Buyer's Costs

buyer's costs.JPGIf you’ve decided to buy a home, it’s important you understand all the costs involved in addition to the price you're paying for the property.

Here’s an overview.

Mortgage application

Lenders may charge a mortgage application fee, which will vary depending on the lending institution.

Mortgage insurance

The federal government requires high-ratio mortgages with less than 20% down payment to 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.

Appraisal fees

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 and is typically $300 plus GST.

Land survey fees

Lenders may require a survey of the property. The fee ranges and is typically $700 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 range and is typically $500 - $700 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.

buyer's costs3.JPGGoods and Services Tax (GST)

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 will also pay the GST on fees for services from appraisers, home inspectors, lawyers and Notary Publics.

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.

Qualifying first-time home buyers may be exempt from paying the PTT if the purchase price of their home is priced up to $475,000. There is a proportional exemption for homes priced between $475,000 and $500,000. At $500,000 and above the rebate is nil. Click here for more cost saving programs.

Adjustments (see details in the Contract of Purchase and Sale)

Property taxes
Depending on the Contract of Purchase and Sale, a property buyer will likely be required to reimburse the seller for any prepaid property taxes. The lender may require the buyer to add property tax installments to monthly mortgage payments. See also Why do I have to pay property taxes on the house I'm buying.

Utility bills
A buyer is typically required to reimburse the seller for any prepayments for municipal swer 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.

buyer's costs2.jpgHome 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.

Moving fees

Moving fees vary depending on the distance moved and whether professional movers do all of the packing. Rates vary.

Utility hook ups

Typically $200 for hydro; cable; phone. There will also be a fee for water and sewer.

Locks

New owners should always have door locks rekeyed. This typically costs $100 per door. Electronic locks cost more.

Strata maintenance fees

Typically paid on the first day of each month.


If you have questions about closing costs, please contact us.