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Ronald Klarenbeek - NowSold.ca

 

Ronald Klarenbeek

The offer is now accepted: see the completion

Buying Guide

Your offer has been accepted, and now there are a number of steps that need to happen before you complete the transaction, close the sale, and take possession of your new home. The first step would be to remove all subjects and conditions, some of which maybe financing, insurance, inspection, title search etc. Ronald Klarenbeek can help explain these steps in detail to help ensure a smooth and comfortable completion. This is especially helpful if you are a first-time buyer.

Completion Steps

1. Deposits

You will need to arrange payment of your deposit as outlined in the Contract of Purchase and Sale. These funds will be held in trust until the completion date. Please see my easy explanation of contract of purchase and sale.

2. Mortgage requirements and financing

In the subject removal you will likely need to get financing. If you haven't already been preapproved you should meet with your lender and provide a copy of the Contract of Purchase and Sale. Attend to all of the subjects or conditions promptly, such as arranging an appraisal of the property value, if that is a condition the banks or lenders need for you to get financing.

HBP allows you to withdraw up to CAD $20,000 from your Registered Retirement Savings Plan ( RRSP) to purchase or build your own home, see The Home Buyer Plan. You will need to pay back into your RRSP but it is worth considering. If this is of interest to you, please tell your financial advisor and ask for more details on the Home Buyer Plan while discussing your mortgage options.

3. Subjects and Conditions

You must be satisfied and remove all relevant subjects and or conditions that were written into the Contract of Purchase and Sale by the stipulated date in the contract, usually 10 days from date of offer, or the contract may terminate. If everyone is working hard but you need a few more days to remove subjects that is possible by writing an addendum and extending the subject removal dates.

4. The Home inspection

While the home inspection is not mandatory, the home inspection is usually written into a buyer’s offer as a subject to the sale because the home inspection enables you or the hired trade professionals to make a more informed decision about the condition of the property and is therefore highly recommended.

5. Insurance

To protect your large investment, it would be very wise to purchase home or content insurance in advance and make sure that the policy will take effect on the completion date.

6. All the Documents

You will need to hire a lawyer or notary. Once you have done this I or my conveyancing team will provide them with a copy of the signed Contract of Purchase and Sale. A few days before the completion date you will need to meet with your lawyer or notary to sign the necessary paperwork.

7. Completion Day

  • Legal property ownership is transferred to your name(s).
  • The mortgage amount is provided to your lawyer or notary by your lender.
  • You will receive a Statement of Adjustments with costs payable, including: balance owing, legal fees, property transfer taxes and other completion costs.
  • Your lawyer or notary will pay the seller and complete all the necessary documents.
  • Your home will be registered at the Land Titles Office in your name.

Bring the following to the office of your notary or lawyer on the day of completion:

  • A bank draft to pay for the remaining down payment, if required.
  • A personal cheque to pay legal fees to your lawyer or notary.
  • Photo identification, such as a driver’s license, passport or resident’s card.
  • A copy of the Contract of Purchase and Sale.

8. Possession day

On possession day I will meet and arrange to pick up the keys and meet with you at your property. I will do a final inspection of the property and then you may begin moving in.

9. Completion costs

The fees that a buyer must pay at completion are known as closing costs and may include any or all of the following:

Adjustments

Adjustments are costs that the buyer will incur to reimburse the seller at the time of possession of the home. These costs may include part of the property taxes (if prepaid but only for the portion of the year you will assume ownership), any utilities, or strata fees.
On the adjustment date, as determined in the Contract of Purchase and Sale, the buyer shall credit the sellers by paying the agreed-to amount in full.

Appraisal

It is possible that your lender may require an appraisal of the home you wish to purchase. Therefore prior to approving your mortgage you may need to arrange and pay for a professional appraisal of the property. Appraisal fees vary; call around for the best price.

GST

Goods and Services Tax or GST is payable on the purchase of a new or substantially renovated home. The amount payable is 5% of the purchase price of the property.

Remember the New Housing Rebate will reduce the total amount of GST payable by 36% if you intend to make your new home your primary residence along with satisfying these requirements:

  • The purchase price must be $349,999 or less to qualify for the entire rebate.
  • To qualify for a partial rebate, the purchase price must be between CAD $350,000 and CAD $449,999.

The net amount of GST payable is due at the time of closing.

The Residential Rental Property Rebate will also reduce the amount of GST payable by 36% if you intend to rent your property to tenants in addition to satisfying the following requirements:

  • The purchase price must be CAD $349,999 or less to qualify for the entire rebate.
  • To qualify for a partial rebate, the purchase price must be between CAD $350,000 and CAD $449,999.
  • The rental must be a ‘qualifying residential unit’, meaning a self contained unit which includes a private kitchen, bath and living area.
  • The home must be the primary residence of the tenant and rented for at least one year.

You can apply for the Residential Rental Property Rebate after the full amount of GST is paid at closing. In addition, supporting documents will be required which include the Statement of Adjustments, Contract of Purchase and Sale, lease agreement and insurance policy.

The New Housing Rebate and the Residential Rental Property Rebate are not available if the purchase price of the property is $450,000 or more.

Because this is a Government program all the information provided above is subject to change at any time without notice. For full up to date details visit the Canada Revenue Agency website.

Home Inspection Fee

A home inspection is an important detail to take care of before closing on a new or resale property. Arrange to have your new home inspected by a certified home inspector in order to make a more informed decision on the quality of your purchase and protect your investment.
Allow 2-5 hours for a home inspection and budget from $500 and up, depending on the size and nature of the property.

Insurance

Prior to completion, it is important to arrange for the appropriate kind of home and or content insurance to protect your investment and belongings. There are various types of insurance to consider:

  • Home insurance
    Typical home insurance policies provide coverage for detached homes and its contents, (personal belongings). Most lenders will require you to carry home insurance as a condition of your mortgage. The cost can vary depending on the value of your home and its contents and on your insurer. Be smart and call around for the best price but make sure you read the fine print. Make sure to have your home insurance in place by the date of completion.
  • Townhouse / Condo content insurance
    Typically a strata corporation provides insurance for the overall structure and common areas of a condominium building as well as the permanently affixed features inside your unit including kitchen cabinetry, flooring, built-in appliances, etc. However, it is recommended that you carry content insurance to protect the replacement cost of your personal belongings. The cost again can vary depending on the value of your belongings.
  • Mortgage insurance
    If you are borrowing more than 80% of the purchase price of your home, you will need to obtain mortgage insurance from the Canadian Mortgage Housing Corporation or CMHC. For more information and current premiums please visit cmhc.com.
  • Property title insurance
    Title insurance is not mandatory but it protects buyers/owners against fraud and forgery, encroachments onto neighboring properties, builders’ liens, zoning restrictions, errors in surveys or other official public records, and known and unknown defects which could affect your ability to sell your property in the future. It would be a wise decision if any of the above concern you.

Legal Fees

Lawyers or notaries will help assist in the transaction by processing all the legal documents required for sale of real estate property. Legal fees generally average from $600 and up, plus GST and disbursement costs.

Your lawyer or notary will arrange for the transfer of purchase monies to the seller from your lender. Your Lawyer or notary will also prepare the Statement of Adjustments which itemizes he costs payable at completion, and finally the disbursement costs such as faxes, phone calls and mailing fees will be itemized and vary from approximately $250 (total) and up. Call around to find the best rate.

Property Transfer Tax

Property Transfer Tax or PTT must be paid to the government when real estate is purchased. Please contact the Property Transfer Tax office in Victoria or go to www. gov.bc.ca/sbr for full details.

In summary, the amount of tax payable in British Columbia is 1% on the first $200,000 CDN and 2% on the remaining balance. The tax applies to any real estate, whether residential, commercial or industrial.

or example, to calculate the Property Transfer Tax for a home purchased at $374,000

1% x $200,000 = $2,000
2% x $174,000 = $3,480
Property Transfer Tax = $5,480

If you are a First Time Home Buyer, you may be able to apply for an exemption to PTT if the following requirements are met:

  • Purchaser is a Canadian citizen or a permanent resident of Canada and resided in B.C. for 12 consecutive months immediately before registering the property or has filed two income tax returns as a B.C. resident during the last 6 years.
  • Purchaser has never owned an interest in a property in a principal residence anywhere in the world at anytime.
  • Purchaser has never received a first time home buyer exemption or refund.
  • Purchaser must move in within 92 days of the date the property is registered and live in the property as the principal residence for 1 year. To keep the exemption, there are additional requirements.
  • To obtain full exemption, the fair market value or purchase price of the property must not exceed CAD $425,000. A partial exemption is available for homes priced between CAD $425,000 and CAD $450,000.
  • The land is .5 hectares (1.24 acres) or smaller.
  • The property will only be used as a principal residence.

Use the following formula to calculate the amount of tax payable on homes purchased between $425,000 and $450,000

Amount of PTT x ($450,000.00 – Purchase Price)
$25,000

For example, a home is purchased for $430,000.00. The partial exemption would be $5,280.00 and the total Property Tax payable is $1,320.00.

$6,600 x ($450,000.00 - $430,000.00)
$25,000

$6,600.00 - $5,280.00 = $1,320.00

Property Transfer Tax (PTT)

        Property Transfer Tax or PTT must be paid to the government when real estate is purchased. Please contact the Property Transfer Tax office in Victoria at gov.bc.ca/sbr for complete details.

The total amount of tax payable in British Columbia is 1% on the first CAD $200,000 and 2% on the remainder. This tax applies to any real estate, whether residential, commercial or industrial.

To give an example, to calculate the Property Transfer Tax (PTT) for a home purchased at $374,000:

1% x $200,000 = $2,000
2% x $285,000 = $5,700

Property Transfer Tax = $7,700

If you are a First Time Home Buyer, you may be able to apply for an exemption to PTT if the following requirements are met:

  • The purchaser is a Canadian citizen or a permanent resident of Canada and resided in B.C. for 12 consecutive months immediately before registering the property or has filed two income tax returns as a B.C. resident during the last 6 years.
  • The purchaser has never bought or owned an interest in a property or in a principal residence anywhere in the world at anytime.
  • The purchaser has never received a first time home buyer exemption or refund.
  • The purchaser must move in within 92 days of the date the property is registered and live in the property as the principal residence for a minimum of 1 year. To keep the exemption, there are additional requirements:
  • To obtain full exemption, the fair market value or purchase price of the property must not exceed CAD $425,000. A partial exemption is available for homes priced between CAD $425,000 and CAD $450,000.
  • The land must be 1.24 acres, 5018.102 square meters or 54'014.4 square feet or smaller.
  • The property will only be used as a principal residence.

Use This formula to calculate the amount of tax payable on homes purchased between $425,000 and $450,000

Amount of PTT x ($450,000.00 – Purchase Price)
$25,000

For example, a home is purchased for $430,000.00. The partial exemption would be $5,280.00 and the total Property Tax payable is $1,320.00.

$6,600 x ($450,000.00 - $430,000.00)
$25,000

$6,600.00 - $5,280.00 = $1,320.00

Site survey fees

In order to obtain a mortgage, your lender may request to have an up-to-date survey of your property on file. A property survey confirms the lot size and dimensions and identifies any encroachments. If you did not receive a copy from the seller you will be responsible at your own cost to have a survey completed. Fees range from $150 to $350 and up, depending on the size of the property.

Utilities

Prior to possession day you will need to contact utility companies such as telephone, cablevision, Internet, hydro and gas to arrange for service. There may be fees associated with opening new service accounts and/or transferring existing ones. Contact your service providers in advance of closing to inquire about fees for closing an account, setting up a new account, or simply transferring locations.