THE CLOSING COSTS:
There are many costs that home buyers incur. Some of the expenses related to buying a home are one-time costs, while others are continuing costs.
It is easy to count your available cash, but remember that all of these cash savings cannot be used as your down-payment. There are last-minute costs such as taxes, legal fees, appraisal fees, moving expenses and home insurance to pay before you are finally in your new home. The time to budget for those closing expenses is now. You must be prepared to pay most, and perhaps all, of the following closing costs.
Your largest cost at the beginning is your down payment.
DOWN PAYMENT: As a first time buyer, this would likely represent 5 – 20% of the purchase price, based on your mortgage financing.
LEGAL FEES & DISBURSEMENTS: The transfer of home ownership from the seller to the buyer must be recorded in the Land Title and Survey Authority Office in order to protect the new owner’s interests.
You will probably want to engage a lawyer or notary public to act on your behalf during the completion of your purchase. The lawyer or notary public will charge a fee for this service, plus disbursements, including the Land Title Registration fee. If you are financing your purchase with a new mortgage loan, there will be a further fee and disbursements to prepare and register the mortgage documents.
GOODS AND SERVICES TAX (IF APPLICABLE): If you purchase a newly constructed home, you may be subject to GST on the purchase price. There may be some rebates available depending on the value of the home. For further information contact the Canada Revenue Agency at www.cra-arc.gc.ca
PROPERTY TRANSFER TAX: The British Columbia Provincial Government imposes a property transfer tax, which must be paid before any home can be legally transferred to a new owner. The current cost is 1% of the first $200,000 & 2% up to $2,000,000 & 3% above $2,000,000 of the final purchase price and is paid upon completion. Some buyers may be exempt from this tax. For further information, please view the Property Transfer Tax office website at www.sbr.gov.bc.ca/business/Property_Taxes/Property_Transfer_Tax/ptt.htm
ADJUSTMENTS: If the current owners have already paid the full year’s property taxes and Municipal Charges (like Water/Sewer & Garbage Collection) to the municipality, you will have to reimburse them for your share of the year’s taxes. This gets paid at completion and is determined by the Statement of Adjustments that will be provided to you by the Lawyer or Notary you choose.
INTEREST: Interest will accrue on your mortgage from the day the mortgage is funded. Your monthly, Weekly or Bi-Weekly mortgage payment will include an interest portion of the payment and a principal portion of the payment that will change over the course of the mortgage repayment.
PROPERTY TAXES & UTILITY PAYMENTS: These costs will vary by municipality in what they cover and when they are due. Some municipalities even cover these charges in maintenance fees if your purchase is in a strata titled property. Please check with The Christies Real Estate Team to verify how these charges are divided up in the Municipality you choose to buy in.
STRATA FEES: Monthly to be determined by the strata you purchase in and the fee is based on your unit entitlement and services included in the strata.
SURVEY FEE: The lending institution may also require that a survey certificate be presented to them. The purpose of the survey is to formally establish the boundaries of the property and to ensure that all buildings are within those boundaries.
Note: Lending institutions may ask for either a building location survey, which establishes where a building is located on a property, or a monumental survey, which establishes the actual boundaries of a property. If the current owner cannot provide a recent survey certificate, it will be your responsibility to pay the surveyor’s fee or the Title Insurance Fee in it’s place.
HOME INSPECTION FEE: Home inspections are always recommended by The Christies Real Estate Team on every purchase, on every type of property. They can vary in cost based on services provided, length of inspection and type of property inspected. Ask The Christies Real Estate Team for a list of trusted professionals in your area.
APPRAISAL FEE: When the lending institution requires an appraisal of the home before approving your loan, it may be your responsibility to pay the appraiser’s fee.
MORTGAGE BROKER’S FEE (IF APPLICABLE): Ask your mortgage broker or bank mortgage specialist if there is a fee to use their services.
MORTGAGE APPLICATION FEE: Lending institutions may charge a mortgage application fee. This application fee may vary between lending institutions.
MORTGAGE LOAN INSURANCE PREMIUM (IF APPLICABLE):
MORTGAGE DEFAULT INSURANCE: This type of insurance is required on most mortgage loans in excess of 75% of the appraised home value. Its purpose is to ensure that the lender will not lose any money if you cannot make your mortgage payments and the value of your home is not sufficient to repay your mortgage debt. The insurance premium is paid to the lender and in most cases, is added to the loan amount and paid for over the term of the loan.
MORTGAGE LOAN INSURANCE APPLICATION FEE (IF APPLICABLE):
MOVING EXPENSES: These could include move in/out fees in your strata building, renting a moving van, hiring a moving crew or if your friends and family are helping out, pizza and water for your helpers!
SERVICE AND UTILITY HOOK UP FEES: Including disconnecting services fees (if applicable) and utility deposits (if required).
FIRE & LIABILTY INSURANCE: The mortgage lender will require that you purchase an insurance policy which guarantees that, in the event of fire, the lender will receive the balance owing on the mortgage loan before you receive any insurance proceeds.
LIFE & DISABILITY MORTGAGE INSURANCE: At your option, you may purchase insurance which will ensure that your outstanding mortgage balance is paid if you die or become disabled.
DEED AND/OR MORTGAGE REGISTRATION FEE:
ESTOPPEL CERTIFICATE FEE:
WATER QUALITY & QUANTITY CERTIFICATE (IF APPLICABLE):
OIL TANK SURVEY OR INSPECTION FEE (IF APPLICABLE): This will very based on location of the property and age of the home.
ADDITIONALLY, ONCE YOU HAVE PURCHASED YOUR HOME, YOU WILL INCUR REGULAR EXPENSES ON A MONTHLY, QUARTERLY OR YEARLY BASIS. SOME OF THESE COSTS INCLUDE:
MORTGAGE PAYMENT – CAN BE MONTHLY, WEEKLY OR BI-WEEKLY DEPENDING ON HOW YOUR MORTGAGE HAS BEEN SET UP.
MUNICIPAL CHARGES/UTILITY FEES – EVERY MUNICIPALITY SETS UP THEIR MUNICIPAL CHARGES DIFFERENTLY, WITH SOME MUNICIPALITIES COLLECTING THEIR PAYMENTS OVER TWO INSTALLMENTS A YEAR, SOME IN JUST ONE INSTALLMENT. ALSO, DEPENDING ON THE MUNICIPALITY, THEY COULD BE INCLUDED IN YOUR PROPERTY TAXES OR MAY NOT BE. EITHER WAY, EXPECT TO PAY A WATER/SEWER CHARGE, GARBAGE COLLECTION AND PROPERTY TAXES YEARLY.
ELECTRICITY & GAS SERVICES – These will vary based on the types of heating in your home and your personal consumption.
Other last-minute (at your option) costs you should not forget to set some money aside for:
garbage cans, tools, window coverings, etc.
redecorating or renovations
furniture, paint, window coverings, etc.