Definitions

Home Purchase Costs

There are many up-front costs when you buy a home. Early planning will help make sure things go smoothly.

Canada Mortgage and Housing Corporation (CMHC)

CMHC is Canada’s national housing agency — a federal Crown corporation that provides mortgage insurance, housing research, and programs to improve housing affordability.

Mortgage Calculator | CMHC

Down Payment

A down payments the part of the home price that does not come from the mortgage loan. The down payment comes from your own money. You can buy your home with a minimum down payment of 5%, if you have mortgage loan insurance from CMHC. You need a down payment of at least 20% for a conventional mortgage.

Deposit

The deposit is paid when you make an Offer to Purchase to show that you are a serious buyer. The deposit will form part of your down payment with the remainder owing at the time of closing. If for some reason you back out of the deal without having covered yourself with purchase conditions, such as financing, home inspection, etc., your deposit may not be refundable and you may be sued for damages. The size of the deposit varies. Your realtor or lawyer/notary can help you decide on the amount.

Appraisal Fee

Your mortgage lender may ask you to pay for a recognized appraisal in order to order to complete a mortgage loan. An appraisal is an estimate of the value of the home. The cost is usually between $250 and $350 and must be paid when you contract for these services.

Having an independent appraisal done on a property before you make an offer is a good idea. It will tell you what the property is worth and help ensure that you are not paying too much.

The appraisal should include:

• Assessment of the property’s physical and functional characteristics
• Analysis of recent comparable sales
• Assessment of current market conditions affecting the property

Mortgage Loan Insurance Premium

If you make less than a 20% down payment, you have a high-ratio mortgage. With a high-ratio mortgage your lender will need mortgage loan insurance. Mortgage loan insurance lets you buy a home with a minimum down payment of 5%.

Most Canadian lending institutions require mortgage loan insurance because it protects the lender. If the borrower defaults (fails to pay) on the mortgage, the lender is paid back by the insurer. You pay a premium for mortgage loan insurance. Your lender will add the mortgage loan insurance premium to your monthly payments, or ask you to pay it in full upon closing.

Mortgage Broker’s Fee

You may have decided to use a mortgage broker. The job of the mortgage broker is to find you a lender with the terms and rates that will best suit you.

Home Inspection Fee

CMHC recommends that you make a home inspection a condition of your Offer to Purchase. A home inspection is done by a qualified home inspector to provide you with information on condition of the home. Costs range depending on the age, size and complexity of the house and the condition that it is in. For example, it may be more costly to inspect a large, older, or one in relatively poor condition or that has many pre-existing problems or concerns.

Title Insurance

Your lender, lawyer, or notary may suggest that you get title insurance. This will cover loss caused by defects of title to the property.

Land Registration Fees

Land Registration fees are sometimes called Land Transfer Tax, Deed Registration Fee, Tariff or Property Purchases Tax. In some provinces and territories, you may have to pay this provincial or municipal charge when you close the sale.  The cost is a percentage of the property’s purchase price.

LTT Calculator – Residential – TRREB

Status Certificate

A status certificate is an official package of documents prepared by a condo corporation (or its property manager). It provides a snapshot of the building’s finances,

governance, and potential liabilities, plus details specific to the unit you want to buy.

Property Insurance

The mortgage lender requires you to have property insurance because your home is security for the mortgage. Property insurance covers the cost of replacing your home and its contents in case of loss. Property must be in place on closing day.

Legal Fees

Legal fees and related costs must be paid on closing day. In addition, your lawyer or notary will charge you direct costs to check on the legal status of the property.