frequently asked questions
here are some answers to questions I often get asked. If the answer is not here, email me and I will respond as soon as I can
- What will the approximate closing costs consist of and how much will they be?
- Land Transfer Taxes
- The amount is based on the sale price, and is paid by the purchaser. In Ontario, this is determined by a variable formula based on the price of the house. This is a fee paid to the Provincial Government and forms part of your closing costs. Toronto also has a land transfer tax which is similarly calculated. Go to Toronto Real Estate Board Tax Calculator site to calculate both taxes.
- There are exemptions for first time buyers. Go to the Ontario Ministry of Revenue Site and City of Toronto site to read about the rebates and/or exemption
- Legal Fees
- These range from $800 to $1500 plus any disbursements such as searches, photocopies, couriers, and mortgage arranging costs. The average fee is about $1200 plus GST.
- Mortgage Insurance
- Usually added to the mortgage principle. Read about this at the Canadian Mortgage and Housing Corporation's website
- House Insurance
- You will have to consult with your insurance company to determine this cost. There are many issues of the day that can surprise buyers but there are many ways around insuring houses with knob and tube, oil tanks etc. Ask Marc about specific issues and how to resolve them.
- Adjustments to Property Taxes
- Refers to the amount you may have to reimburse the vendor for your portion of advanced payments adjusted to the portion of the year you own the house. Divide the amount of days you owned the house by 365. Use this fraction to calculate what you owe for your part of the year.
- Adjustments for Hydro, Gas or Other Household Bills
- Similar to adjustments to property tax
- Land Survey Fee
- If the mortgagor requires it and there is no existing survey. The approximate cost of an in-town survey will range from $1000 to $2400 plus GST.
- Appraisal Fee
- If the mortgagor requires it.
- HST
- The Harmonized Sales Tax in Ontario applies to new homes only, and a rebate may apply to homes < $450,000. See the Canada Revenue Agency website for details. NOTE: the HST does NOT apply to resale homes unless they have been "substantially" renovated. The threshold for this is a somewhat vague 90% new.
- Mortgage Fees
- Most mortgage companies charge an administrative fee to register a mortgage document.
- Home Inspection
- Many purchasers should have a professional home inspection prior to buying their home. In most cases the purchaser will pay for the inspection, and the fee is in the $350 to $450 range. This inspection can give a purchaser peace of mind as well as valuable information about a house.
- Land Transfer Taxes
- What are the other fees might we incur after closing?
- Moving costs, renovations or repairs, and utility hook up fees are among the most common.
- Who pays the Land Transfer Taxes?
- The purchaser pays the Land Transfer Taxes.
- Who pays the realty commission?
- The vendor most often pays the commission, not the purchaser. There are a few exceptions, and Marc would be happy to explain them to you.
- How much is the commission ?
- The commission is negotiable. Often, 5% (+gst) of the sale price is agreed to, which is split between the buyer's realtor and the seller's realtor. Sometimes the rate is higher and other times it is lower. As with all business, you get what you pay for.
- What types of major expenses would I have owning a home as opposed to renting?
- Property taxes, land transfer taxes, repairs and maintenance, house insurance (as opposed to just contents insurance), and all utilities.
- What documents or items might I need from the seller to buy a home?
- Survey (freehold only)
- The survey of the property, or a copy thereof, will show the legal dimensions of the property, any easements or restrictions, any fences and buildings on the property. If you cannot find a copy try consulting the vendor's lawyer, the lender, or even possibly a neighbour. If no survey is available, obtaining title insurance would be strongly advisable.
- Tax Bill
- The most recent tax bill is required to provide the most up to date information.
- Utility Summary
- Buyers often want to know what the costs are to run the home. This can vary from family to family however the information is useful as a guide. Obtaining the cost of heat, hydro, water and cable for the previous few months will give you an Idea of the costs.
- Condominium strata documents
- For condominium buyers you should obtain the phone number to the applicable management company for the condominium corporation so that you may request the most recent financial statements and budget information and be sure the balance in the reserve fund is included in the report.Also known as the status certificate.
- Income Property Documents
- The buyer will require a list of your tenants, a copy of their leases, tenant phone numbers, monthly income and expenses for the building.
- Seller Property Information Sheet
- A legal document, filled out by the seller that describes certain aspects of the property and building.Not mandatory and somewhat controversial.
- Survey (freehold only)
- What is a status certificate?
- A Status Certificate is a collection of documents that describes, in detail, the business of the condominium corporation pertaining to the unit you are about to purchase. Condominium purchases are subject to the condition of obtaining and reviewing the status certificate. Time must be given to obtain the certificate and to allow a lawyer to review it. The purchaser should be confident in the ability of the condo corporation to run the business to proper acceptable standards, including having a satisfactory reserve fund; otherwise the deal could be null and void.
- What are my mortgage options?
- Conventional
- When the amount of your mortgage is less than 80% of the value of the property you are purchasing.
- High Ratio
- When you borrow more than 80% of the value of the property it must be insured by the borrower, through Canada Mortgage and Housing (CMHC), AIG or GE Capital. Usually the insurance fee (paid by the borrower) is up to 2.9% of the value of the mortgage paid to the lender to guarantee their loan. This fee is added to the value of the mortgage and does not form part of your closing costs.
- Vendor Take Back (VTB)
- Occasionally, the vendor will act as the mortgagor and you would make arrangements with the vendor to pay the loan.
- Conventional
- What are the rules for a 5% down payment?
- To answer this question I would refer you to your mortgage broker or go to the MortgageGate.ca website and Joe Sammut, a highly qualified mortgage broker, who will gladly help you with the most updated information. As a rule, a mortgage broker, not a sales representative, would guide you through this process.