Now that you’ve found a suitable property, we now explore what is considered to be a daunting aspect of the mortgage process – the legal documentation and in particular its associated costs.
After having identified the home that you are eligible to purchase, the first step is signing or execution (legal jargon) of an Agreement for Sale between the Vendor and yourself.
The following are some key points that should be noted when entering into your sale agreement:
Terms and conditions of Payment – The general requirement is a 10% deposit to be paid upon signing or execution of the Agreement for Sale with the balance payable within 90 days of the date of the agreement.
A growing option in the real estate industry is that of pre-sold homes. The payment requirements in this instance is usually a 10% deposit upon signing the agreement, a further 10% upon installation of the roof, with the balance due within 90 days of completion of the property (with variations to this concept).
Acquiring your home may probably be the most significant lifetime investment that you make. It is therefore important that you are comfortable about your purchase. You should never allow yourself to be pressured into signing a sale agreement if you are unclear about anything.
Once your application for mortgage financing has been approved and you have signed your letter of offer, the attorneys who are acting on TTMF’s behalf would be instructed to conduct a title search on the property.
This title search effectively traces the ownership of the property to ensure that the Vendor possesses a marketable title, and as such is in a legal position to sell the property to you. If the Vendor has an existing mortgage, this will be revealed during the title search. Assuming, however, that there are no material “gaps” or defects in title, this exercise can be generally be completed within approximately 2 weeks.
After the title search has been completed, a Deed of Conveyance must be prepared. This document essentially conveys or transfers ownership of the property from the vendor over to you, thereby enabling you to offer it as security for the mortgage. Where the property is owned by more than one person, it is important that each party possesses clear title (ownership).
The Deed of Conveyance can be prepared by your attorney of choice.
The Deed of Mortgage is effectively the loan agreement made between the TTMF and you. It contains the details regarding:
An attorney assigned by TTMF must prepare the Deed of Mortgage. It is important that you fully read and understand this document prior to signing it.
This is the aspect of the mortgage process that is of most interest to the prospective homeowner, and is generally critical to their budgeting process.
The legal fees that are generally incurred during the mortgage process are as follows:
Stamp Duty comprises statutory payments that must be made to the Board of Inland Revenue in order that the Deeds of Conveyance and Mortgage can be registered.
With regard to the Deed of Conveyance, Stamp Duty is payable on residential properties with house and land where the value of the property exceeds $850,000.00, and is calculated as follows:
|Property Value Stamp Duty||Payable (%)|
|For the first $850,000||0%|
|$850,001 up to $1,250,000||3%|
|$1,250,001 up to $1,750,000||5%|
However, where land only is being purchased, stamp duty is payable where the value exceeds $450,000 and is calculated as follows:
|Property Value Stamp Duty||Payable (%)|
|For the first $450,000||0%|
|$450,001 up to $650,000||For every dollar of the first $200,000 in excess of $450,000, Stamp Duty will be 2%|
|$650,001 up to $850,000||For every dollar of the next $200,000 in excess of $650,000, Stamp Duty will be 5%|
|Over $850,001||For every dollar of the thereafter, Stamp Duty will be 7%|
Further the Stamp Duty on a Deed of Mortgage is as follows:
|For Residential Properties||Payable (%)|
|Where the sum secured by the mortgage does not exceed $850,000||Stamp Duty Exempt|
|Where the sum secured by the mortgage exceeds $850,000||2%|
If the mortgage exceeds the conveyance, the difference is charged at the same rate as non-residential mortgages. The mortgage must be on the conveyance or transfer or sale of residential property.
Mortgages on non-residential property are charged at $4.00 per thousand.
So for example, the Stamp Duty on a Deed of Mortgage, which is stamped to secure $1,000,000.00 would be $2,000.00 ($1,000,000.00 x 0.2%).
The fees charged by the attorneys for the preparation of these Deeds also varies in accordance with the value of the mortgage facility being granted.
Though some homeowners may at times be intimidated or “turned off” by these legal issues, it is vital that this aspect of the mortgage process be undertaken in a manner that ensures that your interest/ownership (title) in the property is properly established and secured. This will give you peace of mind in knowing that “what you are paying for” will eventually be yours.
Start by approaching TTMF to be pre-qualified. Pre-Qualification allows us to review your affordability. The resultant mortgage amount you can service will be detailed to you in our Pre-Qualification Certificate.