Buying and Selling real estate, and homes, in particular, is a complex process and the money that changes hands is not actually limited to the down payment or sales price of the house. In fact, there are a number of additional costs in any deal for both the person selling their property and the person buying it. Of course, because these costs come from several different directions and are required for a variety of reasons, they are more difficult to predict and list than a simple sticker price on the home itself. Some depend on lawyer or inspection fees while others have to do with the terms of the old and new mortgages. If you’re on either side of the real estate equation or think you might be soon, you have every reason to prepare yourself for these often unforeseen closing costs.

Closing Costs for Buyers

Legal Fee and Disbursement

During the buying process, there’s a very good chance that you have a lawyer ready and able to help you generate and process documents and ensuring that the property is up to inspection standards. In general, a lawyer’s time during a real estate deal can vary between $500 and $150. This is often included in the concept of disbursement along with any fees required for a notary public, searches, and other legal activities during the purchase.

Title Inspection

Sometimes included in legal fees, the title inspection ensures that the seller legitimately owns the property they’re selling you and that it doesn’t have any extra mortgages or liens on it.

Land Transfer Tax

Calculated on a percentage of the home price, most Canadian provinces will charge a land transfer tax whenever local property changes hands.  This amount is somewhat discounted for first time home buyers but is almost never completely waived.

Mortgage Tax and Fees

While most mortgages don’t charge you a fee to set up, some do. Some also insist on a mortgage-related appraisal of the property which often costs one to five hundred dollars. Finally, you may have to or choose to get some mortgage insurance which covers defaults and other financial disasters that might affect your future mortgage payments. If you pay less than 20% down initially, you may be required to get at least a little default insurance.

Adjustment Costs

A standing house still racks up a small amount of bills and, of course, the property tax. The seller’s responsibility stops the moment the buyer takes over the property, at which point these costs belong to the buyer. This means that if bills or tax was prepaid, the seller will be reimbursed for time unused. On the other hand, if bills or property tax are owed, the seller will pay their final share from the money received from selling the property.

Home and Title Insurance

Most mortgages require at least minimal home insurance, so make sure to budget for it. You can also get title insurance which will protect you from mortgage fraud and identity theft further down the line.

Closing Costs for Sellers

Realtor Commission

The realtor you used to find a buyer and expedite the sale gets a commission when the sale is complete. Depending on your pre-sale agreement, each realtor will receive a commission somewhere between 2.5% and 5% of the final sale price.

Legal Fees

The lawyer you hire to discharge the title and verify prepaid expenses like adjustment costs must be paid their fees along with any disbursements that were accrued during the selling process. This cost is usually on the lower end of the $500 to $1500 range.

Mortgage Discharge

If you still had a mortgage at the time of selling the property, you may be facing penalty fees for closing the mortgage early. The amount of this fee varies based on the type of mortgage you had and how early you’re closing it, but fees are usually much higher for fixed rate mortgages.

All of these additional costs to buying or selling real estate relate to the fact that a house exists on multiple bureaucratic levels. The process touches on title ownership, actual control of the property, and access to utilities at the very least, so it’s no wonder there are so many little extra costs.

For more information on how to prepare for your real estate transaction, contact us today!

Once you have found the home of your dreams, you need to know a little about how to close the deal on your new home.

Making the Offer

The offer to purchase or what is also known as an agreement of purchase and sale is what is given to the seller once you find your home. An offer to purchase is a legally binding contract that is prepared by either a lawyer or a real estate agent. In Quebec, you will use a notary. Here are a few to keep in mind that are most important because only after these needs are met is the contract valid. You should also keep in mind that negotiations are important. This is so that you get the very best deal possible. There are a few things your offer needs to have:

• Address of the property, your name, and the seller name.
• The price of the home that you are paying.
• Your deposit amount.
• Extras included in the buy.
• Closing date. This is when you want to move into the home or take possession of it, usually 30 to 60 days after everything is signed for an existing home. If you are having one built, this will be longer.
• Current land survey request.
• Offer expiration date.
• Other conditions not included. These may include things like lender approval of the financing or a satisfactory home inspection that was needed.

After the Offer is Accepted

After your offer is accepted, you will need to take care of a plethora of things. You will meet with your broker or lender to verify everything and finalize everything that has to do with your mortgage. You will need to look over all of the conditions that were included in the offer and although your broker or lender will let you know what you need to bring to the meeting, here are the basics that you will need to have with you:

• Appraisal
• Home inspection report
• Current land survey request
• Estimates on improvements or renovations that you plan to do
• Heating and utility costs
• Condo fees, if applicable
• Signed offer to purchase
• Legal description of property
• Building specs
• The Realtor.ca listing (if there is no listing, photos will suffice)
• Latest property tax assessment
• Change your address and make sure that government agencies, healthcare officials, service providers, and anyone else that is important knows the new address.

Closing Day

It’s finally the day you’ve been waiting for – closing day. You finally get your new home but there are a few things that happen first on closing day before you are handed the keys.

• Mortgage Money. The lender gives the mortgage money to your notary or lawyer.
• Down Payment. Minus the deposit, you give the down payment to your lawyer or notary plus the closing costs. All of this covers things like land transfer fees and legal fees. The typical amount is 1.5% to 4% of the purchase price.
• Deed and Keys. The notary or lawyer will now pay the seller, register the home in your name, and you will then be given the deed to the house and the keys.

There is plenty to know about closing on a home but having the knowledge of what to do will take some of the pressure off and prepare you for one of the most important days of your life.

Oakville Real Estate Law is one of the top firms in Canada for real estate transactions. The firm’s team led by Robert Rose has worked on thousands of transactions the years and have the knowledge and experience you need. For more information, please contact us and we will be glad to help.

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Buying a home is one of the most exciting things in your life but there is a lot to know about when it comes to taxes. While this is just a part of your home purchase, here is a little you need to know about real estate taxes when buying a home and how you may be able to save money.

Some of the taxes you will have to pay depending on which region you are in and if you are a resident or non-resident. For instance, if you are purchasing a home in the Toronto area, there are four taxes that you have to take care of as a non-resident: Income taxes,  property taxes, non-resident speculation tax, and land transfer tax.

Non-Resident Speculation Tax

If you are a non-resident of Canada, there is the non-resident speculation tax. This tax is equal to 15% of the amount of the property and has to be taken care of at the closing.

Property Taxes

Property taxes are typical for homeowners pretty much no matter where you live. The amount is going to depend on what area you live in. For instance, if you live in the Toronto area then there is a calculator you can use that determines the taxes based on the current value assessment of your property. For instance, if your home is worth $425K then your taxes are estimated at $2923, of which $799 goes to education, $2112.37 goes to the city, and $12.51 goes to the transit expansion.

Land Transfer Tax

When you obtain land or even a beneficial interest on land, there is a charge known as a Land Transfer Tax. This is paid to the province during the time the transaction closes. While the Land Transfer Tax is typically paid on the amount remaining on a debt or mortgage taken as part of the arrangement and based on what you paid for the land, there have been recent changes and the Land Transfer Tax has a different calculation. Land transfer taxes are based on a sliding scale dependent on the price of the property.

Non-Resident Speculation Tax

If you are a  non-resident who is buying a home in Canada, then there is something called non-resident speculation tax. This is a 15% tax on the purchase or acquisition of an interest in residential property located in the Greater Golden Horseshoe Region (GGH) by individuals who are not citizens or permanent residents of Canada or by foreign corporations (foreign entities) and taxable trustees. This includes all types of property such as a townhouse, condo, single-family residence, and detached house.

Income Taxes

This is simply something to keep in mind. If you are moving from the United States, for instance, income tax is something you are already aware of so just keep in mind that Canada has it as well. If you are already a resident then you know about income tax payments or refunds.

The good news is that a  claim for $5000.00 can be made for the Home Buyers Amount (HBA) if you qualify. Some of the qualifications include that you purchase a qualifying home, you did not live in a qualifying home that was owned by you in the year of acquisition or any of the four prior years for first time buyers, and the home has to qualify itself by being a single family house, mobile home, semi-detached house, condominium, apartment in a duplex, triplex, apartment building, or fourplex, or a townhouse.

If you have questions about how a real estate lawyer can help with real estate taxes, Oakville Real Estate Law is one of the top firms in Canada for real estate transactions. The firm’s team led by Robert Rose has worked on thousands of transactions the years and have the knowledge and experience you need. For more information on what you need to know about being able to afford a home, please contact us and we will be glad to help.

For years, the Principal Residence Exemption (PRE) was lucrative to Canadians because it allowed an exemption on tax from capital gains as long as the person was selling their primary home. However, back in October of 2016, the rules changed and tightened on the Principal Residence Exemption (PRE). Not only does a person have to be a resident of Canada to take advantage of this benefit, there are now changed parts of the Tax Act as well as additional imposed tax reporting. Here is more on what you should know about how principal residence tax changes affects Canadians.

Why the Change?

The changes on the Principal Residence Exemption (PRE) were changed for a reason. According to the Department of Finance:

“The changes are meant to better ensure that the principal residence exemption is available only in appropriate cases, and in a manner consistent with the Canadian resident and one-property-per-family limits.”

This is basically to prevent those who flip houses or those who buy and sell within the same year, known as speculators. Instead, it is meant to help real Canadian residents who are not selling their home as a means just to make a quick buck but instead are selling so that they can move or whatever the legitimate reason may be.

What is the Formula?

The formula is quite simple, it calculates the exemption by using the amount of years plus one. How this works in layman’s terms is easier explained in this example:

A person buys a townhouse July of 2005 and a condo in September of 2012 then sells the townhouse in October of 2011, and sells the condo in October of 2016, they then get to claim the Principal Residence Exemption (PRE) twice – the full PRE on the townhouse 2005 till 2011, and the full Principal Residence Exemption (PRE) on the condo from 2012 to 2016.

This does not apply to those who were not Canadian residents the year that they acquire the property and instead, provides full exemption to those who are residents and sell two properties in the same year.

Why Was the Tax Change Implemented?

The tax change is there to help those who are legitimate residents and have to sell for whatever reason like a change in location or moving for a job offer. According to Keith Masterman who is a Tax, Retirement, and Estate Planner, some people do have to buy and sell their property in the same year and this does not mean that they are flipping houses or acting as a speculator. Some simply have a change in life plans such as the mentioned job offer.

This way, those who should benefit from the Principal Residence Exemption (PRE) actually do and those who are simply looking to make money fast are not eligible. It also is in place to deter foreign speculators.

What Else Has Changed?

Another change is that there is additional tax paperwork that must be filled out with the Principal Residence Exemption (PRE). Right now, the Form T2091 can be used just like in the past but there may be another form of paperwork that is required in the future. To claim the exemption, you will have to provide your basic information on the tax return for that year.

If you have questions about the Principal Residence Tax Rule or how a real estate lawyer can help, Oakville Real Estate Law is one of the top firms in Canada for real estate transactions. The firm’s team led by Robert Rose has worked on thousands of transactions the years and have the knowledge and experience you need. For more information on what you need to know about being able to afford a home, please contact us and we will be glad to help.

When it comes to selling your home, you might be considering doing it yourself. That is a great idea for some people but before you take the plunge, there are a few things to keep in mind. Here are five things to know about selling your home without the help of an agent.

Hard Work

Selling your home isn’t as easy as just putting an ad in a newspaper. Obviously, there is nothing wrong with placing an ad and you should. However, the most savvy of sellers know that there is more to it than that. Some people place fliers and brochures at heavy traffic areas such as big box hardware stores and supermarkets. Make sure to take plenty of photos and create an ad that draws attention to the potential buyer. It’s rare that a plain listing will secure a sale, especially in a market that may not be on the uprise.

Spend Money

If you really want to maximize the odds of selling your home on your own, be prepared to spend a little cash. Whether it is for newspaper ads, for sale signs, or even a website or listing on a site, these things cost money. Keep in mind though that this is an investment that helps you have a better chance of selling your home at a price that is close to what you want. Sometimes the old saying is true – it takes money to make money.

Research Pricing

There may be a specific price you are looking for to sell your home but it is a good idea to research prices in the area to find out what the market looks like and if you are asking too much or even too little. Find the variables that make a difference such as subtracting for repairs and adding more for things like an excellent location or a house that is near to good schools. Sometimes lowering your asking price can make all the difference between someone who is interested and someone who is serious about making an offer. This doesn’t mean you have to take a loss but do be aware of what is fair and feasible for your target demographic.

Take Agents Into Consideration

Once you are on the market, you can expect agents to contact you wanting to take over the selling of your home. This is an opportunity to gather information from them such as free market values or what the average sales price is for your neighborhood. Make sure you don’t burn bridges because you may decide you want to go with an agent after all and this gives you a chance to find the one that best fits your needs, if that need arises.

Take Advantage of Free Opportunities

Don’t scoff at the power of social networking. Not only is it free but you never know who might be looking for a home and see yours being shared. Best case scenario – someone sees your home and wants to make an offer and the worst case scenario is that at least you were able to get your home out there in front of thousands of people and at no charge.

If you have questions about how a real estate lawyer can help, Oakville Real Estate Law is one of the top firms in Canada for real estate transactions. The firm’s team led by Robert Rose has worked on thousands of transactions the years and have the knowledge and experience you need. For more information on what you need to know about being able to afford a home, please contact us and we will be glad to help.

Families who are getting ready to buy their first home are sure to be bombarded with advice on how to go about purchasing it. With so much advice, it may be hard to know exactly how to get started with financing a first home. Having a step-by-step guide can help first-time home buyers through this process.

Types of Mortgages

It is essential for people who are ready to buy a home to have a basic understanding of the different types of mortgages. Depending on a family’s financial circumstances, there are several ways to go about financing a new home. Different types of mortgages have different requirements, including how much home buyers have to put towards a down-payment, what the minimum credit score must be, and how many years the home can be financed for. Learning about the various types of mortgages is an important first step in the home buying process.

Getting pre-approved for a mortgage

New buyers will make the process of buying a home much simpler if they obtain a pre-approved mortgage loan.  This takes away the headache of finding a home, only to be denied for financing. Once buyers go through this process, they have won half the battle. Any realtor or seller will be ready and willing to go to the next step of the home buying process with a buyer who has taken the time to get pre-approved for a mortgage loan. However it is important to remember getting pre-approved does not guarantee that you will be given a mortgage. It is just the initial step in the overall approval process. Buyers can get pre-approved and ultimately get denied financing.

Comparing mortgages online

There are many helpful tools online that will allow potential home buyers to compare one mortgage loan offer against another. When using online mortgage comparison sites, users will have the advantages of being able to compare multiple lenders at one time. What sounded and looked like a great deal on paper, may not stack up so well when compared to offers available through other mortgage lenders.

Learn about mortgage amortization

For new home buyers, terms like mortgage amortization may be confusing. Knowing about how mortgage amortization works will help home owners understand how long it is going to take them to pay off their home mortgage balance. This information will help make it clearer what type of loan will be in the buyer’s best interest. It also helps to be familiar with the term when talking with a mortgage loan officer. If he sees that the buyer understands the terminology, he will be more likely to offer the best mortgage loan offer possible.

Will you need Mortgage Default Insurance?

The need for Mortgage Default Insurance is something that is misunderstood by many people buying a home for the first time. Whether or not the buyer needs Mortgage Default Insurance will depend on the personal financial circumstances and the type of mortgage loan. The loan officer will advise the buyer before closing if Mortgage Default Insurance is required. There are advantages and disadvantages to having Mortgage Default Insurance, and also ways to avoid it altogether.

Understanding mortgage points and closing costs

Another consideration for people who are preparing to purchase their first home is the additional costs that can be added by mortgage points and the various types of closing costs. It is in the buyer’s best interest to understand each aspect of mortgage points and closing points thoroughly before signing any loan closing paperwork.

Using a mortgage calculator

It takes a great deal of financial planning to prepare for the purchase of a home. A mortgage calculator can help buyers determine the affordability of a mortgage and whether or not they will have difficulty in keeping up with the monthly mortgage notes. It is a step in the home buying process that allows people buying a home to know how much they can afford to borrow.

Choosing a lender

Once buyers have gained a good understanding of the mortgage basics and have determined how much money they will be borrowing, there comes one of the most difficult decisions, choosing the best mortgage lender for their particular circumstances. There are many different options available, including mortgage lenders for bad credit, online mortgages, and low-deposit mortgage options. Each type of lender has its own unique advantages. It will take some time to compare each type of lender and choose the one that best meets the buyer’s financial circumstances.

Buying your first home is a big step—and we want to help make your first big purchase a success. Oakville Real Estate Law firm can advise you in the successful execution of your real estate contract. All phases of the transaction are handled on site. Contact us to schedule to schedule a consultation.

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Owning a home is a dream of many families and it is a decision that is one of the biggest you will ever make. There are a few things you should be able to answer before making a decision as well as what you need to know about the real costs of homeownership. Here are some crucial factors to consider before you make a solid decision.

What You Should Ask Yourself

There are three major questions that you should be able to answer before you take the next step into buying a home and they include:

• What are you looking for in a new home?
• What will your finances support when purchasing a home or more aptly put, what can you afford?
• Pull that all together and the final question is to ask yourself what your lifestyle needs are and and how do they relate to your financial situation?

What Homeownership Really Costs

As a new home buyer, you are probably familiar with a few of the financial needs when buying a new home but do you really know what is involved with the true cost of owning a home? Here are three of the most important things to take think about when looking to buy a home:

• Costs Due Upfront. These are costs that you will have to come up with before you even move in. This includes the down payment, any taxes that are due, and closing costs. When you add all of these costs up, it can be a number that you were not expecting.
• Continued Costs. Ongoing and continued costs are simply a part of owning a home. For instance, property taxes, mortgage payments, utility bills, insurance, routing repairs, and general maintenance. And if you live in a condominium, you have to take into consideration homeowner’s association fees.
• Major Repairs. Something to take into consideration is the major repairs that can and often do pop up when owning a home. Whether it is the cost of a new roof or a faulty HVAC unit, these are typically expensive repairs that eat into your savings and can be devastating if you are not prepared.

There are obvious reasons why owning a home is better than renting but as with any major life-changing decision, there are pros and cons. For instance, buying a home allows you these benefits:

• Stability and the knowledge that you are putting your money towards owning something instead of renting where you will never own the property.
• The ability to renovate, decorate, and modify your home to your own liking.
• An investment that builds equity and can become an opportunity for income if you decide to rent out your home.

It is important to look at the pros and cons of owning a home and now that you have seen some of the benefits, here are a few things to keep in mind that aren’t as positive.

• You are responsible for any repairs, upgrades, or renovations.
• Major repairs can come up and you are the one who has to pay the bills.
• Your home may lose value over time and if you sell, you may lose money.
• Your monthly mortgage payment may go up if the interest rates have increases.

Owning a home is one of the things that is a dream for many and it makes an excellent investment as well as providing your own sanctuary and the sanctuary of your family.

Oakville Real Estate Law is one of the top firms in Canada for real estate transactions. The firm’s team led by Robert Rose has worked on thousands of transactions the years and have the knowledge and experience you need. For more information, please contact us and we will be glad to help.

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