Archives for : July2013

Land Transfer Tax in Ontario

For anyone looking to buy a land in Ontario, there is an additional cost that must be considered when hammering out the specifics of a deal. The Ontario land transfer tax is a sum that must be paid by the purchasing party of any land in the province. For the purpose of the tax, land refers to: buildings, buildings to be constructed, fixtures such as lights, built-in appliances, cabinetry, and of course land itself. The tax is applicable on all land, regardless of whether the transfer of the land is registered with an Ontario land registry office.

The Ontario land transfer tax is not a flat fee, and is usually based on the amount paid, in addition to any remaining amounts of mortgages or debt assumed in the deal to purchase the land. There are exceptions to this, as the tax can also be based on the fair market value of the land in the following circumstances:

  • A lease exceeding 50 years
  • A shareholder receiving land from a corporation
  • A corporation receiving land, when shares of the corporation are issued

The Ontario land transfer tax must be paid when the transfer of land is registered, and if unregistered there is a specific set of documents that must be completed and submitted to the Ministry of Finance within 30 days. The only exception to this payment schedule is when land is transferred between affiliate corporations, in which case a deferral may be possible.

For first-time home-buyers worried that the added cost of the Ontario land transfer tax could price certain properties out of their budget, the worry may be premature. A tax rebate exists for first time home buyers, as long as the sale was closed after December 13, 2007. The maximum amount a refund may be issued for is $2,000, and applicants for the rebate must satisfy a few criteria to be eligible:

  • Minimum eligible age is 18
  • The home in question must be occupied within 9 months of the transfer date as the principle residence
  • The applicant can never have owned a home, or any interest in a home anywhere in the world prior to their purchase in Ontario (this criteria also applies to the spouse of an applicant)
  • The application for an Ontario land transfer tax rebate must be filed within 18 months of the transfer date

The Ontario land tax is a relevant piece of information for anyone looking to purchase land in the province, and a reminder to buyers everywhere that there are often additional costs to property transfers no matter where they are purchased. At the same time though, the first-time home buyer rebate also illustrates the point that most additional taxes and fees have loopholes or exceptions that many may qualify for. In order to get the best deal on any transaction, it is important to conduct thorough and meticulous research of the purchasing environment before the hunt begins.

 

Commercial Mortgage Rates in Ontario, Canada

canada-moneyBuying property in a place as desirable as Ontario is never a bad investment, but that doesn’t mean it isn’t risky. Purchasing residential property is a fairly standard practice that most people are familiar with, but when it comes to purchasing commercial property the experience level drops substantially.

Aside from the complications of finding the right location for an office or business, the complex world of mortgages becomes even more so when it comes to commercial property.

As a reference for those who may be familiar with residential mortgages, but have a lack of knowledge on the commercial side, below is a short list of what differentiates commercial loans from their residential counterparts:

  • Higher interest rates and larger down payments, due to the fact that commercial mortgage loans are seen as riskier than residential mortgages; unlike residential properties, the primary goal of a commercial property is to generate income.
  • Short-term mortgages. Commercial mortgage loans are usually shorter than residential mortgages, and have payment plans that reflect this. Typically commercial mortgages have scheduled balloon payments, such as 3, 5, or 10 years.
  • Higher Fees, given the more rigorous appraisal process for commercial properties, as well as a variety of other inspections that may be required for opening business.
  • More paperwork and a longer processing time is required for commercial mortgage loan applications generally, because of the inherently more complex nature of opening a business than simply moving into a residence.

With commercial mortgage rates being higher, individuals applying for a commercial mortgage in Ontario need to be especially sensitive to the current interest rate climate. The same rebounding global economy that may spur an individual to purchase a commercial property is also driving interest rates up in tandem. These rising rates will have an effect on all commercial mortgage rates, and it is critical that borrowers find loan terms that will ensure financial stability in the long-term.

No matter the location, be it Ontario or Oklahoma, a commercial mortgage is used to buy property that is markedly different in purpose than residential. The risk of high commercial mortgage rates are compounded by the inherent risks of business, and depending on the money invested in the business itself, a borrower can easily find themselves “doubling down” in terms of risk. It is important that the commercial mortgage rates negotiated take into account projected business performance, and not overestimate performance, and by default overextend the borrower’s financial capabilities. View some resources to find a full list of payment options.

Generating income is the primary goal of a commercial property, and an unfavorable commercial mortgage rate can prevent a fledgling business from getting off the ground. Luckily the “for profit’ mindset is shared by the lenders themselves, and so the borrower should be able to arrange commercial mortgage rate terms that take into account, and work to give the business an opportunity to grow. It is in both the lender and borrower’s best interest to see the business succeed, and the mortgage payments paid on time.

 

5 Year Fixed Mortgage Rates in Ontario

Ontario, Canada is a beautiful place, and it is no surprise that many people look to this picturesque Canadian province as a place to purchase a home. When it comes to buying a house in Ontario, there are a number of factors to consider. From striking the right balance between the metropolitan and the natural, to finding a home that is suited for all seasons, any prospective buyer will have their hands full when it comes to house hunting. While it may not be as enjoyable as choosing the neighborhood or house, deciding on the specific terms of a mortgage is one of the most important aspects of the home buying process.

Figuring out the correct mortgage is a complicated process, and it takes more than a little research to make sure that no money is being left on the table. In Canada, economists from the Bank of Montreal predict that the central Bank of Canada will raise interest rates in the second half of 2014. Given this fact, it wouldn’t be surprising to see 5 year fixed mortgage rates in Ontario become a more popular choice for home buyers. The reason that fixed rate mortgages may see an upswing in popularity is because they offer a measure of security to borrowers against rising interest rates, which can lead to rising monthly mortgage payments. Learn more about calculating payment with the online mortgage payment calculator.

Despite the speculation that rates may rise in Canada in the near future, those looking to buy a home in Canada should take those predictions with a grain of salt. Other sources have cited the practice of economists routinely pushing back their rate increase predictions, as similar talk has been circulating for as far back as three years ago. Economics is an inherently complicated discipline though, and in practice even more so.

Given the fairly strong opinion that interest rates in Canada will increase in the near future, but a lack of consensus on when that will occur specifically, potential buyers should take an even closer look at 5 year fixed mortgage rates in Ontario. The 5 year fixed mortgage rate in Ontario gives borrowers the security of a fixed mortgage rate against increases in the short-term (hopefully protecting against the predictions of an increase in interest rates in the near future), while still giving the some of the flexibility and lower initial monthly payments of a variable mortgage rate.

Choosing a mortgage plan is never a sure thing, as the volatility of the market can always throw an unexpected variable into the equation. With most mortgages spanning decades, the best a borrower can do is to make an educated decision with the information available at the time. Especially given the recent turmoil of that the global financial system experienced at the end of the last decade, there is no “sure thing” when it comes to predicting the future of interest rates. In the end it is up to every borrower to look at their specific circumstances and make decide accordingly. Learn more about adjustable rates in Ontario.