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 SALE OF YOUR PROPERTY
PENALTIES PAYABLE TO A MORTGAGE LENDER WHEN DISCHARGING A MORTGAGE
Typically the seller must pay off any mortgage or secured line of credit registered on the property in order to provide the buyer with clear title upon closing. There is no penalty for early mortgage discharge if a mortgage is open for prepayment at any time. However, if the mortgage is not open, a penalty will likely be payable. Consult your mortgage lender on such matters prior to selling.
Upon completion of the sale, your lawyer will make arrangements to ensure the brokerage receives its commission. Your deposit will be applied to the commission owing, however, if the deposit does not cover the commission, the remainder will be paid from the proceeds of the sale. Please note that commission is subject to 13% HST.
DEACTIVATE UTILITIES & CANCEL HOME INSURANCE
Contact your home insurance company and your utility companies to arrange to deactivate your accounts for your new property. The deactivation date should be the “Completion Date” on your Agreement of Purchase and Sale.
Utilities may include: Water, Natural Gas, Heating Oil, Propane, Hydro, Cable TV, Internet, Telephone.
APPOINTMENT WITH YOUR LAWYER PRIOR TO CLOSING
A few of days prior to closing you will be required to visit your lawyer’s office to sign the closing documents. Please note that even if a property is being registered in one spouse's name, if you are married and if the home being sold is your principal residence, both spouses must attend to sign the documents for closing. 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.
Documents Required by the Law Office to Process the Closing. The following items must be provided to your lawyer as soon as possible in order to prepare the file for closing in advance of the closing date:
Copy of Transfer/Deed
Details of any existing mortgages, including: name, address, and telephone number of your mortgage company and mortgage account reference number (if applicable)
Current property tax bill, including any existing property tax bill and any future bill received prior to closing) as well as details of all payments made prior to closing
Copy of survey, if available (not required for a condominium)
Your forwarding address and telephone number
Closing Adjustments: If the property you are selling is heated by oil, you must inform your lawyer in writing. Arrange to have the oil tank filled as of the date of closing and to pay the cost of filling the tank at that time. Provide a copy of the receipt to your lawyer and you will be given credit on the closing adjustments. Any property taxes, common expenses, or mortgage payments due on a date prior to closing must be paid by you before closing. The necessary adjustments will be made by your lawyer on closing.
PAYMENT AFTER CLOSING
Typically, the net sale proceeds are available by certified cheque payable to the registered owners at approximately 1:00 p.m. on the business day following closing. Should a purchaser's deposit, which is being held in trust by the listing brokerage, be greater than the realtor's commission (plus H.S.T.), any excess funds from such deposit will be refunded to the Seller directly from the brokerage after the transaction has been completed. In cases where a Power of Attorney is being used to complete a sale, the net sale proceeds will be payable to the registered owner(s) and not to the person holding the Power of Attorney. If two or more persons are selling a property, they will be required to confirm in writing how the net sale proceeds are to be payable, otherwise, they will be provided with one certified cheque for the entire net sale proceeds.
IMPORTANT INFORMATION FOR NON-RESIDENTS OF CANADA AND
THE SALE OF RESIDENTIAL REAL ESTATE
If, at the time of closing, you are not a Canadian resident, please contact your lawyer and accountant before selling as there may be significant repercussions and extra legal 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.
Legal Fees: Can be higher to process a sale by a non-resident.
Accounting Fees: An accountant will charge a separate fee to apply for a Non- Residency Clearance Certificate. In General, 25% of the gross sale price will be held in trust (typically by the seller’s lawyer for 30 days is then transferred to Revenue Canada to be held in trust), until the government Non-Residency Clearance Certificate has been obtained by the accountant who has filed the appropriate application. Such an application usually takes 60 to 90 days to process and MUST be submitted within 10 days of closing in order to avoid penalties. Once the Clearance Certificate is obtained, direct payment of any taxes owed on any net profits on the sale are paid to the government of Canada with the remaining balance in trust being paid to the client, plus any accrued interest on such money held in trust by the lawyer. Additional, and perhaps substantial, accounting fees will be incurred. Tax requirements also change for investment properties owned by nonresidents of Canada.
For a more detailed analysis of residency/non-residency in a year, visit: www.cra.gc.ca