Mini-Case C: (3.5 marks)

Amanda and Jeff just received the call that their offer of $325,000 was accepted on a Montreal dream home! They know money will be tight since it took all their savings for a 10% down payment. Costs are however adding up, which is making them nervous. The Canada Mortgage Housing Corporation (CMHC) mortgage loan insurance premium is 3.10% of the mortgage amount which they have decided to pay at the time of closing instead of adding it to their monthly mortgage. Other fees include a $450 appraisal fee, a $750 home inspection fee, $1,550 notary fees, land transfer tax (sometimes known as the "Welcome tax" or "Transfer duties" - see table below) and $850 for title insurance and homeowner's insurance of $1,000.

http://ville.montreal.qc.ca/portal/page?_pageid=44%2C80257&_dad=portal&_schema=PORTAL

a)How much will Amanda and Jeff need to cover at closing including the down-payment?

(1.5 marks)

Calculation: (1.5 marks)

b)Amanda and Jeff do not have a ____________________ mortgage as they do not have the 20% down payment. (.5 mark)

c)For their down payment, Amanda and Jeff will be withdrawing from their _____________________________ under the ________________________ where they can "borrow" up to $35,000. (see Table E) (.5 marks-.25 marks each)

d)Amanda and Jeff have up to ______ years to reimburse their withdrawal in c) with a minimum amount needed to reimburse every year under the plan. The first repayment can be made no later than _______________________ of the 2nd year following the year they make the withdrawal. It's also important to note that the repayment cannot be deducted from their taxable income when they file their income tax return but if either one of them fails to reimburse the minimum amount required, they will be taxed on that amount. (1 mark-.5 marks each)