If you’ve decided to buy a home, it’s important you understand the costs involved in addition to the purchase price of the property.
Lenders may charge a mortgage application fee, which will vary depending on the lending institution.
The federal government requires high-ratio mortgages with less than a 20% down payment be insured against default. The cost ranges between 0.60 to 3.85 per cent of the mortgage amount, which is added to the mortgage principal.
The federal government requires a 10 per cent down payment on homes valued at $500,000 - $1 million that need mortgage insurance. Homes valued at $1 million+ require a minimum down payment of 20 per cent. Mortgage insurance is not available for homes in this price range.
Before your lender approves your mortgage, you may be required to have the property appraised. Sometimes your lender will cover this cost. If not, you're responsible. The fee ranges from approximately $300 to $600 plus GST.
Land survey fees
Lenders may require a survey of the property. The fee varies, but is typically $500 plus GST.
Home inspection fees
A home inspection is a report on the condition of the home and includes structural and moisture problems, as well as electrical, plumbing, roofing and insulation. The fees typically range between $500 and $900 depending on the size of the home and the complexity of the inspection. Some inspectors also charge an additional fee for an older home or a home with a secondary suite, a crawlspace, or a laneway home.
Goods and Services Tax
The GST on a new home is 5% of the price. 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 up to $450,000.
Buyers also pay the GST on fees for services from appraisers, home inspectors, lawyers, notary publics and REALTORS®.
Provincial Sales Tax
The PST is generally not payable on services except for legal and notary fees. Both the GST and PST are paid on legal and notary fees.
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 up to and including $2 million. The PTT is 3% on amounts greater than $2 million. If the property is residential, a further 2% PTT is payable on the portion greater than $3 million.
Qualifying first-time home buyers may be exempt from paying the PTT is $500,000 or below. There's a proportional exemption for homes priced between $500,000 and $525,000. At $525,000 and above, the rebate is nil.
Qualifying buyers of new homes may be exempt if the purchase price of their home is $750,000 or below. There is a proportional exemption for homes priced between $750,000 and $800,000. At $800,000 and above, there's no rebate.
Depending on the Contract of Purchase and Sale, a property buyer will likely need to reimburse the seller for prepaid property taxes. The lender may require the buyer to add property tax installments to monthly mortgage payments.
A buyer is typically required to reimburse the seller for prepayments for municipal sewer and water fees.
Rent and security deposits
If there is a secondary suite or a laneway home rental and the tenancy continues, the buyer receives the security deposit from the seller with accrued interest because the buyer is responsible for reimbursement when the tenant leaves.
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 insurance.
Lenders typically require home buyers with a mortgage to buy home insurance. The insurance should be effective on the earlier of either the completion date or the date that the balance of funds is placed in trust.
Legal or notary public fees
Buyers typically hire a lawyer or notary public to assist with drafting documents and ensuring the title of the home is properly transferred. Likely fees include a:
- title search for a property, this costs up to $11
- land title registration fee, which is about $75
For more information about land titles, contact the Land Title and Survey Authority of BC.
Moving fees and utility hookups
Moving fees vary depending on the distance moved and whether professional movers do the packing. Rates vary.
There are also fees for hydro, gas, water and sewer, cable, and phone connections
New owners should always re-key their door locks. Costs depend on whether the locks are standard or electronic.
Strata maintenance fees
Strata fees are typically paid on the first day of each month. If you have questions about closing costs, please contact your Realtor.
What does it cost to hire a Realtor? There's no set commission rate in the real estate profession. Most Realtors are paid after ownership is transferred. Fees are typically paid to the real estate company by the lawyer or notary in the transaction, from the sale proceeds.
Compensation is always agreed to beforehand between you and your Realtor. The commission paid depends on the services your Realtor provides, which can vary significantly depending on your needs as a client or the business model your Realtor employs.
The standard Multiple Listing Contract provides that commission is payable on the earlier of the following: Completion date under the Contract of Purchase and Sale, or the actual date that the sale completes.
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