REAL ESTATE PURCHASES Closing costs are the legal and administrative fees and disbursements associated with buying your home. Understanding each one will help you budget more accurately and lead to a more comfortable home-buying experience.
Joanne Lozinski (sales representative)
The Realty Connection Inc Brokerage 5618 Tenth Line W #9 Mississauga ON L5M 7L9 905.567.1411 416.562.8334 firstname.lastname@example.org www.joannelozinski.com
DEPOSIT The deposit is part of the purchase price and will be required by your Selling Agent within 24 hours of the time your offer is accepted. Generally five to ten percent of the price is the expected amount. Not everyone has the money in an accessible account so a split deposit part now & the rest at a later date is often acceptable. HOME INSPECTION A home inspection has become almost standard in the freehold and condominium townhome purchase. The inspection costs between $400 and $450 for most homes but increases with the cost of the home over $500,000. SURVEY (Freehold Only) You, your bank and your lawyer want to know what it is that you are buying. A survey that shows the lot dimensions and the location of any structures is very important. If the seller does not have a current survey you may be required to have a new survey drawn up. Title insurance has currently been implemented in Canada and can often be used in place of a new survey. Your lawyer can best advise you on which route to go. LEGAL FEES You will need a lawyer to search the title and cover all the legal matters. Rates vary, starting at about $450 for the lawyer's time. In addition you must pay for the disbursements which the lawyer pays on your behalf. The average total bill should run approx $1100 - $1200. Shop around! Call some lawyers and get quotes for comparison.
TITLE INSURANCE Title insurance is a policy of insurance that provides coverage for the title related risks associated with real estate transactions. It is designed to cover the unpredictable or undetectable issues such as forgery ,fraud, missing heirs or creditors that can affect rights of ownership. Cost will likely average roughly 1% of the purchase price. REALTY TAXES If the Seller has paid the full year taxes in advance the Buyer must reimburse him. This is part of the “adjustments” prepared by your lawyer. OIL HEATING If the property is heated with oil , convention dictates that the Seller must fill the tank for closing and then the Buyer reimburses him on closing. NB : If you are switching to gas then make sure your lawyer and the Seller know well in advance of closing so the tank isn't filled. This is part of the “adjustments” HOUSEHOLD INSURANCE The house must be insured prior to closing. The annual premium will likely be $400.00 plus. Many insurance companies won't insure homes with less than 100 amp service or with the old style "knob and tube“ wiring, which is present in most older homes. If the property has aluminum wiring provisions should be made in the Agreement of Purchase and Sale stating the Seller will supply an ESA (Electrical Safety Authority) certificate to the Buyer prior to closing as most insurance companies will require this certification.
MORTGAGE QUALIFICATIONS Down payment â€“ minimum 5% Must qualify at the 5 year mortgage rate Income: Monthly housing cost must not exceed: 32% of your gross income(GDS)/gross debt service ratio principal, interest, taxes, & heat 40% of your gross income(TDS)/total debt service ratio: PITH & other debts/loans. Condo: 1/2 maintenance fees are factored into GDS calculations. WHAT YOU NEED *Credit Report. *Your personal information, including identification such as your driver's license. *Details on your job, including confirmation of salary in the form of a letter from your employer & 3 years tax assessments if self-employed. *All your sources of income. *Information and details on all bank accounts, loans and other debts. *Proof of financial assets *Source and amount of down payment and deposit. *Proof of source of funds to cover the closing costs (these are usually between 1.5% and 4% of the purchase price.
High Ratio Mortgage
< 20% down
Conventional Mortgage > 20% down
Mortgage loan insurance is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price. Mortgage loan insurance helps protect the lenders against mortgage default, and enables consumers to purchase homes with a minimum down payment of 5% with interest rates comparable to those with a 20% down payment
**Insured portion of the mortgage is subject To PST**
The Home Buyers' Plan (HBP) is a program under which you can, generally, withdraw up to $25,000.00 from your registered retirement savings plan RRSP to buy or build a qualifying home. Withdrawals that meet all applicable HBP conditions do not have to be included in your income, & your RRSP issuer will not withhold tax on these amounts, but before you can withdraw any funds you must have entered into a written agreement to buy or build a qualifying home which you must occupy no later than one year after buying or building the home.
If you buy the qualifying home together with your spouse or another individual, each of you can withdraw up to$25,000. You cannot withdraw an amount from your RRSP under the HBP if you or your spouse owned the home more than 30 days before the date of the withdrawl.
Your RRSP contributions must remain in the RRSP for at least 90 days before you can withdraw them under the HBP or they may not be deductible for any year. Generally, you have to repay all withdrawals to your RRSPs within a period of no more than 15 years. You will have to repay an amount to your RRSPs each year until your HBP balance is zero. If you do not repay the amount due for a year, it will have to be included in your income for that year.
*BUYERS GET A TAX CREDIT For 2009 and subsequent years, the budget also introduced a new non-refundable tax credit to help first-time home buyers with some of their closing costs. This Home Buyer Tax Credit (HBTC)will provide up to $750 in tax relief on the purchase of a first home. The HBTC is calculated by multiplying the lowest personal income tax rate for the year (15% in 2009) by $5,000. For 2009, the credit will be $750. To qualify for the HBTC ,an individual must purchase a qualifying home and neither the homebuyer or home buyerâ€™s spouse or common- law partner can have owned & lived in another home in the year of purchase or any of the four preceding years. A qualifying home is a housing unit located in Canada including existing homes and those being constructed. Single-family homes, semidetached homes, townhouses, mobile homes, condominium units, and apartments in duplexes, triplexes, four plexes, or apartment buildings, all qualify. A share in a co-operative housing corporation that entitles the individual to possess & gives an equity interest in a housing unit also qualifies. However a share that only provides a right to tenancy in the housing unit does not qualify.
fees & services are subject to HST*
.NEW HOMES HST â€œMaximum rebate is $24,000.00
LAND TRANSFER TAX Is a provincial tax payable on the purchase of a home. This tax is paid by the Buyer and is calculated as follows: ONTARIO LAND TRANSFER TAX $55,000 - $250,000 … price x 1 % less $ 275 $250,001 - $400,000 …price x 1.5% less $1,525 Over $400,000 ……… price x 2 % less $3,525 The province will rebate up to $2000 for all 1st time buyers on the provincial land transfer tax portion of the purchase. TORONTO LAND TRANSFER TAX $55,000-400,000… price x 1% less $ 275 Over 400,000…. price x 2% less $4275 Only properties purchased in the City of Toronto. 1st time buyer rebate up to $3725.00 (equivalent to a $400,000 purchase)
Rebates on the Ontario LTT are available for first time buyers only. To qualify, you and your spouse if applicable, must be at least 18 years of age and must have never owned an interest in a home anywhere in the world (since you became spouses).If one of you or your spouse owned a home prior to being married & sold that home prior to marriage, the other spouse may claim the entire refund, even in the case of a home owned jointly. If two non-spouses purchase a home with 50/50 interest, where only on e of the buyers qualify as a first time buyer that buyer may reclaim 50% of the rebate. The total rebate is capped at $2000.00
GAS Enbridge Gas- Peel/Toronto 1-877-362-7434 Union Gas - Halton 1-888-774-3111
HYDRO Hydro Mississauga (Ensource) 905-273-7425 Oakville Hydro Corp 905-825-9400 Toronto Hydro 416-542-8000
CABLE Rogers Cable 1-877-mymove9 Cogeco 1-866-427-7451
WATER & SEWAGE Peel 905-791-7800 Halton 905-825-6000 Toronto 416-338-4829
SCHOOL BOARDS Peel District School Board 905-890-1099 Dufferin Peel Catholic School 905-890-1221 Halton School Board 905-335-3663 Halton Catholic School Board 905-632-6300
WEBSITES Mississauga Oakville Brampton Milton Burlington Georgetown: Toronto:
www.mississauga.ca www.oakville.ca/ www.brampton.ca www.milton.ca www.burlington.ca www.haltonhills.ca www.toronto.ca
Condominium A type of ownership in real property where all of the owners own the property, common areas and buildings together, with the exception of the interior of the unit to which they have title. Often mistakenly referred to as a type of construction or development, it actually refers to the type of ownership. Cooperative (CO-OP) (co-op) A type of multiple ownership in which the residents of a multi-unit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit. BUYING A DOM
When you buy a Condominium you are actually buying two things: your individual unit and a share in the condominium corporation that owns and maintains the land and all of the common elements such as elevators, outside grounds, security, parking etc. It is just as important that your condominium corporation is in good condition as your individual unit. To find out the status of the corporation, you should request a 'Status Certificate' as part of your offer. When looking at condominiums, you must also consider the building itself. The choice of the building has a big impact on your 'lifestyle'. The 'building lifestyle' is determined by three factors: Amenities Location Mix of Owners
Condo Maintenance Fee Why do they differ so much between buildings/corporations? In reality operating costs are virtually the same between buildings. What creates the difference is that some buildings include some or all utilities in the maintenance fees while other buildings have the individual owners pay the utilities directly. Secondly each building pays for different amenities such as 24 hr. security guard or none; valet parking; free shuttle bus; swimming pools etc. Finally each corporation is required to set aside a portion of the condo fees for a reserve fund to pay for major repairs in the future. Some corporations may not charge sufficiently for their reserve fund. To compare expenses between buildings, you must add your condo maintenance fees plus utilities you pay direct to get an accurate comparison. Information on the status of the corporation including current condo maintenance fees is contained in a 'Status Certificate' for that corporation/building. Remember again that you should always request a Status Certificate as a condition of making an offer on a resale condominium property. How are common expenses determined?? The developer is responsible for allocating the contributions to common expenses to each unit. Usually the developer bases the allocation on the size of the unit; the larger the unit the greater the amount of payable towards common expenses. A developer however is not required to use this basis for common expense allocation. A portion of the common expenses paid by the owners is transferred monthly to a reserve fund account. The reserve fund is the unit owners' savings for the major repair and replacement costs of the common elements which occur as a building gets older.
Who manages the property? Usually, a property management firm, under the direction of the Board of Directors, runs the day-today affairs of a condominium corporation. Some condominium corporations are self-managed.
The board is responsible for carrying out the obligations of the Corporation as set out in the Act, the condominium documents (declaration, by-law and rules) and any agreements to which the corporation is a party. Do I have a say in what happens in the condominium? Yes - You have the right to participate in the affairs of the condominium corporation. Can I lease or rent the condominium unit I own? Yes - An owner who leases his or her unit must give the corporation the name of his or her tenant(s) and a summary of the lease or a copy of the lease. The owner and the tenant are both responsible to the corporation. What are the advantages of buying a condominium? Original condominiums were developed as a cheaper form of housing. Instead of having to buy the land and the building, people could own their building/unit and share the land cost. It then makes private ownership possible in areas where land values would ordinarily make this too expensive i.e. living downtown. Today people buy condominiums as much for â€˜Lifestyleâ€™ as they do for price. Downtown you can buy condos for over one million dollars quite easily. Condo ownership also eliminates some of the problems of upkeep and maintenance often associated with home ownership, since the cost of maintenance is shared and is usually the responsibility of the Condominium Corporation through its property management (Lifestyle). For older people, condominiums represent an attractive ownership alternative when they spend months abroad.
Status Certificate When purchasing a resale condominium unit, you should ensure that your offer is conditional on receiving and reviewing a Status Certificate and the accompanying documents, as required by the Act. The certificate is the resale equivalent of a disclosure statement and you must review all the material that comes with the certificate to ensure that you are satisfied that both the condominium unit and the condominium corporation are suitable for you. This certificate, for which there is a fee of $100 inclusive of GST, must be delivered within 10 days of the request for it. It discloses whether the owner of the unit you are buying is current in the payment of common expenses as well as a picture of the condominium corporation's financial affairs. It is to be delivered with the documents, which govern the condominium corporation but are not attached. Once the list of agreements is reviewed, you or your lawyer may also wish copies of some or all of them for review. There can be an extra charge for these documents. The Seller is usually responsible to pay the $100.00 fee to obtain the Status Certificate. In the case of a Power of Sale the lending institution requires the Buyer pay the fee
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