Buying a London Ontario income property costs more than the offer you make on the property. There are numerous other expenses that will add to the amount that you should take into account. This purchase price checklist outlines most of the costs you can expect if not all.
The starting point in your calculation… if you’re like most, you’ll need a mortgage for the majority of the purchase price and you should really shop around for a mortgage, not only for the rate but other fees that they could charge you on top of the mortgage.
Last week I had a client who has an accepted offer on a $420,000 property and the difference in fees between three of the top lenders was $1683.00! Their rates were basically the same. She saved the $1683.00 of course!
Fees vary from law firm to law firm. As we work daily with quite a few lawyers I see not only that their fees vary, even disbursements vary! How that can be when the disbursements are written in stone? Because most investors do not know what the disbursements should be, yet nickel dime a purchase over $100!
Land Transfer Tax
Is a tax payable to the Provincial of Ontario by the purchaser upon the transfer of title from a seller. This amount is usually not expected by most investors. It can be sizeable. The amount varies and is generally a percentage of your purchase price. I can advise you, of the exact fee based on the purchase price.
Fees paid to the provincial government for recording a title transfer, mortgage registration or other instruments such as an Assignment or Lien with the local authorities. (Disbursements)
High Ratio Insurance
Must be purchased if you are buying a property for less than 20% down. A sliding fee scale applies, depending on the percentage of the purchase price required in a first mortgage (some minor exceptions) which can be added to the mortgage
Obtained by your lawyer and required in many municipalities throughout Canada before a property transfer can take place. This is an acknowledgment from the building department that the property either has or is clear of outstanding work-orders.
Work-orders are specific clean-up or fix-up requirements that the owner is legally required to do, and which must be completed before ownership can be transferred.
Obtained by your lawyer at the time of sale to confirm that local taxes have been paid and are up-to-date. If they are not up to date, the seller is required to pay them from the proceeds of the sale. If there are insufficient proceeds, then you may be legally required to pay the outstanding taxes. If, on the other hand, taxes have been prepaid, you may have to compensate the seller for them.
Mortgage Appraisal and Application Fees
Application fees apply on high ratio mortgages only while appraisal fees are common to most mortgages. Generally, $250.00 — $335.00 each would apply.
A report commissioned by a property owner or purchaser, usually to verify the condition of a property prior to the “firming up” of a purchase agreement. The scope and detail may vary, but most reports outline any particular problems and associated repair costs. Unfortunately, no licensing is required, and this service is not specifically regulated other than by general consumer protection legislation.
The best safeguard against inadequate work is to ask me who I can refer you to people who stand by their work, whom we have used and those we have fired because of incompetence or lack of care.
The legal written and/or mapped description of the location and dimensions of your land. The survey should also show the dimensions and placement on a lot of any structure, including additions such as pools, sheds and fences. An up-to-date survey is often required by a lender as part of the mortgage transaction, although the practice of Title Insurance as enough is becoming more prevalent in almost 98% of cases.
Over the last few years is the introduction of title insurance into the real estate buying process. Title insurance can be purchased by home buyers to protect against potential deficiencies in a number of areas, such as the land survey. There are numerous benefits to this product, and you should consult your lawyer.
Some local utility companies (hydro, gas, oil) charge a fee on closing to connect new buyers up to their service. More common, however, is an extra charge on the first billing.
Property Tax and Prepaid Utilities Adjustments
If the previous owner prepaid property taxes or other utilities, they will be credited the prepaid portion on closing. If they paid all their taxes by April, expect a large adjustment cost on closing!
City License, City Landlord Fee, an ESA Report and a Fire Marshall’s report, zoning (?), and a myriad of costs that most do not even think about.
One of the first things I do when first working with a client is to go over all fees or costs so that you know what you are getting into, plus, no more worrying or fretting how you are going to come up with the money.
All our clients are well prepared, that is why they save money, time and hassles. If you want to be a client of ours, lets meet and discuss the options.