WHAT OTHER MONEY DO I NEED?

When purchasing a home and applying for a mortgage, the borrower incurs certain costs associated with that purchase.

These costs include, but are not limited to the following:

On closing, your lawyer will make certain adjustments and disbursements to the purchase price. These are prepaid expenses, which will need to be pro-rated between the vendor and the purchaser. For instance, a typical adjustment deals with the property taxes paid to the City or Municipality or oil/propane that is in holding tanks. The amount of prepaid taxes and fuel will be adjusted as of the closing date and one party will be required to reimburse the other.

Some lenders charge an application fee to process the application. These application fees are generally associated with non-conforming mortgages. These may be paid up front or deducted from the mortgage advance.

An appraisal is needed to verify the value of the property being mortgaged. The lenders use an independent, certified appraiser to evaluate the property. This cost is payable by the borrower.

This is required by the purchaser to ensure that the building does not have any hidden problems. Estimated cost is $350.00

The mortgage insurance premium can either be added to the mortgage or paid in a lump sum. It is based on a percentage of the mortgage amount and the nature of the use of the property (owner occupied or rental). A higher premium can be paid where it is a self-employed applicant or there are non-traditional circumstances. Interest is charged on the insurance premium at the same rate as the mortgage.

Good and Services Taxes are only payable on newly constructed homes, vacant land (sold by a developer) and commercial properties. Not on resale properties.

This is a sales tax on the transfer of ownership of your new home. The amount differs depending upon the province. In BC you pay 1% on the first $200,000, 2% on the remaining purchase price. ie: $400,000 would be $6000 land transfer tax. If you have never owned a home before in the world then you may be exempt from this cost. This money is collected by your lawyer at time of closing

These fees are paid to your lawyer to register the mortgage and cover any of his related costs (called disbursements). These disbursements vary and it is best to get a quote from your lawyer. The Land Transfer Tax is also payable as part of the disbursements on closing through the lawyer.

Generally, a lender will require a survey to confirm that the house does not encroach or cross over the property lines. A vendor will often already have a survey, especially if the vendor had a mortgage on the property. If the survey is up-to-date and acceptable to the lender, it will not be necessary to get a new one.

Most lenders will request title insurance. All costs in obtaining such insurance will be your responsibility. Ask about coverage for yourself, not just the lender.

This protects the lender as well as yourself. It is important to phone for a quote, as insurance varies from home to home.

Contact us and we will give you an estimate on what you can expect your closing costs to be with no hidden surprises.