When buying a house or a condo in London, Ontario, and the area, the last thing you need is unbudgeted financial obligations as a home buyer; some or all of these could apply!
Purchase Price and down payment
The starting point in your calculation.
Lawyer’s Fees
Although fees vary across the country, it can cost up to $3,500 depending on whether you are re-mortgaging your existing home or buying a new one.
Land Transfer Tax
It is a tax payable to the Provincial Government by the purchaser upon the transfer of title from a seller. Land Transfer Tax Ontario.
Registration Fees
Fees are paid to the provincial government for recording a title transfer, mortgage registration, or other instrument, such as an Assignment or lien, with the local authorities.
Compliance Letter
This is an acknowledgment from the building department that the property has or is clear of outstanding work orders. Work orders are specific clean-up or fix-up requirements the owner must legally complete before ownership can be transferred. They are obtained by your lawyer and are required in many municipalities throughout Canada before a property transfer can take place.
Taxes
Your lawyer obtains them at the time of sale to confirm that local taxes have been paid and are up-to-date. If they are not up to date, the seller must pay them from the sale proceeds. You may be legally required to pay the outstanding taxes if insufficient proceeds exist. If, on the other hand, taxes have been prepaid, you may have to compensate the seller for them.
There’s More!
Provincial “New Home Warranty Program” premiums — New Homes Only!
A third-party (provincial) warranty program between a builder and a buyer. Except for Ontario and Quebec, the builder’s membership in such a program is voluntary. Through these programs, your home is guaranteed against defects for at least one year. Tarion Ontario.
Mortgage Appraisal and Application Fees
Application fees apply on high-ratio mortgages only, while appraisal fees are standard to most mortgages. Generally, $200— $500 each would apply.
Home Inspection
A report commissioned by a property owner or purchaser is usually used to verify the condition of a property before the “firming up” of a purchase agreement. The scope and detail may vary, but most reports outline any particular problems and associated repair costs. Unfortunately, no licensing is required, and this service is not specifically regulated other than by general consumer protection legislation. The best safeguard against inadequate work is to ask for the inspector’s resume.
Land Survey
The legal written and mapped description of the location and dimensions of your land. The survey should also show the dimensions and placement of any structure, including additions such as pools, sheds and fences. A lender may require an up-to-date survey as part of the mortgage transaction. However, obtaining Title Insurance is more prevalent, and a survey may not be necessary.
And More!
Title Insurance
Title insurance protects residential or commercial property owners and their lenders against losses related to the property’s title or ownership. Understanding Title Insurance
Connection Charges
Some local utility companies (hydro, gas, oil) charge a fee on the closing date to connect new buyers to their service. However, an extra charge on the first billing is more common.
Property Tax and Prepaid Utilities Adjustments
If the previous owner prepaid property taxes or other utilities, they will be credited the prepaid portion on closing. If they paid all their taxes by April, expect a significant adjustment in closing costs!
Interest Adjustment (IA)
Suppose you arrange to make your mortgage payments monthly on the first day of the month, and your transaction closes after the first day. In that case, your lender will charge you interest on closing to the next interest date, called the Interest Adjustment Date (IAD), when your payment cycle begins. This can be a sizeable amount, but it is the correct interest you should pay. For example, close on June 15th, pay 15 days of interest on closing and start payments on August 1st.
Property Insurance
Home insurance covers the replacement value of your home (structure and contents). Your lending institution will request proof that you are insured, as it protects their investment in the loan.
Movers
Avoid the end or beginning of the month; that is when movers are busy and will most often charge you more!
Miscellaneous!
More Home Buyer Tips
Buying a house or a condo is a big decision, not only financially but emotionally. This Home Buyers Guide London offers a few ideas and tips to help you feel prepared and confident throughout the process.