Down payment: First time home buyers can purchase a home with as little as 5% of the purchase price as a down payment. Other than first time buyers, the minimum down payment is 10%. For the down payment, you may use cash, liquid assets, a gift from a direct relative (mother, father, sister, brother), or arrange a loan against an existing asset. The down payment is presented to the borrower's solicitor on day of closing (that's the day the purchaser actually take possession of the house), to be given to the vendor's solicitor. The deposit you secured to the offer at the onset is part of the down payment. In other words, you are a first time buyer and you agree to buy this house on July 15/1997 for $100,000 with minimum down payment (ie $5000), and you posted a deposit of $1000 with the offer on Mar 15, 1997. You will still owe $4000 of down payment on day of closing.

Real Estate Agent: The rules in regards to who pays for Real Estate Agents changed January 1st, 1995. The Agent will now ask you to sign an agreement at the onset, in essence hiring he/she to represent your wishes to the Vendor. Payment for representation normally comes from the Vendor by way of a commission equivalent to a certain percentage of the sale price. However, being that he/she can save you time, money and peace of mind, you may agree to pay your Agent direct.

Deposit: The normal deposit with your offer is $1,000 for an

existing home, and $5,000 to $20,000 for a new house. The deposit makes up part or all of the down payment.

Pre-purchase Inspection: When buying a home, one normally buys using the heart as a guide. The Pre-purchase Inspector can look realistically at the potential home and identify its integrity. In other words, you are hiring this individual to give you some insight into present and future repair costs. This inspection can vary from $249 to $700 depending on the time and detail required by you, the end-user. This bill must be paid when you get the report, usually two or three days after the offer to purchase has been accepted.

The appraisal: This individual will be able to ascertain the value of your purchase, compared to similar sales in the area. This is required by the lending institutions to show their shareholders that mortgage investments are sound. The normal cost of this service is $180 plus GST.

High Ratio Mortgage Insurance:

If you have less than 25% down, the Lending institution may not ask for an appraisal. Instead, they will ask that the mortgage be insured against default. This insurance obtained from CMHC or GE Capital will protect them. In turn, CMHC or GE Cap. charge an administration fee of $235.

If you need to borrow greater than 75% financing, your Lender must have default insurance. This default insurance is provided by

Canada Mortgage and Housing Corporation (CMHC for short) or GE Capital. This insurance guarantees the Lender that there will be no money lost on your file, should you happen to default on your mortgage. This insurance does not protect the Borrower! It protects the Lender. The cost of this insurance depends on the "loan to value" ratio. Most first time buyers require maximum financing, so the insurance premium is 2.5% of the mortgage amount ($2500 on a $100,000 mortgage). This amount is usually added to the mortgage. In other words, if you need to borrow $100,000, the actual mortgage amount will be $102,500 (that's the mortgage plus the insurance fee combined). If you do not require maximum financing, call me for a quote on CMHC premiums. This fee is charged once at the beginning of the mortgage, and can be paid cash on day of closing to save on overall interest. Most first timers add it to the mortgage.

Ontario Sales Tax: Since the Government of Ontario taxes insurance premiums now, you will be asked at the Lawyer's office on day of funding to pay 8% on the above insurance premium (ie $200 on the above $2500 premium).

Land Transfer Tax: The Government of Ontario will also charge you a "welcome to home ownership in Ontario" tax. The easiest way to figure out this tax is to multiply the purchase price by 1% and subtract $275 from that figure. On a $110,000 purchase price, the land transfer tax would be $835 (that's $110,000 x 1% = $1110 minus

$275). This amount gets paid to your lawyer on day of closing. If you happened to have purchased an Ontario Home Ownership Savings Plan (OHOSP) prior to Dec.31/1994, your lawyer will apply for a full rebate from the province after closing. If you enter into an agreement to buy a "new" home by March 31, 1997, the land transfer tax is waived.

Goods and Services Tax: There is no GST on resale/used housing. On new housing, the tax is 7% of the purchase price with a rebate of approximately 2.5% after closing. Most new home contractors will include the reduced GST in the purchase price and ask you to sign over the rebate to them.

Lawyer's Fees and Disbursements: When inquiring on the cost of legal fees (and one should indeed inquire) the lawyer will quote a fee for his/her services. You should always inquire if the fee includes disbursements. Usually, these are extra. The average cost of legal fees in Ottawa will range from $500 to $850 plus GST depending on the firm and the complexity of the purchase. Disbursements will range from $250 to $650 plus GST depending on the municipality and the directives of the Lender. Some Lawyers may ask you for a "retainer" fee, to cover the cost of these disbursements (especially if they don't know you). Most of the time lawyer's fees and disbursements are paid on day of closing.

cost of paper work on a file. One should inquire as to the amount before proceeding to the application stage. A licensed Mortgage Broker in Ontario is forbidden from collecting any fee from the applicant (if the mortgage amount is less than $200,000) until after the commitment to mortgage has been in the borrower's possession for at least 72 hours, and then accepted by the borrowers. The Broker may then charge a simple administration fee of between $100 and $225 or he/she may charge a separate broker fee, depending on circumstances. Most Brokers work on a commission basis and if he/she can get a commission from the Lending Institution that provides the mortgage, then perhaps you will be spared this fee. If the Lending Institution does not pay a referral fee then almost certainly a broker fee will be charged. You should enquire at the application stage the amount of the fee, it can range from $100 to 2-4% of the mortgage amount. This fee is usually paid when you accept the mortgage commitment.

Survey: All Lenders will require an up-to-date building location survey before they advance funds. This survey will certify that the house you are purchasing is indeed on the lot your are buying, and that nobody is using part of your land and that you are not using part of somebody else's land. The cost of a new survey (in town) is around $850. The good news is that the Vendor of the property can normally provide your lawyer with his/her old survey and most Lenders will accept an old survey.

Miscellaneous: There may be other costs such as Interest to a specific date (called interest adjustment date), or prepaid taxes (if the lender requires) to pay on day of closing. Your lawyer will point out all these costs, a couple of days before closing, on what is called a "statement of adjustments".

Total costs: You should prepare yourself to have in your possession an amount roughly equivalent to 3% of the purchase price to cover all the above costs. Most first time buyers get a call from their lawyer a couple of days before closing with the amount required to close. This amount includes everything we've discussed above and normally catches people by surprise....be aware!