If you’ve decided to buy a home, it’s important to go into the process knowing all of the costs involved beyond the asking price of the property.
Here’s an overview of costs involved.
Buying Costs *Mortgage Checklist*
Lenders may charge a mortgage application fee, which will vary depending on the lending institute.
The federal government requires high-ratio mortgages (with less than 20% down payment ) to be insured against default. The cost ranges between 1.25 to 3.75 per cent of the mortgage amount which is added to the mortgage principal.
before your lender approves your mortgage, you may be required to have an appraisal done. Sometimes your lender will cover this cost, if not, you are responsible. The fee ranges and is typically as much as $300.
Land survey fees
Lenders may require a survey of the property. Survey costs vary.
Home inspection fees
A home inspection is a report on the condition of the home that can alert you to any potential issues such as structural and moisture problems, as well as electrical, plumbing, roofing and insulation. Fees can range from $500- $700 depending on the size of the home and the complexity of the inspection. Some inspectors have surcharges for the secondary suite, a crawlspace, over even an older home.
Buyers will a mortgage will be required to buy home insurance. To be safe, make the insurance effective on the earlier of either the completion date or the date that you pay the balance of the funds in trust.
Most lenders also require property buyers to carry fire and extended coverage insurance and liability insurance.
Legal or Notary Public fees
Legal or notary public fees and expenses will likely apply to assist with drafting documents and ensuring the title of the home is transferred properly and without incident.
Moving fees vary depending on the distance moved and whether professional movers do all of the packing. Rates vary.
Goods and Services Tax (GST)
A GST rebate equivalent to 36% of the GST paid is available for new homes priced up to $350,000 and a partial rebate on new homes priced to $450,000.
Buyers will also pay the GST if payable on services such as appraisals and home inspections and survey fees.
Provincial Sales Tax
The PST is generally not payable on services except for legal and notary fees. Both GST and PST are paid on legal notary fees.
2% BC Transition Tax
This is a new tax coming into effect on April 1st 2013. It applies to the sale of new residential homes that are 10% or more complete on April 1 2013, with ownership or possession occurring on or after April 1 2013 and before April 1 2015.
Property Transfer Tax
Home buyers in BC pay a provincial Property Transfer Tax (PTT) when they buy a home. The tax is charged at a rate of 1% on the first $200,000 of the purchase price and 2% on the remainder.
First time home buyers may be exempt from paying the PTT of 1% on the first $200,000 and 2% on the remainder of the purchase price of a home priced up to $475,000. There is a proportional exemption for between $475,000 and $500,000. At $500,000 and above the rebate is nil. Click here for more cost saving programs.
Some lenders require property buyers to add property tax installments to monthly mortgage payments.
Pre-paid property taxes or utility bills
A buyer typically is required to reimburse the seller for any prepayments.
Mortgage life insurance
If the owner dies, this type of insurance will pay off the balance owing on their mortgage.
Fire and liability insurance
Most lenders require property buyers to carry fire and extended coverage insurance and liability
BUYING A HOME?
ADDITIONAL COSTS YOU SHOULD BE AWARE OF
Property Purchase Tax
1% of the first $2000,000 & 2% of the balance is payable to the Provincial Government at the time the transfer of title to the property is filed for registration in the Land Title Office
If you are a first time buyer you may be exempt from paying the Property Purchase Tax if:
you have never owned a principal residence anywhere in the world
you are a canadian citizen or permanent resident of Canada
you have resided in BC for at least one year immediately prior to your application to register the purchase
the purchase price does not exceed $275,000 (lower mainland) & $225,000 (outside lower mainland)
you are financing at least 70% of the Purchase Price (fair market value)
(this does not include any amounts borrowed from related individuals)
the mortgage must have a term of one year or more
you do not pay down more than $11,000 (lower mainland), $9000 (outside lower mainland) on your mortgage during the first year
the property is occupied as your principal residence and you take occupancy within 92 days of registration of the transfer at the land title office
After the tax due date (most lower mainland area taxes are due on the 1st business day in July) you will be required to pay a portion of the taxes for the balance of the year.
This also applies to utilities (water, sewer & garbage) if they are billed separately.
Your mortgage lender may require an application fee and an appraisal fee
C.M.H.C charges a fee based on the amount of mortgage
Single Family Homes
The mortgage lender will require written proof of fire insurance coverage (an Insurance Binder). Most insurance agents charge a fee for an Insurance Binder, generally from $0 to $30.
The mortgage lender may require a Survey Certificate. If you are unable to obtain a copy of an existing survey from the Vendor or City/Municipality, a new one will cost approx. $200 plus GST.
Strata Title Homes
Strata Certificates required:
Insurance Certificate - confirmation of insurance coverage on buildings & common property
Form A - Certificate of Full payment of Maintenance Fees
confirmation that strata fees are paid up to date
Section 36 Certificate - sets out information on the Strata Corporation.
(the cost for all 3 certificates is usually between $30 & $60)
Some condominiums require you to pay a move-in fee of $50 to $100.
Legal costs do vary. When requesting a quote ask that it include fees, all disbursements (the legal costs of searches, registration fees, couriers, photocopies, faxes, land title agent’s fees, etc.) and taxes (GST and PST) to be charged.