Tuesday, May 30, 2023 / by Evelyn Lopes- Klarine
What are the COSTS OF SELLING A HOME in Ontario
Unveiling the Secrets and Costs of Selling
When selling your home in Ontario, it's important to be aware of the various costs associated with the process, so that you can budget for them accordingly. This list is extensive, you may have some, or all of them to account for, but being aware of them is the first step when contemplating a move. Let's break them down.
When selling your home in Ontario, it's important to address your outstanding mortgage. For most people , this is the biggest cost when selling a home. Here's a breakdown of the mortgage payout process:
First get your Mortgage Statement:
Contact your mortgage lender and request a mortgage statement. This document provides a snapshot of your remaining mortgage balance, including any applicable interest or penalties.Knowing this amount is crucial when calculating your net proceeds from selling your property. Calculating your net proceeds from the sale will give you an understanding of how much money you will have in your pocket after all expenses are paid. This amount will let you know how much money you will have left for your next purchase or have in hand for whatever you wish to do down the road.
Review your mortgage agreement to determine if there's a prepayment penalty for paying off your mortgage before the agreed-upon term. This penalty is typically calculated as a percentage of the remaining balance or a few months' worth of interest. Additionally, find out if your mortgage is portable, which means you can transfer it to a new property and potentially blend and increase the rate if you need additional funds. By doing so you can eliminate any potential prepayment penalties. Consult your mortgage lender or review your contract to understand the specific terms and potential penalties.
Mortgage Discharge Statement:
Once you're ready to proceed with the sale, obtain a mortgage discharge statement from your lender. This statement outlines the final amount required to fully pay off your mortgage, including any prepayment penalties and accrued interest up to the payout date- also known as the closing date.
Closing Date Coordination:
Coordinate with your real estate agent, lawyer, and mortgage lender to ensure the mortgage payout aligns with the closing date of the sale. Proper coordination is essential for a smooth transition and timely payment to the lender.
Funds for Mortgage Payout:
Ensure you have sufficient funds available to cover the mortgage payout. These funds can come from the proceeds of the sale or other financial resources.
Mortgage Discharge Process:
Your lawyer will typically handle the mortgage discharge process, working with the lender to arrange for the discharge and ensuring all necessary paperwork is completed accurately. There may be fees associated with discharging the mortgage, covering the process of removing the mortgage lien from the property.
Certificate of Discharge:
Once the mortgage is paid off, the lender will issue a Certificate of Discharge. This certificate serves as proof that the mortgage lien has been removed from the property's title, providing peace of mind to both you and the buyer.
Remember that mortgage payout procedures and requirements can vary based on your specific mortgage terms and lender. It's always advisable to communicate with your mortgage lender early in the selling process to understand their specific requirements and ensure a smooth mortgage payout.
Working closely with your experienced lender, lawyer and realtor, together they will help ensure that the mortgage payout is handled properly, that the dates are appropriate to your situation and all necessary steps are taken to release the mortgage lien and complete the sale transaction successfully.
If you would like a FREE COPY of our HOME SELLER CHECKLIST of the Process and COSTS OF SELLING YOUR HOME IN ONTARIO, check out the link in the descriptive comments below, you can also call or text to 905-965-5902 and we make sure that you get your free Home Selling Checklist.
In addition to the mortgage payout, there are other costs to consider when selling your home in Ontario:
This is the fee paid to your real estate broker and agent for their services in selling your home. The commission is typically a percentage of the final sale price and is negotiable. Note that all realtors are not created equally and fees and services differ. Understand what your fees will cover.
These fees cover the cost of hiring a real estate lawyer, which is required in the province of Ontario to handle the legal aspects of the transaction. They will prepare and review documents, conduct title searches, and facilitate the closing process.
Property Tax Adjustments:
Property taxes are adjusted at the closing of the sale. The seller pays for the taxes for the time he owns the property. The buyer pays for the taxes from the day of closing onward. Adjustments will be calculated for property taxes, so that each party pays their fair share. If you have overpaid, you will be reimbursed, if you have not paid for your share of the taxes, you will be required to do so. The lawyers involved will calculate these numbers.
Utility and Service Adjustments:
Settlement of outstanding utility bills, such as hydro, gas, water, and waste management, may be required. The buyer assumes responsibility for these bills after the sale, and you may need to reimburse them for the portion you owe.
Home Staging and Repairs:
If you choose to stage your home to enhance its appeal or if there are necessary repairs identified during the selling process, you may incur costs associated with these improvements.
Budget for the cost of hiring professional movers, renting a moving truck, or purchasing packing supplies for your move to a new residence.
Outstanding Liens or Debts:
Address any outstanding liens or debts on the property, such as outstanding property taxes, home equity loans, or lines of credit, before the sale.
Rental Agreement Contract Payouts:
If you have leased items on your property, such as a furnace, air conditioner, hot water tank, or security system, you may need to pay off those lease-to-own contracts before or at closing. Investigate options such as buyouts, assumptions by the new homeowner, and associated costs. Knowing these numbers will help you and your realtor evaluate pricing and negotiation options during the offer phase.
For principal residence properties in the province of Ontario, currently there is no capital gains taxes due for from the sale because of the principal residence exemption. This holds true if the property was solely your principal residence for every year you owned it. Canadian citizens
Once again, If you would like a FREE COPY of our HOME SELLER CHECKLIST of the Process and COSTS OF SELLING YOUR HOME IN ONTARIO, check out the link in the descriptive comments below, you can also call or text to 905-965-5902 and we make sure that you get your free Home Selling Checklist.