What is title insurance?
How much Land Transfer Tax am I going to have to pay on my purchase?
What is a new home warranty?
What amount of mortgage can I afford?
What will it cost to hire a real estate lawyer?
Where can I finding a good real estate agent?
What is title insurance?
Your lender will provide you with financing, your lawyer is searching title, and the biggest investment you'll ever make is protected against any unwarranted claims. Right?
Well . . . not exactly. Rights to real estate are not guaranteed. Unless you have title insurance, one of those things that 'only happens to other people' could happen to you. Fraud, forgery, title defects, survey problems, even human error, can delay, even prevent your home from closing . . . or worse, threaten your rightful ownership years later.
Title insurance protects a purchaser against loss resulting from title defects and survey defects that would have been revealed by an up-to-date survey or real property report. It can be used in lieu of a survey and can eliminate the need for costly off-title searches.
Although most Canadians have only heard about title insurance in the past few years, it has been in existence for over 100 years in the United States and is rapidly gaining popularity in Canada.
With title insurance, home buyers may have an easier time obtaining financing and the seller will have an easier time closing, even in the presence of problems with the survey or title.
Title insurance insures against past problems that could affect your ownership in the future. A low, one-time premium covers you for loss or damage up to the policy amount and/or legal costs you would have to pay to defend your title.
Once a policy is issued, a covered title problem is not your concern. The title insurance company will assume the risk.
Title insurance offers many benefits to the homebuyer:
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It may reduce expenses by eliminating some disbursement costs your lawyer might otherwise have to incur. |
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• |
It provides coverage for matters that would be excluded from a lawyer's opinion. |
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All financial institutions accept title insurance in place of an up-to-date residential survey. |
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If someone whose name is identical to yours has a court judgment against him or her, the bank may refuse to release funds even if you sign an affidavit confirming that you are not that person. |
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If it is discovered that the garage or pool of the house you are buying extends onto a neighbouring property, municipal setback or utility right of way, title insurance will take care of the problem. |
For more information on title insurance, please contact us or visit http://www.firstcanadiantitle.com/.
How much Land Transfer Tax am I going to have to pay on my purchase?
Under the Land Transfer Tax Act, the Province of Ontario charges a tax to allow the transfer of all property purchased in Ontario. Land Transfer Tax payable on residential land is calculated as follows:
First $55,000 of the purchase price—0.5%
Next $195,000 of the purchase price—1.0%
Next $150,000 of the purchase price—1.5%
Over $400,000—2.0%
Examples
The Land Transfer Tax payable on the purchase of a $250,000 residential property is calculated as follows:
First $55,000 of purchase price x 0.5% = $275
Next $195,000 of purchase price x 1.0% = $1,950
TOTAL LAND TRANSFER TAX TO BE PAID = $2,225
The Land Transfer Tax payable on the purchase of a $450,000 residential property is calculated as follows:
First $55,000 of purchase price x 0.5% = $275
Next $195,000 of purchase price x 1.0% = $1,950
Next $150,000 of purchase price x 1.5% = $2,250
Next $50,000 of purchase price x 2.0% = $1,000
TOTAL LAND TRANSFER TAX TO BE PAID = $5,475
The following table calculates the Land Transfer Tax you can expect to pay based on the purchase price of your home:
|
Purchase Price ($) |
Tax ($) |
Purchase Price ($) |
Tax ($) |
Purchase Price ($) |
Tax ($) |
|
100,000 |
725 |
160,000 |
1,325 |
210,000 |
1,825 |
|
110,000 |
825 |
170,000 |
1,425 |
220,000 |
1925 |
|
120,000 |
925 |
180,000 |
1,525 |
230,000 |
2,025 |
|
130,000 |
1,025 |
190,000 |
1,625 |
240,000 |
2,125 |
|
140,000 |
1,125 |
190,000 |
1,625 |
250,000 |
2,225 |
|
150,000 |
1,225 |
200,000 |
1,725 |
|
|
Great care has been taken in the creation of this table; however, there is no guarantee of complete accuracy.
IMPORTANT NOTE:
If you are a first-time homebuyer of a newly constructed home, the Ontario government provides a rebate of up to $2,000 of the Land Transfer Tax payable.
What is a new home warranty?
Tarion Warranty Corporation (formerly the Ontario New Home Warranty Program) was created in 1976 by Ontario's home builders to guarantee consumers specific rights when they buy a new home or condominium constructed by a builder. Since then, Tarion has provided comprehensive warranty protection to more than 750,000 new homes and condominium units, effectively safeguarding new home buyers against many problems, including deposit loss, delayed closing, major structural defects, Ontario Building Code violations and construction defects.
All builders and vendors are required by the act to register with Tarion and, before construction begins, to enroll each home they build for sale or under contract to an owner. Tarion receives no government funding and is totally financed by registration, renewal and enrollment fees.
What amount of mortgage can I afford?
Use this rule of thumb to see if you'll qualify for a mortgage on your dream home.
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1 |
Calculate the combined monthly before-tax income of you and your spouse. |
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2 |
Divide by three. This figure is the monthly payment you can afford to make on your house. |
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3 |
Take the total price of the house and subtract the amount of money you expect to make as a down payment. This is the money you will have to borrow. |
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4 |
Look at the Mortgage Payment Calculation Chart below. Look down the left column and locate the interest rate you expect to pay. Line this up with the amortization period of your choice. (Most first-time buyers take the 25-year amortization.) |
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5 |
Multiply this figure by the amount you need to borrow. Divide by 1,000. |
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6 |
Add to this your estimated monthly heating costs and monthly property taxes. |
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If this figure is equal to or less than one-third of your gross monthly income (calculated in Step 2), you'll qualify for a mortgage on your dream home. |
Bear in mind that this is a rough estimate. If you have several other large loans already, you may qualify for less. Also, banks and trust companies vary in their policies. The best way to know what you can afford is to go to the lending institution of your choice and get pre-qualified.
| Mortgage Payment Calculation Chart | ||||
|
Interest |
Amortization Periods | |||
|
10 years |
15 years |
20 years |
25 years | |
|
3.00 |
9.65 |
6.90 |
5.54 |
4.73 |
|
3.25 |
9.76 |
7.02 |
5.66 |
4.86 |
|
3.50 |
9.88 |
7.14 |
5.79 |
4.99 |
|
3.75 |
9.99 |
7.26 |
5.91 |
5.13 |
|
4.00 |
10.11 |
7.38 |
6.04 |
5.26 |
|
4.25 |
10.23 |
7.50 |
6.17 |
5.40 |
|
4.50 |
10.34 |
7.63 |
6.30 |
5.53 |
|
4.75 |
10.46 |
7.75 |
6.44 |
5.67 |
|
5.00 |
10.58 |
7.88 |
6.57 |
5.82 |
|
5.25 |
10.70 |
8.01 |
6.74 |
5.96 |
|
5.50 |
10.82 |
8.14 |
6.85 |
6.10 |
|
5.75 |
10.94 |
8.27 |
6.98 |
6.25 |
|
6.00 |
11.07 |
8.40 |
7.12 |
6.40 |
|
6.25 |
11.19 |
8.53 |
7.26 |
6.55 |
|
6.50 |
11.31 |
8.66 |
7.41 |
6.70 |
|
6.75 |
11.43 |
8.80 |
7.55 |
6.85 |
|
7.00 |
11.56 |
8.93 |
7.69 |
7.00 |
|
7.25 |
11.68 |
9.07 |
7.84 |
7.16 |
|
7.50 |
11.81 |
9.21 |
7.99 |
7.32 |
|
7.75 |
11.94 |
9.34 |
8.14 |
7.47 |
|
8.00 |
12.06 |
9.48 |
8.28 |
7.63 |
|
8.25 |
12.19 |
9.62 |
8.44 |
7.79 |
|
8.50 |
12.32 |
9.76 |
8.59 |
7.95 |
|
8.75 |
12.45 |
9.90 |
8.74 |
8.12 |
|
9.00 |
12.58 |
10.05 |
8.86 |
8.28 |
|
9.25 |
12.71 |
10.19 |
9.05 |
8.45 |
|
9.50 |
12.84 |
10.33 |
9.20 |
8.62 |
|
9.75 |
12.97 |
10.48 |
9.36 |
8.78 |
|
10.00 |
13.10 |
10.63 |
9.52 |
8.95 |
|
10.25 |
13.24 |
10.77 |
9.68 |
9.12 |
|
10.50 |
13.37 |
10.92 |
9.84 |
9.29 |
|
10.75 |
13.50 |
11.06 |
10.00 |
9.46 |
|
11.00 |
13.61 |
11.22 |
10.16 |
9.63 |
|
11.25 |
13.77 |
11.36 |
10.32 |
9.80 |
|
11.50 |
13.91 |
11.52 |
10.49 |
9.97 |
|
11.75 |
14.04 |
11.66 |
10.65 |
10.15 |
|
12.00 |
14.18 |
11.82 |
10.81 |
10.32 |
|
12.25 |
14.32 |
11.97 |
10.98 |
10.49 |
|
12.50 |
14.46 |
12.13 |
11.15 |
10.67 |
|
12.75 |
14.59 |
12.28 |
11.31 |
10.85 |
What will it cost to hire a real estate lawyer?
At Lerners, you get big-firm reliability at small-firm prices.
In addition to legal fees, the following are some of the normal disbursements that will be incurred by your lawyer on your behalf for the purchase of property in the City of London.
• title search
• title insurance
• land transfer tax
• registration costs
• utility report
• miscellaneous charges (fax, photocopy, courier)
IMPORTANT NOTE:
At Lerners, there are no up-front costs—all fees and disbursements are payable on closing.
Where can I find a good real estate agent?
Visit http://www.mls.ca/
