Frequently Asked Questions

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What is a Mortgage?

A mortgage is nothing more than a large loan secured by real estate. If you keep this simple concept in mind, everything else will fall into place nicely. For most people, the big unknown is figuring out how much of a mortgage they can get. Again, it's fairly simple. Generally, you will qualify for a mortgage of about three times your family's gross annual income-assuming that you have steady employment, a good credit history and relatively little debt.

Should I rent or buy?

Do you enjoy moving often? Do you prefer using your savings for such things as vacations, retirement or starting your own business? Do you enjoy not having to worry about regular maintenance and repairs?

If you answered yes to any of these questions, you may not be ready to own a home yet. While you probably have a lot of good reasons for wanting to buy a home, you also have to consider your reasons for not wanting to.

Remember that buying a home is one of the biggest emotional and financial decisions you'll ever make, so prepare yourself to make a knowledgeable decision.

Although buying a home usually seems like a great idea, it is important to understand what home ownership involves. Being a homeowner is something to be proud of, but it also means having to invest money, time and energy, and taking on added responsibilities. Before you decide to buy a home, make sure you're ready.

Here are some of the main advantages of owning a home:

Financial Security. If housing prices rise, your home will provide you with some financial security due to capital appreciation.

Flexibility. You can decorate or renovate your home to meet your own personal tastes and needs.

Stability. Not being vulnerable to the whims of landlords and roommates.

Here are some of the main disadvantages of owning a home:

Financial Stress. Pulling together a down payment, meeting regular mortgage payments and other ongoing costs will tie up a lot of your cash, and can put considerable stress on your finances.

Maintenance. Keeping your home in good shape requires time and money.

Higher Costs. You may pay more each month for housing than you did as a renter. There are also extra costs for maintenance and property taxes.

More Responsibility. You alone are responsible for payments, repairs and maintenance.

Home ownership can be an affordable and a great investment. For what you are paying in rent, you could own your home.

What are the steps to getting a mortgage?

Just so you know, Buyingblock can assist you with all the steps or any step where you would like our help.

Make the decision to rent or buy.

Put together a team of professionals who can help you.

Determine the cost of a mortgage.

Create a budget to buy a home.

Define the house price you can afford.

Do a credit check on yourself.

Determine the downpayment required.

Understand how banks make their decisions.

Get a mortgage pre-approval.

Do you need mortgage insurance?

Decide what to buy.

Make an offer to purchase (aka Agreement of Purchase and Sale).

Choose the type of mortgage.

Act once your offer has been accepted.

Maintain your investment.

How do I choose a mortgage?

Today, financial marketing gurus have been working overtime to give consumers a myriad of mortgage options. Choice is great, but it does tend to muddy the waters.

Try to keep it simple. This principle works in almost every facet of life, including mortgages. Weeding through all of the marketing gimmicks and sticking with the basic options you need in a mortgage will save you a lot of grief.

The most important issue with any mortgage is the cost. Your goal is to minimize your cost, so be very conscious of interest rates and how they are calculated. Don't be inticed by low introductory rates; these are usually gimmicks. You need to look at your effective rate over the full term of your mortgage. Most mortgages have their interest calculated semi-annually, but there are several new products on the market that compound their interest monthly. The more often a mortgage rate is compounded, the higher your effective rate is. In other words,: semi-annually is good, monthly is bad.

Something else that's important is your mortgage term. The term you choose will usually dictate how long your interest rate is guaranteed for. Typically, the yield curve for mortgage rates slants upwards and to the right, meaning that the longer your term, the higher yor interest rate. Choosing the long term mortgage is a form of insurance. You are guaranteed that your interest rate and payment amount will not change for the term you choose. Whether you need this type of insurance is dependent on your personal financial situation. Do you have a good cash flow? Can you afford to pay an extra few hundred dollars a month if your interest rate goes up? There is no right answer but you want to be darn sure you don't roll the dice and end up losing your home.

A recent hot product is the variable rate mortgage. As interest rates have dropped steadily over the last few years, a lot of consumers saved a bundle by choosing a variable rate. Most variable rate mortgages base their rates on the bank's prime rate. When the prime rate goes up, your rate goes up; when the prime rate goes down, your rate goes down. Every lender has put their own twist on their own variable rate mortgage. Remember to cut through the fluff and look at the bottom line when comparing variable rate mortgages. What is your effective interest rate over the entire term, not just the introductory period? Remember that these mortgages may have a long term (e,g, 5 years) but your interest rate is not guaranteed. If you are the type of person who is conservative or has a tight cash flow, this is not the product for you.

Flexibility is the other variable to look at. How flexible is the mortgage? Can you pay weekly, bi-weekly, semi-monthly, or monthly? Can you make extra payments at any time or just once a year? Is your mortgage convertible to a longer term? What rate will they give you, the posted rate or a discounted rate?

Having a mortgage that is flexible is nice, but the most important factor is cost. You need to look at the effective interest rate of the mortgage over the term you choose. If you keep things simple, you will choose the right mortgage every time.

What tasks does a lawyer perform?

You need a lawyer to protect your legal interests, which includes ensuring that the property you are considering is not associated with any building or statutory liens or charges, or work or clean-up orders. Your lawyer will review all contracts before you sign them, especially the Offer (aka Agreement of Purchase and Sale) to purchase. Having a lawyer involved in the process ensures that things go as smoothly as possible, adding to your peach of mind.

Lawyer/notary's fees range widely and depend on the complexity of the transaction. Shop around for rates.

Remember that a lawyer/notary:

Should be a licensed full-time lawyer/notary.

Should be local and understand real estate laws, regulations, and restrictions.

Should have realistic and acceptable fees.

Can explain things in plain language.

Budget: $800-$1,200.

What tasks does an inspector perform?

You should consider having any home you are thinking of buying inspected by a knowledgeable and professional inspector.

The Home inspector's role is to inform you of the property's condition, letting you know if something is not functioning properly, needs to be changed or is unsafe. You will also be informed of repairs that need to be done. A home inspector may even be able to tell you where there may have been problems in the past.<

Every inspection should include an evaluation of at least the following:

Foundation

Doors and windows

Roof and exterior walls

Attics

Plumbing and electrical systems

Heating and air conditioning systems

Ceilings, walls and floors

Insulation

Ventilation

Septic tanks, wells or sewer lines

Any other buildings, such as a detached garage

The lot, including drainage away from buildings, slopes and natural vegetation

Overall opinion of structural integrity of the buildings

Common areas (in the case of a condominium/strata or co-operative)

There is presently no uniform certification and no requirement for home inspectors to take any courses or to have passed any tests. Anyone can say that they are a home inspector. However, a good home and property inspector generally belongs to a provincial industry association, such as the Canadian Association of Home and Property Inspectors.

Budget: Home inspector fees are generally $395 and more, depending on the size and condition of the home.

What tasks does an appraiser perform?

Having an independent appraisal done on a property before you make an offer is a good idea. It will tell you what the property is worth and help ensure that you are not paying too much. Your lender can also ask for a recognized appraisal in order to complete a mortgage loan.

The appraisal should include an unbiased assessment of the property's physical and functional characteristics, an analysis of recent comparable sales and an assessment of current market conditions affecting the property.

Budget: $250-$350 in most areas of a typical single-family house.

What tasks does a real estate agent perform?

No one plays a more important role in helping you find a home than your real estate agent. Your real estate agent's job is to:

Help you find the ideal home

Helps you write up an Offer (aka an Agreement of Purchase and Sale)

Negotiate on your behalf to help you get the best possible deal

Provide you with important information about the community, arrange and coordinate the home inspection, and essentially save you time, trouble and money.

When the time comes to select a real estate agent, don't be afraid to ask questions - especially about any possible service charges. Sellers normally pay a commission to the agent, but some agents will still charge buyers a fee for their services. If you would like to know more about a real estate agent's ethical obligations, you can visit the Canadian Real Estate Association's website or call your local real estate association.

Budget: 2.5 to 6 per cent of the sales price is typically charged to the seller, then split between the buyer's agent and the seller's agent (who is also called a listing agent).

What tasks does an insurance broker perform?

An insurance broker can help you with your insurance needs, including property insurance and mortgage life insurance. Lenders insist on property insurance because your property is their security for your loan. Property insurance covers the replacement cost of your home, so premiums may vary depending on its value.

Your lender may also suggest that you buy mortgage life insurance. Mortgage life insurance provides coverage for your family should you die before your mortgage is paid off. This type of insurance is often available through your lender, who then simply adds the premium to your regular mortgage payments. However, you may want to compare rates between both an insurance broker and your lender.

Be careful not to confuse property or life insurance with mortgage loan insurance, which may be required for high-ratio mortgages.

What tasks does a builder/contractor perform?

If you are buying a newly constructed home or require renovations to a resale home, you will have to hire a builder or contractor. Make sure to ask for references and talk to other customers about the builder's performance. This could include:

Check with the program in the area.

Visit other housing developments that the company has built.

Ask builders or contractors if they are members of a local homebuilders' association or ask for a provincial license number.

If you are having a custom home built, remember that:

You may want to hire an architect.

Builders of custom homes usually work on either a fixed-price or a cost-plus basis. Authorize any changes to your contract by writing your name or initials beside the change.

On a final note, make sure your contract is as specific as possible about construction details, right down to the brand name or model number of any finishes. Make sure that you initial any changes to your contract.

As a member, you are welcome to check out our qualified professionals.

What tasks does a land surveyor perform?

If the seller does not have a or Certificate of Location, you will probably need to get one for your mortgage application. If the in the seller's possession is older than five years, it will probably need to be updated. Remember that you must have permission from the property owner before hiring a surveyor to go onto the property. Ask your real estate agent to help co-ordinate this with the owner.

Budget: $750-$1,000

What tasks does the lender or mortgage broker perform?

If you haven't already gone through the mortgage pre-qualification process, you will need to find a good lender to assist you during the purchasing process and for as long as you have your mortgage.

Remember that many different institutions lend money for mortgages, such as: banks, trust companies, credit unions, caisses populaires, pension funds, insurance companies and finance companies. Shop around and speak with more than one lender because terms and options will vary.

Some people find it helpful to use a mortgage broker. Mortgage brokers don't work for any specific lending institution. Their role is to find the lender with the terms and rates that will best suit the buyer.

To find a lender or mortgage broker, you can get a referral from your real estate agent, family members, friends or other professionals. Look in the Yellow Pages under Banks, Credit Unions or Trust Companies for a lender and under Mortgage Brokers for a broker. Better yet, utilize BuyingBlock to get you the best rate.

Budget: No cost to you. The Mortgage broker gets a commission paid directly by the lender.

Should I check my credit rating?

Yes. That way, there will be no surprises when you meet with a lender. Credit rating company Equifax states that a score of 600 or more, is good enough to secure a mortgage at the best rates (provided you have enough of a down payment and the income to support the payments). If you're hoping for a zero-down mortgage, the number to beat is 680. Being aware of your score ahead of time lets you know whether you'll be accepted or rejected when you go knocking on lenders' doors. If you find you don't make the grade, you can start fixing the problem. If you're unaware of your credit history, you may be paying more interest than you should, or even be denied unfairly. There may also be mistakes in a person's credit history that ultimately affects the score and can be easily corrected.

Credit scores are available for a fee online through both Equifax (equifax.ca) and TransUnion (transunion.ca). Both come with a credit history and tips on how to improve your score. Equifax will provide a free credit history, without a credit score, through the mail. If you find an error, notify the lender of the mistake. You might also want to inform the organization that made the mistake and/or Equifax.

Q.	How can I ensure my credit rating is good?
A.	Pay your bills promptly, especially credit cards. Borrow only what you need and what you can afford. Try to pay off loans on time and as quickly as possible. Keep your outstanding balances at below 50% of credit limits

Q.	What can I use as my down payment?
A.	The lender will need to confirm where your down payment is coming from. Acceptable sources include: Registered Retirement Savings Plan Gift from immediate family Accumulated savings Sale of existing home Investment partner

What is a mortgage pre-approval?

Based on your current financial situation and a satisfactory credit review, a pre-arranged mortgage determines:

The amount you can borrow

The interest rate of your mortgage

How much your mortgage payments will be

This information, along with your down payment, makes it easier for you to shop within your price range with an assurance that financing is available (subject, of course, to the bank's approval of the property appraisal). A pre-arranged mortgage is free of charge and carries absolutely no obligation.

With financing pre-arranged, you may be able to negotiate a better price on the home you want. You're guaranteed a fixed interest rate for up to 90 days from the date you receive your pre-arranged mortgage confirmation to the closing date. You're protected from interest rate fluctuations. If mortgage rates go up during that time, the lower guaranteed rate applies.

What is required to obtain a mortgage?

In most cases:

Full-time employment or stable income

Proof of income

Good credit rating

Verifiable down-payment

Filling out a Mortgage Application

What's a fixed rate mortgage?

The interest rate for a mortgage is locked in for the full term of the mortgage. Payments are set for the term, providing you with the security of knowing precisely how much your payments will be throughout the entire term. mortgages can be open (may be paid off at any time without breakage costs) or closed (breakage costs apply if paid off prior to maturity).

Click here to read an article about variable vs. fixed mortgages written by Michael Pezzack, our Mortgage Specialist.

What's a variable rate mortgage?

With a variable rate mortgage, mortgage payments are set for the term, even though interest rates may fluctuate during that time. If interest rates go down, more of the payment is applied to reduce the principal; if rates go up, more of the payment is applied to payment of interest. rate mortgages may be open or closed. A variable rate mortgage provides you with the flexibility to take advantage of falling interest rates.

Click here to read an article about variable vs. fixed mortgages written by Michael Pezzack, our Mortgage Specialist.

When is mortgage insurance required?

If the amount of the mortgage exceeds 80% of the lending value of the mortgaged property, the mortgage is considered "high ratio". Canadian law requires that mortgage insurance must be purchased for the full amount of a high ratio mortgage. Mortgage insurance is available from and Genworth. An application fee and an insurance premium are payable to the insurer (this can be added to the mortgage amount). In some cases, banks may require a mortgage to be insured even if the loan-to-value ratio is less than 80%, for example, if the property is considered higher risk because of a highly volatile real estate market.

How do I choose between a fixed rate and variable mortgage?

Historically, variable rates have been lower than fixed rates. If rates go down, a larger portion of your payment goes towards principal, helping you pay off your mortgage faster. Your regular payment stays the same even if rates change.

With a fixed rate mortgage, you can take advantage of the same interest rate for the entire term with a regular payment that stays the same. You will have the security of knowing exactly how much your payments are and how much of your mortgage will be paid off at the end of your term.

Click here to read an article about variable vs. fixed mortgages written by Michael Pezzack, our Mortgage Specialist.

How do I choose between a short term and long term?

Choose short term (generally 2 years or less) if you want the flexibility now and will decide long-term mortgage solution later. If you choose short term, you are also willing to play the market as you believe rates are going to decrease.

Choose long term if you find the current rate affordable. You want to be able to budget for the longer term and you think rates are going up and/or you are risk averse.

How do I choose between an open and closed mortgage?

mortgages offer flexibility to pay off your mortgage quicker and/or refinance in shorter time increments (from anytime to 6 months to a year). It's a good option if you believe rates will be coming down. terms lock you in for 1 to 5 years, allowing you to capitalize on low rates for set period of time. A closed mortgage provides lower rates than fixed or convertible terms and allows you to make an annual prepayment of between 10% and 20% of your original mortgage amount.

What length of amortization should I choose?

The amortization of your mortgage, typically between 5 and 40 years, is an important factor to consider. Obviously, the longer the amortization, the lower the payments, but low payments aren't everyone's priority. Larger payments mean your home loan will be paid off more quickly as you put your money into an appreciating asset. You will also pay less interest. Basically, larger payments are better, as long as you can afford them.

Should I go with a longer amortization?

In practical terms, someone with zero per cent down on the average Canadian home would make a monthly payment of $1,827.13 with a 25-year amortization based on a 5.1% interest rate (the current rate for a closed five-year term). Extend that amortization period to 40 years and the monthly payment becomes $1,509.75.

The lower monthly payment gives people flexibility, and those payments can be made higher when the borrower feels more comfortable. The real cost is the interest. Over 40 years, total interest on the loan would be $414,033. On a 25-year amortization, the total interest would drop to $237,253.

There's also the upfront cost of mortgage insurance, which increases as the amortization length increases. Consumers pay a premium of 3.1% in mortgage insurance on the value of their mortgage with zero per cent down. Another .20% are added to the loan for every five years they add to their amortization period beyond 25 years.

In the end, insurance could add more than $10,000 to your mortgage. Banks just add that to the mortgage, effectively making the loan about 103% of the value of the home. If you choose a shorter amortization period, you can save a lot of money and live mortgage-free sooner.

How do I maintain my investment?

Make Your Mortgage Payments on Time

Whether monthly, biweekly or weekly, be sure that you always make your mortgage payments on time. Making late payments (delinquency) may result in late charges and affecting your credit rating negatively. Failing to make payments can even lead to serious consequences, like foreclosure.

A good way to prevent late payments is to have the amount automatically deducted from your account every month and to put at least three months' worth of mortgage payments in savings for emergency situations. If you are having trouble making payments, discuss the situation with your lender.

Prepare for Costs of Operating a Home

Repairs. You need money for when things break down - and they will. There's no landlord to call when problems arise. If your hot water heater fails, you need emergency funds set aside to repair or replace it. Replacing a hot water heater can cost $500. A new roof could be more than $2,000. A new furnace could cost $3,000 or more. A new heat pump or central air conditioning unit could cost more than $1,200. Save now to be ready for these expenses in the years to come.

New types of bills. You may be paying for utilities such as heat and electricity for the first time. If you don't budget enough money to pay these bills when they are due, your service could be cut off.

Avoid buying on impulse. Don't run out and buy stylish new bedroom furniture on a whim. Budgeting helps you avoid the temptation to make major purchases on credit. If you know exactly how much you have to work with each month, you'll be less likely to load yourself up with heavy debt payments that are tough to keep up with. If you must buy something on credit, shop around for the best loan terms. It's usually better to save for major purchases like bedroom suites and entertainment systems instead of charging them. You'll pay less, or you may decide that you'd rather use the savings for something else.

Watch your mail. As a new homeowner, you may receive several offers for new credit cards. This may seem like a great opportunity to buy new things for the house or other items, but be careful. Keep in mind the financial responsibility of purchasing a home, and review your new homeowner's budget. With credit cards, it's easy to build up a large debt quickly. Most credit cards charge interest for any outstanding balance at the end of the billing period, and that can be expensive, too. If you need a credit card for emergencies, choose a card that requires full payment at the end of each billing cycle. This eliminates the cost of interest payments, prevents you from buying something you can't really afford, and ensures good credit standing without a credit balance.

Besides your mortgage, property taxes and insurance, there are many other ongoing costs in operating your home: aside from regular maintenance and repair, you may want security alarm services, snow removal services or gardening services. If you have a condominium or strata, some of these expenses may be included as part of your monthly maintenance fee.

Saving for Emergencies

Even if you know how to do repairs yourself, there are costs involved. Every building has a life cycle, which means that all parts of a building age and require major repairs or replacement at some point. For example, you might know that your roof will have to be replaced in a few years simply because of its age. Repairs like these are expected and can be planned for. However, many repairs are unexpected and can sometimes be costly.

Set aside an emergency fund to deal with unexpected problems such as major repairs, illness or job loss. A good guideline is to put 5% of your take-home pay in a special account.

Living Within Your Budget

Prepare a monthly budget and stick to it. You should monitor your spending every month and evaluate your progress in meeting your financial goals. If you continue to spend more than you are bringing in, you must find ways to cut back. If you are having trouble sticking to your budget, don't hesitate to ask a professional money manager for help.

What are some tips for Home Repair and Maintenance?

You need to learn enough about the major mechanical systems of your home to be able to perform routine maintenance and handle various emergencies. Every adult member of your household should know the location of the following:

Main shutoff valves for water and fuel

Emergency switch for the furnace or burner

Hot water heater thermostat

Main electrical switch

Fuse box or circuit breaker box

Moisture, heat and air pressure must be balanced to ensure a healthy home. Remember that homes, like people, get old. It's a good idea to inspect your home regularly and replace or repair parts and materials that wear out with use and time. Because different components of your home work together and affect each other, minor repairs can quickly become major ones if they are not immediately taken care of.

You will probably be able to do many of the repairs yourself. However, if you feel you cannot handle the job on your own, it is best to call an expert. No matter who carries out the repair, remember that the work has to be well done. Bad materials and poor workmanship will end up costing you more in the end. Don't forget to keep records of any repairs and improvements you make.

Should I increase my mortgage payment?

You'll be surprised to see how much faster you can pay off your mortgage when you increase your payments. A shorter pay-off period can save you thousands of dollars in interest over the life of your mortgage. Once in each 12-month period, you are permitted to choose to increase the amount of your mortgage payments by as much as 20%, without administration fees. The increased payment amount goes directly toward reducing your principal. These increased payments continue for the remainder of the term, unless you wish to increase them again after another 12 months.

If mortgage rates drop, you can take advantage of the opportunities to reduce your amortization period at renewal time. You can simply go on making the same regular payments after you renew at a lower interest rate. Less of your payment will go toward interest, so you'll be paying off more of the principal - a truly painless way to save money.

Can I make additional principal prepayments?

A great way to save on interest costs and reduce the life of your mortgage is by making annual principal payments. If you choose a closed mortgage, you may prepay a per cent of the original principal amount of your mortgage once in every 12-month period. The rates depends on the bank, but generally range between 10 and 20%. The prepayment is applied directly to the principal of your mortgage.

With many banks you may also double your regular mortgage payments (of principal and interest). You can make a principal prepayment of $500 or more to your open mortgage as often as you like. Plus, you can make principal prepayments of any amount you wish on your mortgage principal at renewal time.

Does sales tax (GST and PST) apply?

Taxes apply to the purchase cost of a new property. Residential resale properties are usually tax exempt; however, GST is charged on fees.

How much is the Land Transfer Tax?

A real estate transfer tax is assessed on real property when ownership of the property is transferred from one party to another. The buyer pays the Land Transfer Tax. The tax is a percentage of the value of the property based on a graduated scale:

0.5% of the value of consideration for the transfer up to and including $55,000, 1% of the value of the consideration which exceeds $55,000 up to and including $250,000, and 1.5% of the value of the consideration which exceeds $250,000; and 2% of the amount by which the value of the consideration exceeds $400,000 for land that contains at least one and not more than two single family residences.

For information on the Toronto Land Transfer Tax, check out these two articles written by Leslie Yu on our BuyingBlock blog:

Toronto - FYI
Yep, Toronto has definately landed

Do I need fire insurance?

All mortgage lenders require a certificate of fire insurance to be in place from the time you take possession of the home. The amount required is generally the amount of the mortgage or the replacement cost of the home. This cost can vary on the property size and extras being insured, as well as the insurance company and the municipality. The cost can vary anywhere from $250-$600 for most properties.

How do I use the equity in my home?

Equity refers to the difference between your home's appraised value and your outstanding mortgage. You can use up to 75% of the current value of your property using a Home Equity Line of Credit. If your mortgage is up for maturity, you can choose a Home Equity Line of Credit, instead of another mortgage, for the full 75% of the appraised value. You can also keep the terms of your current mortgage and take an additional line of credit secured with the difference in your equity up to 75%.

Q.	As a non-resident, can I qualify for a mortgage?
A.	Yes, as a non-resident you are able to qualify for a mortgage. The maximum Loan to Value is typically limited to 65%, but can go as high as 75% in special cases. A credit report from the country of origin, proof of income and down payment is also required.

Q.	Can I get a mortgage to renovate my property or pay off credit cards?
A.	Yes. Mortgages can be obtained for a variety of purposes including home purchases, home renovations, or refinancing to pay off other high interest rate debt.

Q.	Can I qualify for a mortgage if I am unable to confirm my income?
A.	There are a number of products available for applicants who, for whatever reason, have a solid down payment but are unable to provide standard income verification. Another normal requirement is that the applicant has good credit. The amount of the mortgage advance will typically be 65% of the total property value but mortgages of up to 75% of the total can also be arranged.

Q.	How to calculate provincial land transfer tax?
A.	Up to and including $55,000.00, 0.5% plus $55,000.01 to $250,000.00, 1.0% plus $250,000.01 to $400,000, 1.5% plus Over $400,000.01, 2.0%. So, for example a $470,000 house would amount to $5,875 in taxes. $275+ $1,949.99+ $2,249.99+ $1,399.99. The tax is payable when your lawyer does the property transfer (i.e. before you move in).

Q.	Is there a rebate on the provincial land transfer tax?
A.	There is a bill in the Provincial Legislature that has not yet been voted on. A first time homeowner could get a maximum $2,000 rebate. So, if the buyer paid $2,500 in tax, the buyer would get back $2,000. If the buyer paid $1,500 in tax, the buyer would get back $1,500. To get the application, go to www.rev.gov.on.ca and click on forms and publications and then on land transfer tax refund.

Q.	How to calculate Toronto municipal land transfer tax?
A.	Up to and including $55,000.00, 0.5% plus $55,000.01 to $400,000.00, 1.0% plus Over $400,000.01, 2.0%. So, for example a $500,000 property would amount to $5,775 in taxes: $275+ $3,449.99+ $1,999.99.

Q.	Is there a rebate on the provincial land transfer tax?
A.	Yes. If you are a first-time purchaser of a newly constructed or re-sale residential property with two or less single-family residences. The rebate for first-time purchasers is up to a maximum of $3,725.00.

How much should I account for closing costs?

Be prepared, make sure your closings costs account for all the 'little' things. You don't want to be shocked on the closing day. We recommend budgeting 2-3% of the purchase price for your closing costs. You will need to budget additional amounts because ancillary expenses can arise, and without a proper cushion, you could find yourself begging the bank or desperately asking Mom and Dad for a loan. Many costs will technically arise after closing, but it makes sense to be prepared nonetheless.

Utilities: If you are a first time buyer with no history with the gas, electric or water companies, they may require a deposit. Expect between $300 and $500. Also, you may receive your first bill and not know what hit you. Often, bills are estimates and can comprise 2 or 3 months worth of estimated charges.

Property Taxes: Depending on when the property taxes for the property are required, your first installment may be due soon after you close.

Legal costs: Your lawyer will give you an estimate of around $600-800 but that doesn't include disbursements, GST and registration of your deed and mortgage. A good estimate is $1,400.

Title insurance or a new survey: Budget $350 for title insurance. In most cases, the agreement of purchase and sale will have a clause asking for the vendor to provide a survey to the purchaser at their cost within a certain period of time. If the vendor does not provide you with an acceptable survey, you may need to obtain a new survey which costs approximately $650.

Home inspection: Plan for $450.

: Plan for $250. Get the lender to pay this.

Insurance premiums: Budget $60 monthly.

fees: if you are putting a down payment of less than 20% you will be required to be insured. The fees can be rolled into the mortgage but you will need to pay the Provincial Sales Tax on the fees.

Only for the Residents of Toronto (Lucky you) ... Toronto : The City of Toronto recently brought in a Land Transfer Tax. The formula works as follows: for the value of your home up to $55,000 (.5%) plus, for the portion between $55,001 and $400,000 (1%) plus, for the portion over $400k (2%). Here's an example; for a $450,000 property, your land transfer tax would be $4,724.99 ($55k portion=$275) + ($344,999 portion=$3,449.99) + ($50k portion=$1,000). Luckily, there is an immediate rebate for first time home buyers of $3,725. Therefore, the total cost is $999.99.

Only for the Residents of Ontario (Lucky you 2) Ontario : This is charged by the Province on Ontario. The formula works as follows: for the value of your home up to $55,000 (.5%) plus, for the portion between $55,001 and $250,000 (1%) plus, for the portion between $250,000 and $400,000 (1.5%) plus, the portion over $400,000 (2%). Luckily, there is an immediate rebate for first time home buyers of $3,725. Here's an example; for a $450,000 property, your land transfer tax would be $5,475 ($55k portion=$275) + ($195,000 portion=$1,950) + ($150,000 portion=$2,250) + ($50,000 portion=$1,000). The rebate for first time home buyers is $2,000. Therefore, the total cost is $3,475.

Once you move in, the costs start to increase as, of course, you want to decorate both the inside and outside of your home with the utmost of sophistication (LOL). It's always good to create a budget that you swear to uphold.