyer before the closing date. Your lawyer calculates that amount from the purchase price, the deposit already paid, mortgage funds and the statement of adjustments.
Buying a home involves more than arranging the down payment. The timing of each payment matters because a late deposit, delayed bank draft or lender funding issue can put completion at risk. A real estate transactions lawyer can explain the funds required for your particular agreement and coordinate the legal steps before completion.
When are closing costs due in Ontario?
Closing costs are due at different points in the transaction, but the balance required to close is usually provided to your lawyer shortly before completion. Your lawyer will give you a trust-funding request after reviewing the purchase, the lender’s instructions and the statement of adjustments.
Some expenses arise earlier, such as a home inspection, an appraisal requested by the lender, or condominium document review. The larger closing balance is generally required before the lawyer can register the transfer, pay Ontario land transfer tax and send the seller’s lawyer the money needed to complete the sale.
Do not rely on a general percentage of the purchase price. Ontario land transfer tax, Toronto municipal land transfer tax for Toronto properties, the type of property, lender requirements and adjustments can materially change the final amount. For a breakdown of what closing costs do buyers pay, obtain an estimate based on the address, price and financing.
The Ontario payment timeline from offer to closing
The Agreement of Purchase and Sale sets the deposit deadline, while the closing date controls when the remaining purchase money is due. There is no Ontario-wide rule saying that every deposit is due within a particular number of days after signing.
- After the offer is accepted: The buyer delivers the deposit by the deadline written in the agreement. It is commonly held in the listing brokerage’s trust account, although the agreement may direct it to a lawyer’s trust account.
- During any conditional period: A buyer may pay for a home inspection, appraisal, insurance arrangements or other due diligence as the service is obtained. A lender may also ask for documents to satisfy financing conditions.
- Before closing: The lawyer reviews title, obtains mortgage instructions and prepares or reviews the statement of adjustments. The buyer receives the amount to provide to the lawyer’s trust account and the approved payment method.
- On closing day: Mortgage money is advanced if the lender is ready, the lawyers exchange documents and funds, and the transfer and mortgage are registered electronically.
For example, a buyer purchasing a $850,000 Toronto condominium may pay a $42,500 deposit under the agreement, pay an inspector separately during a condition period, and later receive a lawyer’s request for the remaining down payment, land transfer taxes, legal disbursements and adjustments. The precise balance cannot be calculated from the purchase price alone because the deposit credit, mortgage advance and condominium adjustments affect it.
Deposit, down payment and closing costs are different
A deposit is money paid under the purchase agreement, a down payment is the buyer’s portion of the purchase price not funded by the mortgage, and closing costs are additional transaction expenses. The deposit is generally credited toward the purchase price and therefore forms part of the buyer’s down payment at completion.
The statement of adjustments records this credit. It starts with the purchase price and then shows items that must be added or credited between buyer and seller, including the deposit already held in trust. The buyer does not normally pay the same deposit a second time on closing, but must still have enough money to cover the rest of the down payment and closing costs.
For example, consider a buyer purchasing a freehold home for $700,000 with a $35,000 deposit and a $560,000 mortgage. The deposit is credited toward the $140,000 down payment, leaving $105,000 of down payment to be supplied, plus land transfer tax, legal costs and any adjustments. The final request from the lawyer will reflect the actual figures.
If you are asking when is down payment due, it is normally part of the closing funds delivered to the lawyer before completion, after credit for the deposit. Do not wait until moving day to arrange it, particularly where a bank draft or financial-institution transfer is required.
How closing costs are paid to the right people
The buyer normally provides the required balance to their lawyer, usually by bank draft or another method the lawyer has approved, and the lawyer distributes funds from trust. The lawyer uses the closing funds to pay required taxes and registration charges, complete the seller’s payment and pay permitted disbursements connected with the transaction.
Do not send money until your law firm provides verified trust-funding instructions. Fraudsters may send convincing messages with changed banking details. Confirm any instructions or changes by calling a known firm telephone number, not a number contained in an unexpected email.
Banking lead time matters. A bank draft may require advance ordering, and electronic or wire delivery can be subject to bank cut-off times, holds or confirmation requirements. Your lawyer cannot complete until cleared buyer funds and lender funds are available as required.
From the lawyer’s trust account, closing payments may include Ontario land transfer tax, and Toronto municipal land transfer tax where applicable, electronic registration charges, the seller’s net proceeds and amounts shown on the statement of adjustments.
What your lawyer checks before asking for closing funds
Your lawyer checks the legal and financial information needed to calculate the correct closing balance before asking you for money. The transaction-specific statement of adjustments, rather than a U.S.-style closing disclosure, shows the final amount owing between buyer and seller.
Depending on the property and transaction, that work can include title and off-title searches, review of the purchase agreement, mortgage instructions, insurance confirmation required by the lender, deposit confirmation and review of tax or condominium adjustments. The lawyer also prepares a trust ledger that accounts for money received and paid out.
If the lender needs proof of the buyer’s contribution, keep down-payment funds traceable. Be prepared to provide account statements, gift documentation where applicable, and records of transfers. Buyers using the Home Buyers’ Plan (HBP) or a First Home Savings Account (FHSA) should start withdrawal steps early and confirm the lender’s documentary requirements.
Mortgage loan insurance is different from routine closing costs. Where a mortgage is insured, the insurer may be CMHC, Sagen or Canada Guaranty, but the lender and mortgage professional should confirm how any insurance premium is handled in that mortgage arrangement.
What happens on closing day in Ontario
On closing day, the lawyers exchange the required documents and funds, register the transfer electronically and release funds once registration is confirmed. Keys are released according to the arrangements made for the transaction, often through the real estate broker after confirmation of closing.
The buyer’s lender generally sends mortgage funds to the buyer’s lawyer under its funding instructions. Once all required money is available and closing documents are in order, the buyer’s lawyer completes the electronic registration and sends the seller’s lawyer the balance required to close.
If your lender funds late or your own money is delayed, tell your lawyer and mortgage professional immediately. A delay can affect possession, moving plans and the seller’s onward transaction. 
Seller closing costs and buyer closing costs
Buyers and sellers each have closing costs, but the agreement and statement of adjustments determine the allocation in a particular transaction. Buyers commonly pay their own legal costs, applicable land transfer taxes and financing-related expenses; sellers commonly pay costs connected with discharging their mortgage and their selling arrangements.
Property taxes, condominium common expenses, fuel and similar items may be apportioned to reflect who owns the property for each part of the relevant period. Read more about who pays property taxes at closing.
Parties can negotiate price, inclusions, credits and other contractual terms before the agreement is firm, but a buyer should not assume that a seller will pay the buyer’s land transfer tax or title insurance. For a practical list of what does buyer pay at closing, review the expected items early.
Can closing costs be added to your mortgage?
Do not assume that closing costs can be added to your mortgage. Whether mortgage proceeds can cover any particular amount depends on the lender’s approved loan amount, property value, loan-to-value requirements and mortgage instructions.
Mortgage loan insurance may apply where the mortgage meets the applicable insured-mortgage requirements, but it is not a substitute for having cash available for land transfer tax, legal costs and adjustments. Confirm your available funds with your mortgage professional before waiving a financing condition or committing to a closing date.
Avoid last-minute closing delays
Early preparation gives you time to correct a shortfall, document a gift or resolve a lender condition before completion. Use this checklist as soon as the transaction is firm:
- Ask your lawyer when the final trust-funding request is expected.
- Keep down-payment and closing funds in accounts that can be documented for the lender.
- Arrange a bank draft or approved transfer early enough to meet bank cut-off times.
- Review the statement of adjustments and ask about any item you do not understand.
- Verify trust instructions independently and never act on an unverified change by email.
- Tell your lawyer promptly if mortgage proceeds, an HBP withdrawal, an FHSA withdrawal or your own funds may be delayed.
A lawyer handling land conveyance can coordinate the documents and funds required for an Ontario purchase, sale or refinancing. 
FAQ about when closing costs are paid
How do I pay closing costs?
You normally provide the final closing balance to your real estate lawyer by bank draft or another lawyer-approved method. Your lawyer then pays the appropriate recipients from trust as part of completion.
Who are closing costs paid to?
Closing funds may ultimately go to the provincial government for land transfer tax, the land registration system for registration charges, the seller’s lawyer, service providers and your lawyer for authorized fees and disbursements. The trust ledger and reporting documents explain the payments made for your transaction.
When does the seller pay closing costs?
The seller’s lawyer generally pays the seller’s transaction costs from sale proceeds on closing, subject to the agreement and available proceeds. Those costs can include mortgage payout amounts and other seller obligations.
When is my first mortgage payment due after closing?
Your first mortgage payment is due on the payment date set out in your mortgage terms, not necessarily on the closing date. Confirm the date, payment frequency and amount directly with your lender after the mortgage has been funded.
For buyers outside Toronto, a real estate lawyer Innisfil can also help identify the closing funds and timing for an Ontario transaction.
Speak with a Toronto real estate lawyer
Knowing when to deliver your deposit, down payment and closing funds can help prevent avoidable pressure as your closing date approaches. Early legal review can clarify the statement of adjustments, lender instructions and the money required to complete.
Call 416-321-8766 or request a quote to discuss your matter with Zinati Kay.