Understanding Your Closing Costs

When buying a home people should be prepared for all costs associated with the purchase. Here is a breakdown of some of the costs that you may incur when buying a home:

Legal Fees: Usually range around $1000. You can choose either a Lawyer or Notary to complete your transaction.

Home Inspection: Optional but very important as it provides a detailed analysis of the property. It helps educate you on your property and potentially save you money over the long run.

Property Transfer Tax: A fee paid to the Provincial Government for recording a title transfer or a mortgage registration. In B.C. it’s 1% of the purchase price up to $200,000 plus 2% on the portion that is greater than $200,000.

Note: If you are a first time home buyer and meet the first time home buyer qualifications, you can qualify for a full exemption if the property value is not more than $425,000, it’s your principle residence and the property is 1.24 acres or smaller.

http://www.sbr.gov.bc.ca/business/property_taxes/property_transfer_tax/first_Time_home_buyer.htm

Title Insurance: If there is not a survey certificate available on the property then title insurance may be a requirement from the mortgage lender. It provides protection against problems that could be seen on a survey and it also is a way to protect the purchaser against title fraud.

Mortgage Insurance:  This is only needed if you are buying a home with less than a 20% down payment. It can be included in your mortgage.

http://www.cmhc-schl.gc.ca/en/co/buho/
http://www.genworth.ca/homeownership/index.asp
http://www.canadaguaranty.ca/homebuyers

HST: When buying a brand new home you will be faced with paying HST. Sometimes it is included in the purchase price but other times it is not. Make sure to know exactly how it is set out in the contract. There is a rebate that can be claimed if you are purchasing a new home.

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/cnstrctn/nwhsng/bc/menu-eng.html

Property Tax & Prepaid Utilities: If the previous owner prepaid property taxes or city utilities, they will be credited the prepaid portion on closing. If they paid all their property taxes in June, expect a adjustment amount after any purchase closing after June.

Utility Hook Ups: When hooking up hydro or gas you may be required by the service provider to pay fees to have your account set up.

Appliances: This may not be a cost that you will incur if you wrote in the purchase agreement to keep the appliances that are currently in the home. However not all sellers want to leave their appliances behind.

When setting your budget, you also need to consider the ongoing costs that will become a part of your monthly home ownership expenses, which include:

• Home insurance
• Property taxes (they can be added into your mortgage payment)
• Utilities – gas/hydro
• Ongoing maintenance

**These fees will not be incurred by every homeowner and are subject to change.