Refinancing
Mortgage Refinancing BudgetThe question most people ask prospective lawyers is “How much do you charge?” The question you should be asking is “How much money do I need to budget for my transaction?”
Our aim is to provide you with clarity regarding you legal expenses at the beginning so you can properly budget for your refinance.
For budgeting your refinancing expenses, you need to factor in the following expenses:
ONE
LEGAL FEES AND EXPENSES
There is a small variance in legal costs from law firm to law firm and our legal costs are competitive with other law firms. Give us a call at 613 746-8115 and we will be pleased to provide you with both the total legal costs (fees, all expenses and HST) as well as a breakdown so you can properly budget for your refinancing.
Our fees are due on closing and paid from the new mortgage advance.
TWO
DEDUCTIONS FROM THE NEW MORTGAGE ADVANCE
From your gross loan, lenders may deduct any applicable CMHC premiums, retail sales tax on those premiums, a holdback for municipal property taxes if they are to be paid through your mortgage, loan commitment fees in some cases, mortgage broker fees in some cases, etc. The amount you are borrowing and the amount the lender advances are not always the same. We recommend you have your lender advise you what the net advance to the lawyer will be so you can budget accordingly.
THREE
MORTGAGE DISCHARGE PENALTIES AND ADMINISTRATION FEES
On closing, we will pay out the balance owing on your existing (old) mortgage or secured line of credit. On top of the balance owing, the lender will be charging an administration fee to discharge the debt (usually around $300 to $400).
If you are paying out your mortgage prior to maturity, you will likely be subject to an early payout penalty which is often the greater of:
- (a) 3 months’ interest on the outstanding balance; and
- (b) The interest rate differential: For fixed rate mortgages and where the market interest rate is lower than your interest rate, the difference in the interest rate is multiplied by the outstanding balance and the number of years left on the term of the mortgage. This can be a lot more than 3 months’ interest so you should contact the lender in advance to find out the estimated amount of the penalty.
TIP
You may be able to reduce the amount of the penalty by making a prepayment prior to closing to reduce the outstanding principal on which the penalty is based. Please review the terms of your mortgage to determine what your prepayment privileges are and feel free to contact us if you wish to discuss this in further detail. Give us a call and we will be happy to discuss your eligibility in more detail.
613 746-8115