Introduction
If you are a homeowner in Ontario thinking about using your home equity to consolidate debt, renovate, or invest, understanding the full range of fees and closing costs is essential.
A home equity loan, sometimes called a second mortgage, lets you borrow a lump sum using your home’s equity as collateral. It is a powerful way to access funds, but you need to know the associated costs to make a smart financial decision.
Under Ontario’s Financial Services Regulatory Authority of Ontario (FSRA), mortgage brokerages, brokers, and agents must:
- Clearly disclose all fees
- Provide written cost of borrowing disclosure, including APR and fees
- Ensure the loan suits your financial situation
What Are the Typical Closing Costs for a Home Equity Loan
Closing costs are one-time expenses due when your home equity loan is finalized. These cover legal, administrative, and professional services required to register your loan, verify your property’s value, and disburse funds.
Common closing costs include:
- Legal fees
- Appraisal fees
- Title insurance and registration costs
- Lender or origination fees
- Brokerage fees, if applicable
- Miscellaneous disbursements
Under FSRA guidelines, all licensed professionals must give you a written breakdown before you sign.
Which Fees Are Included in Closing Costs
1. Legal Fees and Disbursements
A real estate lawyer in Ontario must:
- Conduct a title search
- Register the new mortgage
- Transfer funds and confirm title integrity
Typical range: $1,000 to $3,000
2. Appraisal Fees
An independent property appraisal confirms market value before approval.
Range: $300 to $600, higher for rural or complex properties
3. Title Insurance and Registration Fees
Protects against title defects, liens, or registration errors.
Typical cost: $200 to $500, one time premium
4. Lender or Origination Fees
Charged by lenders to cover underwriting and funding.
Range: 1% to 4% of loan amount
5. Brokerage Fees, If Applicable
If you use a licensed mortgage broker, fees must be fully disclosed under MBLAA before signing.
Range: 1% to 2%, may vary by lender
Average Closing Cost Breakdown in Ontario
| Fee Type | Typical Range (Ontario) |
|---|---|
| Appraisal Fee | $300 to $600 |
| Legal and Disbursements | $1,000 to $3,000 |
| Title Insurance | $200 to $500 |
| Lender Origination Fee | 1% to 4% |
| Brokerage Fee | 1% to 2% |
| Registration / Misc. | $100 to $300 |
Total estimate: $2,000 to $5,000 for a $100,000 home equity loan
What Is an Origination Fee and How Is It Calculated
An origination fee covers lender costs like underwriting and document preparation.
In Ontario, it is typically a percentage of your loan, for example 2% of $100,000 equals $2,000.
Private and alternative lenders may charge more due to higher risk.
How lenders determine origination fees:
- Loan to value (LTV)
- Credit profile and income stability
- Property type and location
- Loan structure and term
- Lender type, bank versus private
Can You Negotiate or Reduce Origination Fees
Yes, origination fees are often negotiable.
Strategies to lower costs:
- Compare multiple FSRA licensed lenders
- Negotiate directly
- Improve credit score and LTV
- Bundle services
- Request full written disclosure
Understanding Appraisal Fees in Ontario
Lenders require appraisals to confirm loan to value ratios.
Factors affecting cost:
- Property size and location
- Type, condo versus detached
- Turnaround time
- Market conditions
Typical range: $300 to $600; rural or luxury up to $1,000 or more
What Are Title Insurance Fees and Why They Matter
Title insurance protects both borrower and lender against:
- Unregistered liens
- Fraud or documentation errors
Types:
- Lender’s title insurance, required
- Owner’s title insurance, optional but recommended
Cost: $200 to $500, one time
Hidden Fees to Watch Out For
Even though FSRA mandates disclosure, always read carefully.
Possible hidden fees:
- Prepayment penalties
- Maintenance or renewal fees
- Application or discharge charges
- Courier or wire transfer costs
- Late or NSF fees
How to protect yourself:
- Request a written cost estimate
- Review required disclosure forms outlining rates, fees, penalties, and conflicts in writing
- Have your lawyer review documents before signing
Comparing and Reducing Home Equity Loan Fees
How Fees Differ by Lender Type
| Lender Type | Typical Fees | Notes |
|---|---|---|
| Banks | Lower origination, higher credit standards | Federally regulated |
| Credit Unions | Moderate fees | Provincially regulated by FSRA |
| Trust Companies | Moderate fees | Flexible approvals |
| Private Lenders | Higher origination and legal fees | Faster funding |
Cost Saving Tips
- Compare total borrowing cost, not just rate
- Confirm FSRA disclosure compliance
- Negotiate broker fees
- Avoid redundant appraisals
- Consolidate services
Long Term Costs to Consider
Beyond upfront fees, calculate your Total Cost of Borrowing (TCOB), including:
- Interest over time
- Renewal or refinancing costs
- Potential tax implications
FSRA requires full disclosure of APR, interest, and all mandatory fees in writing.
The Role of FSRA and Licensed Mortgage Professionals
Professionals generally must be FSRA licensed to broker mortgages for others, unless exempt such as your bank.
They must:
- Disclose all fees in writing
- Recommend suitable products
- Provide required disclosure forms outlining rates, fees, penalties, and conflicts in writing
- Have legal duties around suitability and disclosure, and we choose to operate on a best interest basis
Final Thoughts: Protecting Yourself and Your Home Equity
A home equity loan can be a powerful financial tool, but only if you understand the real costs.
Key takeaways:
- Always get a written fee breakdown before you sign anything. At Mortgage Brain, we make sure every dollar is accounted for.
- Compare the total cost of borrowing, not just the rate. We show clients the real cost picture so you can see what is worth it, and what is not.
- Work with FSRA licensed professionals who have duties around suitability and disclosure. We operate on a best interest basis because transparency is how we do business.
- Have a lawyer review all documents to confirm terms and registration details. We coordinate directly with your lawyer for a smooth closing.
- If you are using your equity to consolidate debt, Mortgage Brain helps you structure it strategically for long term financial freedom.
When you work with a broker who knows the system and puts your goals first, you are not just tapping into your home’s value. You are building a smarter, safer path to financial control.
At Mortgage Brain, we help Ontario homeowners leverage their equity with confidence, reduce unnecessary fees, simplify the process, and take control of their finances.
