closing costs

Guide to 2004 Closing Costs

In addition to the actual purchase price of your home, there are a number of expenses (directly related to your closing), which must be paid. Following is a description of the costs you may incur. Please note that all costs are approximate.

Survey Land Transfer Tax Legal fees Disbursements Adjustments Home inspection Home insurance First mortgage Second mortgage Moving GST Currency exchange rates

1. Survey

If the Vendor does not provide you with an up-to-date, or acceptable existing survey in the Agreement of Purchase and Sale (showing the existing location of fences, buildings and structures), it will be necessary to have one prepared as mortgages require it. Even if you do not require a survey for the mortgage, it is a good idea for you to have one prepared to ensure that there have b1> Survey$800.

2. Land Transfer Tax

This tax is payable on all purchases. Currently the Land Transfer Tax is calculated as follows:

for a property under $55,000., the tax is $5.00 per thousand from $55,000. to $250,000., it is $10.00 per thousand, minus $275.00 over $250,000., it is $15.00 per thousand, minus $1,525.00 Home/Duplex over $400,000., is $20.00 per thousand, minus $3,525.00

This tax is payable on closing.

3. Legal Fees

This varies according to lawyer. It is best to shop around a little to find someone with whom you feel comfortable. Perhaps your sales representative can refer a few lawyers to you if you do not already have one. Make sure you ask what the fee includes (more specifically, does it include the title searching fee? If not, how much will that be?) Also ask the lawyer if he/she will be charging extra to act on behalf of the mortgagee. And if so, how much? It is highly distressing on closing to discover that due to legal fees, you have insufficient funds for closing. Most lawyers charge a flat fee (including the title searching fee) and usually charge extra for the mortgage. Approximate cost: $500. and up

4. Disbursements

There will be other costs which the lawyer will have to pay on your behalf. Things like photocopies, tax certificates, zoning clearance and work orders, couriers, registering of deeds and mortgages, searching title (but not the fee), searching executions, mortgage schedules, estoppel certificate (for condominiums) and other incidentals. A typical list of disbursements is as follows:

City Tax Certificate ....................... Building Division Reports ............... Engineering Reports ..................... Sheriff's Certificates ...................... Registry Offices Searches ............. Utility Searches ........................... Register Deed .............................. Register Mortgage ........................ Law Society Fee .......................... Copies, fax, postage, courier ........

$24.00* $245.00* $40.00* $150.00* $100.00* $20.00* $50.00* $50.00* $50.00* $21.00*

Total cost approximately $750.00 * denotes GST (Goods and Services Tax) applicable

5. Balance Due on Closing & Statement of Adjustments

Basically, the balance due on closing is the difference between the sale price and the amount of your deposit (presented with the offer). However, there are certain items which will be adjusted at the time of closing. Taxes If the Vendor has paid taxes for the full year, you are responsible for your portion from the time of closing, to the end of the year. Fuel If the property is heated with oil or propane, the Vendor is entitled to be paid for what was in the tank on the premises at closing date. Since gauges are unreliable, it is usual to have the Vendor fill the tank and pay the supplier for that amount. The Purchaser then pays the Vendor for the full tank. Utilities All metered utilities and gas will be read on closing. The Vendor is responsible up to the date of closing. The closing day itself is apportioned to the Purchaser.

6. Home Inspection

Home inspection is an elective exercise, which may or may not be requested by the purchaser. It is often wise to elect to have an inspection of the property as a condition of an offer to purchase. No property is without some defects, often not amounting to much, but it's a great way to eliminate surprises and an excellent way to establish a budget for future maintenance required. Usually around $325.00, and up. Some companies go by the formula of $1.00 per $1,000. of purchase price. Whenever possible, use a "bonded" inspector.

7. Home Insurance

This varies. We would suggest $500.00, and up. Shop around for quotes.

8. First Mortgage Costs

"Interest Adjustment" - This is something many Purchasers do not understand. If you are arranging a new First Mortgage, your lawyer will receive the mortgage monies from the mortgage company on the morning of the closing date. However, most Mortgage Companies use the 1st or the 15th of the month as payment date. Therefore, if you were closing a deal on August 10th, the Mortgage Company would deduct from the mortgage monies, interest from the date of closing (10th) to the 1st of the following month (ie. September 1st) Interest Adjustment Date; and your first payment would then commence on the 1st day of the following month (ie. October 1st) and continue on a monthly basis thereafter. Example: $100,000. First Mortgage at 11%

interest from the 10th to the 1st of the following month approximately $623.00 instead of getting $100,000.00 from the Mortgage Company on closing, you receive only $99,368.00

As mentioned, it is a common procedure with Mortgage Companies and is only done for the purpose of adjusting the interest for a part of the month at the beginning of the mortgage. Simply be aware of it.

9. Second Mortgage Costs

Usually additional legal fees (check with your solicitor) and appraisal plus brokerage charges of about $475.00, and up.

10. Moving Costs

This varies anywhere from $85. to $125. per hour, depending upon the company and the number of people involved. It will also depend on the size of the vehicle, the amount of furniture and the time of the month you are moving. Just a note at this point about the procedure on the actual closing date. It is necessary for your lawyer to obtain the money from your Mortgage Company on the day of closing, and arrange for an appointment in the Registry office to close the deal with the other lawyer. Lawyers often have many deals closing on busy days, and it is often difficult for them to arrange a closing time until later in the day. It is strongly advised therefore, that you do not order your moving truck early in the day, as you are not entitled to possession of your new property until after the deal has closed. By not ordering the truck for "the break of dawn", you will not be paying the movers to sit outside your new home waiting for the deal to close. Please discuss this with your lawyer.

11. GST (Goods and Services Tax - currently 7%)

Purchase Used Residential Housing New Residential Housing Extensively Renovated Housing Commercial Properties Land Only

GST Payable No Yes Maybe Yes Yes

Also subject to GST are survey costs, legal fees, disbursements (those indicated with an * in 4.), fuels and utility adjustments, home inspections, home insurance and moving costs. Your lawyer should be in touch with you within the week prior to closing to arrange an appointment for signing final documents.