Fees & costs

IRD

Interest Rate Differential

The fixed-rate penalty calculated as the difference between your current rate and today's posted rate for the remaining term, applied to your balance. Almost always much higher than the 3-month interest alternative.

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Closing costs

One-time costs payable on or before completion: land transfer tax, legal fees, title insurance, property insurance, adjustments (e.g. prepaid property taxes), and home inspection. Typical range: 1.5–4% of the purchase price.

Land transfer tax

LTT

A provincial (and in Toronto, municipal) tax payable on every property purchase. Ontario rates range from 0.5% to 2.5% by price band. Toronto adds a matching municipal tax.

Mortgage default insurance

Insurance the lender takes out (you pay the premium) when your down payment is under 20%. Provided by CMHC, Sagen, or Canada Guaranty. Protects the lender if you default — you do not get insurance proceeds.

Prepayment penalty

The fee charged when you break or pay out a closed mortgage early. Variable-rate breaks: 3-month interest. Fixed-rate breaks: greater of 3-month interest or IRD — and IRD can be brutal.

Title insurance

A one-time policy purchased at closing that protects the lender (and optionally you) against title fraud, encroachments, or undiscovered liens. Typical cost: $250-$500.

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