Brand New Property
Developers typically require a deposit anywhere from 10% to 20% based on the purchase price not including the net HST and the deposit is typically divided into portions.
If you are looking to purchase a property with a down payment "less than the deposit required" please refer to the example below based on the following:
The key in this scenario is that you have to come up with $20,000 for the deposit. If you only have 5% from your own resources you will have to find alternative options (ie borrow from family). Most developers will not require the full deposit in one transaction and in this example they may require 5% of the deposit on the subject removal date and split up the remaining deposit into 3 more deposits of 5%.
Based on a 5% down payment of $5000, the mortgage amount (not including the mortgage insurance premium) required in this scenario is $95,000 for a total purchase price of $100,000 ($5000 down payment + $95,000 mortgage). Please refer to mortgage insurance premium explanation at the bottom of the page.
In my experience the net Hst can be added to the purchase price however it depends on how the contract of purchase is written up. If the net HST can be added to the purchase price please keep in mind that the percentage down payment is now based on the purchase price net Hst.
In this scenario the purchase price net HST will be higher than $100,000 therefore a 20% down payment will now be based on the higher purchase price, not the original $100,000.
Please access the following HST calculator
http://www.rosborough.com/bc-real-estate-new-home-hst-calculator.html
Mortgage insurance premiums are required when the down payment is less than 20%. The mortgage insurance premium is not an out of pocket expense and is added to the mortgage amount and that is what your mortgage payments are based on.
If you are looking to purchase a property with a down payment "less than the deposit required" please refer to the example below based on the following:
- Purchase price of $100,000
- Intended down payment of 5% which equals $5000 based in this scenario
- Developer requires a 20% deposit which equals $20,000 based in this scenario
The key in this scenario is that you have to come up with $20,000 for the deposit. If you only have 5% from your own resources you will have to find alternative options (ie borrow from family). Most developers will not require the full deposit in one transaction and in this example they may require 5% of the deposit on the subject removal date and split up the remaining deposit into 3 more deposits of 5%.
Based on a 5% down payment of $5000, the mortgage amount (not including the mortgage insurance premium) required in this scenario is $95,000 for a total purchase price of $100,000 ($5000 down payment + $95,000 mortgage). Please refer to mortgage insurance premium explanation at the bottom of the page.
- The $20,000 deposit is held "in trust" at the lawyer's office and the $95,000 mortgage amount required based on a 5% down payment will be advanced to the lawyer's office on completion.
- As you can see in this scenario the lawyer will have $115,000 in total which represents a surplus of $15,000.
- The closing costs (ie legal fees, adjustments, property transfer tax if applicable) will be deducted from the $15,000 and the client will receive the difference in the form of a certified cheque or this amount be deposited directly into the client's bank account.
In my experience the net Hst can be added to the purchase price however it depends on how the contract of purchase is written up. If the net HST can be added to the purchase price please keep in mind that the percentage down payment is now based on the purchase price net Hst.
In this scenario the purchase price net HST will be higher than $100,000 therefore a 20% down payment will now be based on the higher purchase price, not the original $100,000.
Please access the following HST calculator
http://www.rosborough.com/bc-real-estate-new-home-hst-calculator.html
Mortgage insurance premiums are required when the down payment is less than 20%. The mortgage insurance premium is not an out of pocket expense and is added to the mortgage amount and that is what your mortgage payments are based on.
