CLOSING THE DEAL:  THE COSTS

To avoid any surprises on closing, here is a list of what to expect:

•·         The Deposit:  Part of your downpayment, a deposit is due upon acceptance of your offer.

•·         Home Inspection:  Prepared by a qualified inspector to assess the property for defects and poor maintenance.

•·         Appraisal:  Prepared by an appraiser chosen by the lender, or by CMHC if the mortgage is CMHC insured.

•·         Legal Fee/Disbursements:  Your lawyer will quote his fee for closing the purchase and mortgage(s) plus an approximation for his disbursements, which include registration fees, courier costs, photocopies, etc.  Ask for an estimate.

•·         Land Transfer Tax:

                                                0.5%                            $0-55,000  +

                                                1%                               $55,001-250,000  +

                                                1.5%                            $250,001-400,000  +

                                                2%                               0ver $400,000

Due on closing and reflected in the "Statement of Adjustments" which your lawyer prepares prior to closing day.

•·         Interest Adjustment:  Monthly mortgage payments are due on the first of the month.  Unless the closing date is the first of the month, you must prepay the amount of interest accruing up to the 1st day of the following month, the Interest Adjustment Date.

            Example:        Closing             March 15

                                    IAD                             April 1

                                    First Payment               May 1

Interest from March 15th to 31st must be paid on closing day.  If however, you choose biweekly or weekly payments your interest adjustment period will be much shorter.

•·         CMHC & PST:  If your mortgage is insured by CMHC the insurance premium will usually be added to the mortgage so it is not a cash requirement on closing.  However, the premium is subject to 8% PST, and the tax must be paid on closing.

•·         Prepaid Expenses:  If the Seller has prepaid any other expenses such as utilities, water and sewage, oil in tank or taxes, he must be compensated.  This will be reflected in the Statement of Adjustments.

•·         Property Tax Holdback:  If the lender is collecting and paying property taxes you may be required to pay to the lender an amount to ensure sufficient funds are available to pay the next installment of property taxes when due.

•·         Other Fees:  Occasionally, a lender or the broker will charge a fee for providing the mortgage.  If so, these costs should be disclosed to you at the time the Statement of  Mortgage is issued to you.