Posts Tagged ‘city of mississauga’
Land Transfer Tax / Property Transfer Tax in Canada
If you decide to purchase a property, in Canada, you will be required to pay a tax to the Ministry of Revenue/Finance, in the province where you are buying.
This tax is commonly referred to as the “Land Transfer Tax” or the “Property Transfer Tax”.
The tax is usually paid to the Ministry of Revenue, within the Province and the tax is calculated based on the fair market value of the property, using a certain formula. The formula used to calculate the land transfer tax portion varies greatly from province to province. I used Ontario’s formula, as an example. Here is how the Land Transfer Tax is calculated for a property purchased in Ontario:
The first $55,000 is taxed at 0.5%
The next $195,000 is taxed at 1%
The next $150,000 is taxed at 1.5%
And the remaining $250,000 is taxed at 2%.
So if you purchased a home for $300,000 in Ontario, your Land Transfer Taxes payable would be calculated as follows:
The first $55,000 is taxed at 0.5% or 0.005 * $55,000 = $275
The next $195,000 is taxed at 1% or 0.01% * $195,000 = $1,950
The next $150,000 is taxed at 1.5% or 0.015 * $50,000 = $750
And the remaining $250,000 is taxed at 2% or 0.02 * $0 = $0
The total Land Transfer tax payable is: $275 + $1,950 + $750 = $2,975
If you decide to purchase a property in Ontario, and within the City of Toronto, you will be required to pay an additional tax, called the Toronto Municipal Land Transfer Tax and this is calculated as follows:
The first $55,000 is taxed at 0.5%
The next $345,000 is taxed at 1%
And 2% on the entire portion over $400,000.
So using the above formula, a home valued at $300,000 will result in an additional tax of:
The first $55,000 is taxed at 0.5% or 0.005 * $55,000 = $275
The next $345,000 is taxed at 1% or 0.01% * $245,000 = $2,450
And 2% on the entire portion over $400,000 is taxed at 0.02 * $0 = $0
The total Toronto Municipal Land Transfer Tax payable is: $275 + $2,450 = $2,725
Land Transfer tax payable $2,975 + Toronto Municipal Land Transfer Tax payable is $2,725 = $5,700 !!
I decided to do some research to just compare all of the provinces and territories to see which provinces/territories had the highest and which provinces/territories had the lowest land transfer taxes.
The table below is based on a $300,000 purchase price and the data was collected as of July 31, 2010.
I was very surprised (well actually not) that the results show Ontario (Toronto buyers) are paying the HIGHEST land transfer taxes, compared to any other city in the country!!
| Provinces and Territories | Estimated Land Transfer Tax Payable |
| Home Purchase Price = $300,000 | |
| Ontario (city of Toronto area*) | $5,700 |
| Nova Scotia (Halifax county) | $4,500 |
| British Columbia | $4,000 |
| Manitoba | $3,150 |
| Prince Edward Island | $3,000 |
| Quebec | $3,000 |
| Ontario (not the city of Toronto) | $2,975 |
| Newfoundland | $1,250 |
| Saskatchewan | $915 |
| New Brunswick | $805 |
| Yukon | $750 |
| Northwest Territories | $490 |
| Alberta | $335 |
| Nova Scotia (not Halifax county) | $150 |
Information gathered as of July 31, 2010. This information is not guaranteed and therefore should not be relied upon without verification. E.&O.E. * Those who purchase in the City of Toronto, are also required to pay the Toronto Municipal Land Transfer Tax
This article written by Elizabeth Blair on July 31, 2010. Elizabeth is a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.
You can contact Elizabeth directly by phone at (905) 510-5785
by email at eblair@mortgageedge.ca
or you visit any of her active websites at:
http://www.burlington-mortgage.ca
http://www.oakville-mortgage.com
http://www.streetsville-mortgage.ca
Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) www.imba.ca
Lic # M08005880 / Brokerage Lic # 10680
Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.
Buying a home, renting it all out, or just a portion of it
Buying a home, renting it all out, or just a portion of it
I have run into this question a few times, over the years, and decided that I should sit down and write about it. When you purchase a home, as the mortgagor, you will come across some questions around whether the home you are buying is going to be your primary residence (you will be living there yourself) OR whether you have intentions of renting out ANY portion of the house.
1. Is this your primary residence?
This question will be asked of you, at the mortgage application stage. It is important to specify exactly what your intentions are with this new home you are buying. If you are planning on renting out the home, you must state this. Your answer will determine how your mortgage application is underwritten. If you purchase a home and it will be your primary residence, you may purchase a home in Canada with a minimum down payment of 5%. However, if you purchase a home and have intentions of renting it out, your down payment must now be 20% per Department of Finance new borrowing guidelines introduced on April 19, 2010.
The question will also be asked of you, at the lawyer’s office. The lawyer will require you to sign a legal affidavit stating that this is your primary residence and it is not intended for use as a rental property. If the client even hints that they will be renting out any portion of the house, the lawyer cannot and should not commission the affidavit.
2. Is ANY PORTION of the house to be rented out?
This statement will appear in your mortgage commitment and applies if this is your primary residence. You may be wondering why would it be a concern to my lender if I decide to just rent out a PORTION of my house?
Here is likely the most apparent reason why a lender would not allow this. Should the mortgage go into default, how quickly can they (the lender) get a tenant out of the house, as opposed to the owner? At one time, when someone was about to go into default, they might immediately sign a lease with a friend and then the mortgagee would have to go through a cumbersome process to evict them. While it is now easier to evict a tenant, there is always concern about delays that might occur getting a tenant out. Also, it is important to mention, that since the tenant does not own the home, they may not take the same care of the property, that an owner would.
In summary, some very important things to consider:
If you purchase a home, and you have indicated that it is your primary residence, the lawyer is instructed, by the lender, to prepare a legal affidavit stating that this is your primary residence and that you do not have intentions of renting out the home. Remember that if the borrower even hints that they will be renting out any portion of the house, the lawyer CANNOT commission the affidavit.
Also remember that if this is your primary residence you should not even rent out a PORTION of your home UNLESS you have notified your lender. If your lender finds out, EVEN IF you are not in default on any other provision, there will most certainly be a default coming if you do not disclose the new rental arrangement and the lender finds out. You may be thinking, well how can the lender find out…….easier than you think. A disgruntled neighbor, family member, or even worse, your tenant! I recently met a mortgage applicant who shared their intention of reporting their current landlord for renting out an illegal basement apartment to them as a way of retaliating for raising the rent! So a word of caution if you are thinking of doing this or even are in this situation now…..lenders can find out.
Be absolutely sure to disclose up front, to the bank, or your broker, exactly what your intentions are with the property at the time you are planning to buy, OR, if you make any changes to your plans after you move in.
This blog post was written by Elizabeth Blair on June 24, 2010. Elizabeth is a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.
You can contact Elizabeth directly by phone at (905) 510-5785
by email at eblair@mortgageedge.ca
or you visit any of her websites at:
http://www.burlington-mortgage.ca
http://www.oakville-mortgage.com
http://www.streetsville-mortgage.ca
Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) www.imba.ca
Lic # M08005880 / Brokerage Lic # 10680
Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.
Changes to Insured Stated Income programs
Borrowing Guidelines for Insured Stated Income Programs in Canada are about to change
The borrowing guidelines for insured Stated Income Programs are about to undergo some major changes and these changes will be implemented effective April 9, 2010.
The changes are being announced by CMHC (also known as Canada Mortgage and Housing Corporation). CMHC’s changes, as well as those announced by Finance Minister Jim Flaherty effective on April 19, 2010 are all attempts to help cool off the heated housing market which is now being driven by record-low interest rates. More importantly, these new measures are required to protect borrowers from taking on more debt than they can afford especially as interest rate hikes are imminent. While Canada still allows Stated Income programs here, they are becoming very rare in the U.S. The massive number of defaults and foreclosures reported by the U.S. after the 2008 credit crisis were attributed mostly to Stated Income programs that were used to place under-qualified borrowers into mortgage loans that they could not afford.
While Canadian lenders continue to use the Stated Income programs here, customized for commissioned and self-employed borrowers, CMHC will now be scrutinizing those same applications using tighter underwriting criteria making the CMHC Self-Employed mortgage insurance program a little harder to access.
What exactly does Stated Income mean?
Stated Income means exactly that. When a mortgage application is created, for a self-employed or commissioned applicant, and the entire income amount is not verifiable in traditional documents, for example a Notice of Assessment, the applicant may apply under the Stated Income program to allow an income adjustment to help qualify them for a home purchase or re-finance. A real example might look something like this:
Mr.Thomas works as a Systems Analyst in Toronto. He is purchasing a house based on his earnings alone as his wife is currently not working. He earns $77,000 gross annually and his employment status is considered self-employed as he works as an independent contractor and bills the company directly for his time. He is not on payroll. He has worked in various departments for this same government organization, as a Systems Analyst, for the last two years. To buy the home they want, this couple would need an income of $85,000 to qualify for the purchase. On a traditional mortgage application, the couple would be declined and would not be able to purchase the home. However, by utilizing the Stated Income program, the couple can qualify to buy this home with a 5% down payment and the income placed on the application would be “stated” on the application at a higher amount. The couple has no other savings or funds available to them. The income to qualify the applicants, would be entered at the amount of $85,000 instead of his actual income of $77,000, in order to qualify the buyers.
Here is an outline of the changes that will be implemented on any applications called Stated Income applications which pass through CMHC as an “insured” mortgage AFTER April 9, 2010 and how these changes would affect the particular applicants described above:
1. Downpayment: those who are purchasing a home, and who have applications classified as a Stated Income application, will be required to put down 10% rather than the 5% minimum required today.
Mr.Thomas and his wife, after April 9, 2010 must have a down payment equal to 10% of the purchase price, along with enough funds to cover closing costs.
2. Tenure: those who have been working in the same business for greater than three years, would not be eligible for the Stated Income program and therefore those in this category would have to provide proof of their income, for example, a Notice of Assessment.
Because Mr.Thomas had only been working as a Systems Analyst for the past two years in total, they could still apply under the Stated Income program and be eligible. Had Mr.Thomas been working three years and 6 months, as a Systems Analyst, they could not qualify for the home they wanted.
3. Documents: documents will be requested and viewed by the lender to help determine the length of self-employed which are not always requested today. The documents a lender may ask for: a business license, proof of GST registration, articles of incorporation (if incorporated).
4. Commission: those who are collecting commission would no longer be eligible for the Self-Employed program.
Mr.Thomas is not paid on a commission basis, therefore, after April 9, 2010, he could still utilize the Stated Income program.
5. Limits: a re-finance will be limited to 85% loan-to-value instead of the current limit of 90% used today.
If Mr.Thomas decides to re-finance his home, in the coming years, while he is within the insured status range and assuming self-employed income is still their primary income, they will only be able to re-finance up to 85% of the value of their property.
It is important to mention that these program changes only affect those mortgages that are “insured” by the lender therefore, those mortgages that are not insured, could be reviewed differently from lender to lender and each lender would specify their underwriting criteria on a case-by-case basis.
© 2010 This article was written by Elizabeth Blair at Mortgage Edge on March 11, 2010. Elizabeth Blair services mortgage clients primarily in Mississauga and all over the Greater Toronto area
You can contact Elizabeth directly by phone at (905) 510-5785
by email at eblair@mortgageedge.ca
or you visit her website at: http://www.missmortgage.ca
Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca
Lic # M08005880 / Brokerage Lic # 10680. Head Office: Park Place Corporate Centre, 15 Wertheim Court, Suite 210, Richmond Hill, ON, L4B 3H7, Canada.
Value of Home Improvements
You may be thinking about those spring-time projects that you will need to tackle this year, like landscaping the garden, rebuilding a patio or fence, changing older windows and doors, a new roof, or even remodeling your basement, kitchen or bathroom. If you tune in to some recent popular TV programs like “Extreme Makeover – Home Edition”, you will surely catch the home makeover bug. If you live in a freehold house, you should be spending an average of 1% of your home value annually, on maintenance, just to keep it in good repair and to prevent it from declining in value, according to “Home Buying for Dummies” by Eric Tyson and Ray Brown.
Renovating a home, may also be an important consideration for you in 2010, if you are thinking of listing your home for sale. Remember that the right renovations can help you to maximize the resale value of your home. The renovation payback statistics were extracted directly from the Appraisal Institute of Canada’s website and the data is current as of January 2010:
To see the table, please click on the link:
You can check your renovation investment plans using the Appraisal Institute of Canada’s on-line tool. The name of this tool is RENOVA and it is an excellent resource for homeowners. You may visit the site by going to this website:
http://component.aicanada.ca/e/resourcecenter_renova_all.cfm
Remember that the referenced website link is only a guide, and you should always carefully consider that proper appraisal values and returns can be provided by an accredited appraiser holding a CRA or AACI designation. It is also important to mention that an appraiser will also assess other factors, about the home to complete accurate appraisal results, for example, the neighborhood, recent real estate activity, lot, location, etc.
Canada AM has been running an informative real estate market series that commenced on January 25, 2010. Featured on Tuesday’s program was Mr. Ed Saxe of Edjline Appraisal Services. Mr. Saxe is a certified Canadian Residential Appraiser as well as the President of the Ontario Association of the Appraisal Institute of Canada. Mr. Saxe discusses that the number one investment returns come from kitchen and bathroom renovations, however, as a homeowner, he advises that discretion is required when spending. Mr. Saxe advises homeowners to carefully consider just how much they are spending and where they are spending. For example, he mentions that you would not be wise to spend $50,000 on a kitchen renovation if you are living in a home that is only worth $200,000. A home renovation should be relative to the market and the neighborhood in which you live. You can view the current live video clip at the following link:
http://watch.ctv.ca/news/top-picks/added-value/#clip259603
This blog was written by Elizabeth Blair of Mortgage Edge.
Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.
You can contact Elizabeth directly by phone at (905) 510-5785
by email at eblair@mortgageedge.ca
or you visit her website at: http://www.missmortgage.ca
Lic # M08005880 / Brokerage Lic # 10680
The Evil IRD Penalty
The IRD penalty (Interest Rate Differential) has become a very hot topic in the last year. With the recent plunge in interest rates, many fixed rate mortgage holders, have contacted their banks to find out what it would cost to break their mortgage term in pursuit of today’s much lower mortgage rates.
Many are shocked to find out that the IRD penalty is so high, that breaking their mortgage has even become impossible for some as it would eat up any small amount of equity that they managed to build. If you are selling a home outright, add to this penalty amount, the real estate fees to sell, and many are completely trapped and unable to find the extra cash they need, in their home equity, to move away from the mortgage obligation. The IRD penalties are often huge and in most cases are absolutely outrageous.
I have experienced the same feedback from my own clients, who have made these calls. A recent client discovered their penalty would be $20,000……..I compare this kind of penalty charge to a form of predatory lending…….perhaps similar to the behavior of a loan shark? Is that too strong a term to use? Maybe not when you consider that while the bank won’t break your legs, or threaten your family’s safety, their imposed IRD penalties could very well “cripple you financially” …..now you know why I compare it to loan sharking.
In difficult times, when many home owners are already struggling to make ends meet because of lost jobs, pay cuts, ex-spouses no longer receiving child support, others struggling to maintain support payments, and others with unexpected requirements to move a family out of a house, would it not make sense for banks to re-visit their IRD penalty policy and agree to settle for a 3-month interest only? Everyone else has been expected to reduce their expectations, so why are the banks not doing the same for their customers, especially in light of the current financial devastation, being faced by many individuals and families today?!
Consumers and industry professionals need to stand up against the IRD penalty as it is quietly eroding and undermining the financial stability of many households who have decided to re-finance or to get out of a current fixed rate mortgage.
Here also, is a link to a website where there has been much lively discussion, about the IRD penalty, sponsored by Ms. Ellen Roseman, of the Toronto Star. You will see many shocking personal stories of mortgage holders who have faced the reality of the IRD penalty. It is even more shocking to see that our own government has done nothing to protect consumers, even after many have already written their personal stories to organizations like “Ombudsman Ontario”. Here is the link:
http://www.ellenroseman.com/?p=414
I believe that there will be great negative fallout, for many home owners down the road, unless home owners are given the option to freely re-finance their mortgages to obtain lower rates now as rates remain low. Once mortgage rates climb, those who are very new home owners, who took out 35-year amortizations 5 years ago, have accumulated little equity and at the same time increased their household debt-load, their ability to carry a mortgage renewal, at a higher mortgage rate, will be a huge challenge.
Government must step in and force banks to change the rules. The IRD Penalty should be illegal and banks should be limited to charge only the standard “3-month interest penalty” instead of the IRD penalty being used today. I already see it choking many mortgage holders, today, who are simply looking to move out of a higher mortgage rate into a lower mortgage rate, or perhaps even get out of a mortgage obligation due to current financial pressures, for example, a lost job.
I just returned from visiting the States and read an article in the USA Today. It discusses how Texas banks have held a strong position, based on their tight regulations, even when many other banks around them failed. An especially interesting point, in this article, is that the state of Texas prohibits banks from charging high mortgage penalties …… Canadian banks should also be prohibited from using the IRD penalty calculation. You can read the article in the USA Today, at the following link:
http://www.usatoday.com/money/economy/2009-12-28-texas-banks_N.htm
Ottawa is presently reviewing Canadian mortgage rules and may change financing rules to increase minimum down payments and decrease the extended amortization of mortgages (currently at 35 years) – these would be very positive moves to make. Texas banks have done well and their tough guidelines governing the mortgage financing industry have been the very reason why a housing fallout there, has been minimal.
If you want to express your concern about the IRD penalty, and you live in Mississauga or Streetsville, you should write to the Honourable Bonnie Crombie, Member of Parliament, for Mississauga and Streetsville areas, to request that the Government work to remove the IRD penalty, in use today, by our banks.
Her email address is:
crombie.b@parl.gc.ca
This post was written by Elizabeth Blair, a licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.
You can contact Elizabeth directly by phone at (905) 510-5785
by email at eblair@mortgageedge.ca
or you visit her website at: http://www.missmortgage.ca
Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca
Lic # M08005880
Brokerage Lic # 10680
Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.
What is a “closed” or “open” mortgage?
When you are shopping for a mortgage, you may hear the terms, CLOSED or OPEN mortgage. Let me explain the difference between these two options so you can determine which one is better for you.
OPEN MORTGAGE An “open” mortgage means that the mortgagor (the borrower) can pay the mortgage off, fully, at any time, without a mortgage penalty. A fully open mortgage is suitable for the following types of borrowers:
a) a property investor buys a property and has intention of selling it in a very short timeframe;
b) a borrower sets up this mortgage because they are expecting a large sum of money (for example, an inheritance or a work bonus) and will use that money to pay off the full mortgage loan amount;
c) a borrower who might be required to move on notice (perhaps due to a work relocation requirement) and would need to pay the mortgage off in full when the house sells.
d) you receive regular large bonus amounts, as an employee of your company, and you wish to apply these amounts to your mortgage anytime without the restrictions that might come on a lender’s regular pre-payment terms.
e) or perhaps you do not want to be locked into any term, for your mortgage loan.
Note that, the mortgage rates, for fully OPEN mortgages are higher than those given for “closed” mortgages. For example, effective today November 24, 2009, a fully open variable mortgage rate, is available at Prime Rate Plus 0.80% = 3.05%
CLOSED MORTGAGE A closed mortgage means that the mortgagor (the borrower) is given a contract “term”. If the borrower breaks the mortgage, before that contract term is up (known as the renewal date), the borrower must pay the mortgagee (lender) a full three months of interest penalty to get out of the contract (or IRD penalty). Variable mortgage contract terms are available for 3 year terms and 5 year terms, right now. A closed variable, 5 year term, mortgage rate is priced right now at between Prime Rate Minus 0.10% = 2.15% up to Prime Rate Plus 0.10% = 2.25%. A closed variable, 3 year term, mortgage rate is priced at Prime Rate Minus 0.25% = 2.00%.
So you can see that there are specific reasons why a borrower would choose a closed mortgage over an open mortgage.
This post was written by Elizabeth Blair on November 24, 2009, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients all over the Greater Toronto Area.
You can contact Elizabeth by phone: (905) 510-5785
Or email: eblair@mortgageedge.ca
Visit her website at: http://www.missmortgage.ca
Elizabeth Blair is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca
Lic # M08005880 / Brokerage Lic # 10680
Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, L4B 3H7
NEW Lower Mortgage Rates!
Here are hot new mortgage rates for you:
1. Variable Rate Mortgage at Prime Rate – 2.25% **
2. 5 Year Fixed Rate – 3.75% **
If your mortgage loan amount is greater than $370,000, I can get you
3.59% ** on a 5 Year Fixed Rate.
** Some conditions apply and subject to approval by the Lender. Mortgage rates are subject to change without notice.
This post was written by Elizabeth Blair, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario.
Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.
You can contact Elizabeth directly by phone at (905) 510-5785
by email at eblair@mortgageedge.ca
or you visit her website at: http://www.missmortgage.ca
Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca Lic # M08005880 Brokerage Lic # 10680 Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.
HOT News: Lenders slashing variable discounts
Hot news for those who are looking for variable rate mortgages. Here is the best deal available today:
Prime Rate plus 0.15%. —> 2.40%
Wow, this is an excellent rate and is only available for mortgage terms of less than 3 years.
You pick a renewal date between March 19, 2012 and May 31, 2012.
This blog post was written by Elizabeth Blair, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.
You can contact Elizabeth directly by phone at (905) 510-5785
by email at eblair@mortgageedge.ca
or you visit her website at: http://www.missmortgage.ca
Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca Lic # M08005880 Brokerage Lic # 10680 Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.
First time home buyers :: Get a break on Closing Costs and Land Transfer Taxes
Recognizing that the Canadian housing industry is a significant contributor to our economy and its growth and stability, the Canadian Government has now sweetened the deal to stimulate the housing industry and help Canadians with the costs of purchasing a home.
There are now 2 ways you can get a break on your closing costs and land transfer taxes.
1. CLOSING COSTS
The federal budget tabled in the House of Commons, by the Honourable Jim Flaherty, Minister of Finance on January 27, 2009 entitled “Canada’s Economic Action Plan – Budget 2009” now contains a $750 tax credit to offset closing costs. The tax relief will be extended to those first time buyers who acquired a home after January 27, 2009.
You may view a copy of Budget 2009 at the following link:
http://www.budget.gc.ca/2009/pdf/budget-planbugetaire-eng.pdf
2. LAND TRANSFER TAXES
The land transfer tax makes up the largest portion of a buyer’s closing costs. In December 2007, the Ministry of Revenue extended its Land Transfer Tax Refund to buyers of RESALE homes. This refund could be accessed by first time buyers who entered into agreements of purchase and sale after December 13, 2007. First-time home buyers can now apply for a refund, for up to a maximum of up to $2,000 on the land transfer taxes that they have paid. Details on this previous notice can be found at the following link:
http://www.rev.gov.on.ca/english/taxes/ltt/
This notice was written by Elizabeth Blair, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.
You can contact Elizabeth directly by phone at (905) 510-5785
by email at eblair@mortgageedge.ca
or you visit her website at: http://www.missmortgage.ca
Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca
Lic # M08005880 / Brokerage Lic # 10680
Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.
What is a mortgage discharge fee?
I received an email from someone who found my website on the internet, asking me why they were charged a discharge fee, by their bank, when they paid off the full balance of their mortgage. This was a fee that they were surprised to see and they were checking with me to see if that was a valid charge that they had to pay.
I explained to this person that this was most definitely a valid fee and that they should go back to their original mortgage contract/mortgage commitment to read the fine print, listed somewhere in their document. If you refer to the fine-print of your mortgage agreement/commitment, you will see it there listed under a “fees” section and it will list all standard fees borrowers will pay in certain situations, for example, service fees, assignment/transfer fee, processing fee, default charges/missed payment fee, as well as the discharge fee, as well as other possible fees related to the mortgage.
Here are a few situations where you would be required to pay a discharge fee:
1) if you pay off your entire mortgage balance;
2) if you switch from your current bank, to another bank, and register a new mortgage with the new bank.
3) if you sell your home and switch from your current bank to another bank.
The discharge fee is worked out, by your bank, on a simple one page form and it really does seem to be a very excessive fee to pay, for a simple form that may have taken your bank a short time to prepare. Interestingly, the mortgage discharge fee varies from province to province and from lender to lender. Did you know, for example, that in the province of British Columbia, The Financial Institutions Commission (FICOM) which regulates the financial services industry, has stated that a mortgage discharge fee must not exceed $75. You can read about their position at this following link:
http://www.fic.gov.bc.ca/pdf/mortgagebrokers/mb-07-003.pdf
Unfortunately, the Financial Services Commission of Ontario (FSCO) has not created a similar cap on the bank’s mortgage discharge fee in Ontario. While every bank must disclose the discharge fee, in the mortgage contract provided to you, you can also go on-line to see what current published discharge fees are, at any time. Remember, however, that the discharge fee that you see in the mortgage contract you signed, is the fee that you will be charged once there is a need to have a mortgage discharge statement prepared. Bank’s published discharge fees can be viewed at this following link:
http://www.fiscalagents.com/thestar/mtg_disx_sort.shtml
This blog was written by Elizabeth Blair, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.
You can contact Elizabeth directly by phone at (905) 510-5785
by email at eblair@mortgageedge.ca
or you visit her website at: http://www.missmortgage.ca
Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca
Lic # M08005880
Brokerage Lic # 10680
Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.
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