Closing Costs
- Set up/Appraisal Fees
This fee covers items such as Lender application fees, Property Appraisal fees to determine value of the property for lending purposes, and CMHC or GE Capital application fees. Conventional Mortgage fees normally run about $223-$275.
- Property Tax Holdback
Property taxes are required to be paid to the Municipality in advance. Because of this, you may be required to place on deposit with the Lender, and amount to ensure that there are sufficient funds to pay the first Tax Bill when received. You should ask your Mortgage Representative how much this would amount to in you specific case. YOU DO NOT NEED TO DISCOVER ON CLOSING DAY THAT THIS IS AN ADDITIONAL EXPENSE WHICH YOU HAD NOT PREPARED FOR!!
- Solicitor’s Fee and Disbursements:
As a general “Rule of Thumb”, legal fees are considered to be approximately 1% of the purchase price, however, this varies considerably. I suggest that you discuss fees with your Solicitor before you proceed. You will quite often find that your Realtor will recommend a particular Solicitor, whom he/she has a good working relationship with. In this case, you generally being referred to a Solicitor who SPECIALIZES IN REAL ESTATE PRACTICE and you will likely be charged a very fair fee, based on volume discounts through your realtor.
Approximate fees:
Recording of Documents-Deed $75.00,
Mortgage $75.00
Title Migration $500-$1,500
Legal Disbursements- Postage, Courier,
etc. $90.00 plus HST
- Deed Transfer Tax
This tax varies by Municipality – Halifax, Dartmouth and Halifax County is 1.5% of the Purchase Price of the Property; in Hants County it is .5%. If the property is Commercial, the tax is 2%. - Land Survey
The Lender may require a survey of the Property by an accredited Land Surveyor. This is necessary to establish that the house or structure is within the specific legal boundaries of the lot and that there are no encroachments, and that the property complies with local building bylaws. The requirement is actually for a “Plot Plan” or “Surveyors Certificate” – this is usually less costly that a “full line survey”. In many cases the Seller will provide you with a Plot Plan and this may be acceptable to the Lender. You should discuss with your Solicitor the value of this document. If you do decide to have a new Plot Plan prepared, the cost will be in the amount of $375 -$500.
- Closing Adjustments
When buying a house, you should make provision for adjustments between you and the Seller – items such as fuel, prepaid taxes, etc. will have to be reimbursed to the Seller on closing. You should discuss these costs with your Solicitor. Fuel/Oil Adjustment (200 gallons or 909 liters) is approximately $600.00.
- Tax Adjustments
The Buyer must pay his share of taxes from the date of closing to the next billing date. Taxes are billed in six-month intervals in advance and are due in April and September of each year. The Buyer is responsible for any taxes that the Seller has prepaid for the period of time that the Buyer will own the property. PLEASE NOTE THAT IF THE NEXT TAX BILLING WILL ARRIVE BEFORE ENOUGH FUNDS ARE COLLECTED IN YOUR TAX ACCOUNT AT THE MORTGAGE COMPANY, MONIES TO BE SET ASIDE OR MONIES MAY BE DEDUCTED FROM THE MORTGAGE CHEQUE.
- Accrued Interest:
Normally mortgage interest is calculated from the first of the month to payment date; therefore, when you “close” your transaction on a date other than the 1st, you will pay interest from the date of closing to the 1st of the following month; if you are paying your mortgage on a monthly, your first regular payment will then be due on the 1st of the next month:
i.e.: if you close on the 23rd, you will pay an interest charge for the period from May 23rd to May 31st – 9 days; then your first regular monthly payment would be due on July 1st; however, you have chosen to pay other than monthly, this will vary. You should have this clearly explained to you by your Mortgage Representative so that you are prepared for your payment schedule.
- Property Insurance:
You will be required, as a condition of your mortgage, to maintain adequate fire and extended coverage insurance on your property – for the amount of the balance of the loan or the replacement cost of the building – whichever is less. The cost will vary with property value, location, etc.
- Utility Connections:
You should make contact with the various utility companies (telephone, cable TV, water electricity, oil, etc.) as soon as possible to ensure uninterrupted service. Some may need several weeks advance notice to make the necessary connections.
- Properties On Well:
If you are purchasing a property with a well, we strongly recommend that you personally attend to obtaining a water test immediately. The Pathology Lab on University Avenue in Halifax will give you the necessary information, test bottles, etc. If you find the water unacceptable, it is essential that you notify us immediately to discuss the situation further.
- Properties Under Construction:
If you are purchasing a property under construction, we recommend that you visit the site regularly and keep advised if the work is not progressing on schedule or if there are major problems. If you establish a good relationship with the contractor, you will probably be much happier with the end result.
ESTIMATED COST TO PURCHASE
Note: Term of the mortgage will be 5 years at an interest rate of 5.5%. Amortization will be 25 years.Purchase Price $ 100,000.00 Minimum Down payment (5%) $ 5,000.00 Balance of First Mortgage $ 95,000.00 CMHC Insurance premium (3.5%) $ 3,562.50 Total Mortgage Including Insurance premium $ 98,562.50 Mortgage Amount $ 98,562.50
Note: Minimum Gross Income required to Qualify for This Mortgage Would Be Approximately $39,000 (30% Gross Debt Service)Total Monthly Mortgage Payment $ 100,000.00 Purchase Price $ 602.21 Yearly Taxes ($1,198 divided by 12 monthly) $ 99.83 Yearly Heat (estimated) $1,125 divided by 12 $ 93.75 Total Monthly costs (Including heat, Lights And Hot Water and Property Taxes) $ 795.79
Total costs Per MonthMortgage $ 602.21 Taxes $ 99.83 Heat, Lights & Water $ 93.75 Water $ 15.00 Telephone $ 35.00 Cable TV $ 35.00 Insurance (Property & Personal contents) $ 30.00 Total Estimated Monthly costs $ 910.79
APPROXIMATE LEGAL COST ANTICIPATED ON $100,000.00 PURCHASE
Deed Transfer Tax (1 ½% of Purchase Price) $1,500.00 Legal Fees* $650.00 Survey $321.00 Title Migration* Recording Mortgage Fee $75.00 Misc. Disbursements. (courier, copying, fax and phone)* $50.00 HST on Fees and Disbursements* $19.00 SUBTOTAL $2,790.00 Property tax adjustment (up to six months in advance if applicable) $800.00 SUBTOTAL $3,590.00 Oil Adjustment (if applicable) $325.00 SUBTOTAL $3,915.00 Municipal Clearance letter (if applicable) $75.00 SUBTOTAL $3,990.00 Professional Home Inspection (if applicable) $300.00 TOTAL $4,290.00
BANK CHARGES: assumes appraisal fees, application fees, interest adjustment, high ratio fees and inspection fees if any, are paid directly to the bank.
*POTENTIAL ADDED FEE IF THE BUYER HAS NEGOTIATED TO PAY FOR THE LAND REGISTRATION, THIS FEE WITH BE APPROX. $500.00 - $1,200
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