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.

Many prospective homeowners find this process not only cumbersome, but also confusing and sometimes long-winded. From time to time, mortgage-financing companies are unjustly criticized for delaying a mortgage transaction, when in reality there may be a legal impediment that is hindering the completion of the process.

In such situations, it is important that the customer understands that the Company is not only seeking to protect its security or interest in the property, but more importantly that of the customer.

Here are the documents that are necessary in the legal process with regard to a Mortgage Transaction:

• Agreement for Sale
• Title Search
• Deed of Conveyance
• Deed of Mortgage
• Legal Fees: Attorney & Statutory Fees

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After having identified the home that you are eligible to purchase, the first step is the signing or execution (legal jargon) of an Agreement for Sale between the seller of the home (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).

• You should request from your Vendor a copy of the title deed or deed of lease and have your attorney review this document prior to signing the sale agreement. This will ensure that there are no covenants or restrictions that may affect your ability to obtain clear title (ownership).
• When purchasing land, it is important that you confirm that the Town and Country Planning Division has approved the parcel for development of residential properties.
• Ensure that you are clear with regard to the clause regarding the forfeiture of your deposit in the event that the sale cannot be completed.
• Ensure that all parties to the sale sign the agreement, and that it is witnessed.

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.

Title Search

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 an unencumbered property, 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 defects in title, this exercise can be generally be completed within approximately 2 weeks.

Deed of Conveyance

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.

Deed of Mortgage

The Deed of Mortgage is effectively the loan agreement made between the TTMF and you. It contains the details regarding:

• The amount of the Mortgage Loan or the Principal Sum
• The Rate of Interest that will be charged
• The Repayment Term
• The Monthly Installment
• Lump sum Repayments to reduce the Principal Balance
• Early Repayment of your Mortgage Loan
• The legal description of the property. This is usually described in the First Schedule of the Deed of Mortgage.
• Personal Covenant
• Property Maintenance Req’d

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.

Legal Fees

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:

• Title Search Fees (Downpayment of $1,500.00)
• Stamp Duty to register the Deed of Conveyance
• Stamp Duty to register the Deed of Mortgage
• Attorney’s Fee to prepare the Deed of Conveyance
• Attorney’s Fee to prepare the Deed of Mortgage

Stamp Duty

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%
Over $1,750,001	7.5%

Stamp Duty on a Deed of Conveyance – Residential Properties with House & Land

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 $1,500,000.00, and is calculated as follows:

Property Value Stamp Duty	Payable (%)
Every dollar on the first $400,000	3%
Every dollar on the next $500,000	5%
Every dollar after that	7.5%

Stamp Duty on a Deed of Mortgag

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.

Example of Stamp Duty Fees:

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%)

Attorney’s Fees

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 TTMB to be prequalified. Pre-qualification allows us to review your affordability. The resultant mortgage amount you can afford will be detailed to you in our pre-qualification Certificate.