Frequently Asked Questions

1. When is the downpayment paid?
2. What is a closing date?
3. What are closing costs?
4. Who do I pay the closing costs to?
5. When do I pay the closing costs?
6. What is the difference between purchase price, downpayment and mortgage amount borrowed?
7. How is Land Transfer Tax calculated?
8. Do I need to pay a Mortgage Loan Insurance Premium?

1. When is the downpayment paid?
   

   The downpayment is paid on closing.

   

2. What is a closing date?
   

   The closing date is the day you pay for the home and take possession. It is also referred to as the completion date.

   

3. What are closing costs?
   

   Closing costs are one time costs that must be paid before the closing date. They include: land transfer tax, adjustments, legals, registrations and disbursments.

   

4. Who do I pay the closing costs to?
   

   All of your closing issues are handled by your lawyer. They will pay all of the costs associated with closing your deal and then bill you. You pay the closing costs to your lawyer.

   

5. When do I pay the closing costs?
   

   Your lawyer will schedule a meeting with you a day or two before closing to sign all related documents and discuss the closing procedure. They will inform you of how much your closing costs are and ask you to bring the balance with you plus your remaining downpayment.

   

6. What is the difference between purchase price, downpayment and mortgage amount borrowed?
   

   The purchase price is the agreed upon value to be paid by the buyer to the seller. The downpayment is your total available savings being put towards the purchase of the home. It is the difference between the purchase price and the amount of money being borrowed. If your downpayment is less than 25% of the purchase price the CMHC insurance fee will be included in your mortgage amount borrowed.

   

7. How is Land Transfer Tax calculated?
   

   How is Land Transfer Tax calculated?
   The calculation of the Land Transfer Tax is a gradual percentage calculation. To Determine your land transfer tax value follow the table below. The Land Transfer tax formula: = purchase price X % less $ value.

   Purchase Price                   %                  Less:

   Less than = $ 250,000       1.0%           $250

   Greater than $ 250,000      1.5%           $1,525

   Greater than $ 400,000      2.0%           $3,525

   

8. Do I need to pay a Mortgage Loan Insurance Premium?
   

   If you are borrowing more than 75% of the value of the property, the mortgage must be insured. The insurance protects the lender against borrower default. This enables you to purchase a home with as little as a 5% down payment. Currently in Canada there is two issuers of loan insurance premiums: Canadian Mortgage and Housing Corporation (CMHC) & GE Mortgage Insurance Canada. The calculation of the insurance premiun is determined by the amount of downpayment you have and a gradual percentage scale.