In order to obtain a conventional mortgage, home buyers are required to provide a down payment of at least 20% of the purchase price. If you do not have the full 20% down payment, it may be possible to obtain a high-ratio mortgage that will require a down payment of at least 5% and the purchase of default insurance.
Be sure to visit at least two lenders before you make a decision.
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COMPLETING THE PURCHASE OF YOUR HOME
INSURANCE FOR YOUR PROPERTY
Purchases of residences (excepting condominiums) cannot be completed without a Fire Insurance Binder being provided to the purchaser's lawyer prior to closing. Ensure your insurance agent delivers the binder to your lawyer prior to closing and that your insurance is effective on the closing date.
If the residence is a condominium, the condominium corporation will have insurance for the entire project but it is necessary for the unit owner to arrange insurance for the contents of the unit and for public liability. Ensure that insurance covers any deductible that might become payable to the condominium corporation for a claim under its insurance. In some cases, some mortgage lenders and builders require condominium unit insurance for contents and liability to be in place prior to finalizing the occupancy closing.
Contact your local utility companies to set up accounts for your new property. The start date should be the day you are scheduled to take possession of your new home. This is the “Completion Date” on your Agreement of Purchase and Sale.
Utilities may include: Water, Natural Gas, Heating Oil, Propane, Hydro, Cable TV, Internet, Telephone.
You should also ensure that you cancel the utilities at your current place of residence.
PURCHASING FROM A BUILDER
If you are purchasing a newly constructed residence, you should arrange an inspection of the property prior to closing and prepare a list of any matters requiring the attention of the builder. At that time, you will complete the Certificate of Completion and Possession for delivery by the builder to the TARION Warranty Program. All outstanding items must be noted. Both you and your lawyer should receive a copy of the Warranty Certificate prior to closing.
CLOSING CHEQUES & APPOINTMENT IN THE LAW OFFICE PRIOR TO CLOSING
A couple of days prior to closing, you will be required to visit your lawyer’s office to sign the closing documents and provide the cheques required for closing. Closing cheques must be by certified cheque or bank draft and should be received at least 24 hours prior to the closing date. Even if a property is being registered in one spouse's name, if you are married and if the home being purchased will be a principal residence, both spouses must attend to sign the closing documents. Be prepared to show your unexpired photo identification. If one of the signatories will not be available, you must arrange a Power of Attorney well before the closing date.
Closing adjustments include items already prepaid by the seller that will benefit the purchaser after the closing date, such as: prepaid property taxes, prepaid condominium fees, fuel oil, etc. If purchasing a new home from a builder, closing adjustments are often higher since they may include hydro and water meter installation costs, Ontario New Home Warranty Enrolment Fee, boulevard tree planting, driveway paving, grading deposit, gas water heater, educational lot levy, municipally required fencing, etc.
Before keys can be released by the lawyer to the purchaser on the date of closing, the mortgage lender must provide closing funds, documents must be exchanged between the lawyers, and the land registry office registrations must be completed. Therefore, if you are moving on the closing date, you may not be able to pick up your keys until late in the day. Consider having movers arrive late in the afternoon or early evening in order to avoid additional moving costs or consider scheduling them for the day following completion.
IMPORTANT INFORMATION FOR NON-RESIDENTS OF CANADA
If, at the time of closing, you are not a Canadian resident, please contact your lawyer and accountant as there can be significant repercussions and extra legal, buying, and accounting fees may apply.
Being considered a non-resident of Canada is not related to whether or not a person is a Canadian citizen. Even a Canadian citizen will usually be treated as a non-resident if they have been living in Canada less than a total of 183 days in the year or if one has no residence in Canada and customarily lives outside of Canada. Any person who is not a Canadian citizen will be considered a non-resident of Canada if one lives outside Canada more than 183 days in a year. A person who is not a Canadian citizen and is not a landed immigrant can still be treated (for tax purposes) as a resident of Canada if such person lives in Canada more than 183 days a year.
Potential Issues when a Non-Resident Purchases Residential Real Estate in Ontario:
Getting a Mortgage - If a buyer does not work in Canada and does not have established Canadian income, most mortgage lenders require a higher cash down payment - typically at least 35% of the purchase price.
Foreign Buyer's Tax - If you are purchasing property in Ontario, a 25% Foreign Buyer Tax will apply to your purchase.
Fire Insurance on Purchased Property - Mortgage lenders will not allow mortgage funds to be advanced unless the lawyer for the Buyer receives a binder for fire insurance (from an Ontario Insurance broker) prior to closing. If a non-resident owns no other Ontario property, such insurance may be more difficult to obtain and, before committing to buying a property in Ontario, a Buyer should ensure they receive written confirmation from an Ontario insurance broker that fire insurance will be provided for any intended purchase.
For a more detailed analysis of residency/non-residency, visit: www.cra.gc.ca