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Need to Know

This is possibly one of the most important areas to read on the site, especially if you are a first time home buyer.  There is so much red tape and we make sure that all the “I’s” are dotted and “t’s” are crossed so that there are no big surprises down when it comes to closing day.  Below is a list of contact information you will need to have in order to get everything organized for the big transition. You will also find in this section information about Tarion Fees, Closing costs, Land transfer taxes etc.  This is crucial for every home buyer to know because it will play a huge roll in your over all budget for your initial down payment.  Should you have an questions or concerns please do not hesitate to contact me and I will be very happy to assist you.

The following are crucial decisions you need to make prior to buying or selling your
home:

•    Decide on a lawyer who will be handling the transaction (Legal fees are roughly around $500 to $700 each for a purchase and a closing)
•     Make a call to that lawyer and let him/her know that you will be using them and ensure that they have the time to take on your closing/purchase
•    A copy of the Offer to Purchase will be sent to your lawyer automatically by the Real estate office where your agent works  (the name and telephone number of your lawyer will have to be given to your Real Estate Agent)

Your lawyer will need the following information in order to assist you properly:

•    A copy of your most recent Mortgage Statement
•    Property Tax Statement for the current year
•    Copy of your home insurance (Usually, your insurance company will fax them a copy of the rider)
•    Direction from you Lender with Mortgage instructions

You will need to contact the following people to inform them of the move:
Enbridge Gas
1-800-668-4732
($25.00 will be charged to set up the new account)

Mississauga Hydro
905-273-7425
($20.00 Set up fee and you keep the same account)
moving@enersource.com

Have your account number ready and the name of the person who has purchased your house.

Toronto Hydro
416-542-8000  or   www.torontohydro.com

Region of Peel – Water
905-791-8711
(ask for billing because they handle the accounts)
The Region will require your lawyers name and will give you a new account number.
Cost for the new account is $36.00

City of Toronto  www.toronto.ca
Water   416-338-4829

You will be asked to provide the following information:

* The closing or moving day
* A forwarding address
* A new telephone number

A meter reader will make every effort to obtain a reading on the closing date. However, if you are ready to vacate the premises, please read the meter and call with the reading. A final bill will be sent to your new address.

Cable and Internet provider: Rogers or Bell

Telephone Provider: Bell Canada or Rogers Home Phone

Put a Forward on your mail.  The form can be obtained from any Canada Post Kiosk or can be done on line at www.smartmoves.ca

How much do I really need to close my house?

For most new home buyers, the vast majority if not all of their savings are put into their down-payment so money can be quite tight at the time of closing. This is not a time for surprises, big or small, so I am taking this opportunity to remind buyers that they should be budgeting anywhere from 1.5 to 3 per cent of the purchase price of the home for closing costs. Closing costs range from legal fees to warranty fees to taxes to reimbursement costs. The builder can’t charge you for anything that isn’t set out in the agreement of purchase and sale, so there’s really no reason for anyone to be caught off guard. In fact, assuming you had the agreement reviewed by a lawyer prior to signing it, he or she should have flagged these costs for you.

Nevertheless, I have itemized and quantified some of the closing costs you should be aware of.

TARION FEES:

The vast majority of builders pass the cost of the mandatory new home warranty (Tarion home enrolment fee) onto the purchaser as an adjustment on closing. For homes priced between $200,000 and $250,000 the new home warranty fee is $450 plus GST and PST. For each $50,000 increase in the house price, the warranty fee increases by another $50 plus tax.

The Tarion Fee is quite modest relative to the amount of protection you get  – one year workmanship and materials coverage, two year on the major mechanical systems and against water entry through the building envelope and seven years major structural defect protection, plus deposit loss and other coverage’s. Still, you have to plan and budget for this cost.

LAND TRANSFER TAX:
Whether you buy a new home or a resale, you can’t escape the Provincial Land transfer tax. Land transfer tax on the typical new home in the GTA runs around $2,500. The precise calculation is a half per cent on the first $55,000, one per cent on the amount between $55,001 and $250,000, 1.5 % on the amount between $250,000 and $400,000 and 2% on the amount above $400,000.So,if you purchased a $250,000 home, you’re looking at land transfer tax of around $2,225 (it will be slightly less due to the netting out of GST embodied in the purchase price so you are not paying tax on tax).

First-time home buyers of newly built homes still qualify for a land transfer tax rebate of up to $2,000, which represents the tax payable on a home costing approximately $237,000,
GST included.

LEGAL FEES:

There are several fees you will need to pay your lawyer including his or her basic fee for the service rendered as well as any disbursements for charges they may have paid on your behalf to third parties (title search fees, deed registration fees, Law Society Surcharges). You should budget between $750 and $1,000 for legal fees including disbursements.

OTHER ADJUSTMENTS:
Other adjustments on closing include things as diverse as realty tax adjustments to credit the builder for property taxes pre-paid past your date of possession, boulevard landscaping charges, refundable grading deposits, utility connection charges, etc.

If you are purchasing with anything less than 20 per cent down, then mortgage insurance premiums will also apply, although they actually cover the bank, not you.