If you’re buying a home, it’s important to understand all the costs involved in completing the deal, in addition to the price you’re paying for your new home.
Here’s an overview.
Mortgage application
Lenders may charge a mortgage application fee, which will vary depending on the lending institution. If you are borrowing part of your down payment through the BC Home Owner Mortgage and Equity (HOME) Partnership Program, there will be additional fees.
Mortgage insurance
The federal government requires high-ratio mortgages with less than a 20-per-cent down payment to be insured against default. The cost ranges between 0.60 to 3.85 per cent of the mortgage amount, and is added to the mortgage principal.
The federal government requires a 10-per-cent down payment on homes valued between $500,000 and $1 million that need mortgage insurance.
Mortgage insurance is not available for homes valued at or over $1 million. Additionally, these homes require a minimum 20-per-cent down payment.
Appraisal fees
Before your lender approves your mortgage, you may need to have the property appraised. Sometimes your lender will cover this cost. If not, you’re responsible. The fee ranges from $300 to $450.
Land survey fees
Lenders may require a survey of the property. The fee is typically around $500.
Home inspection fees
A home inspection is a report on the condition of the home. The inspection will assess potential structural and moisture problems, as well as electrical, plumbing, roofing and insulation issues. The fees vary, but are typically 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, crawlspace or laneway home.
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, which costs up to $11.
- A land title registration fee, which is about $75.
For more information about land titles, visit the Land Title and Survey Authority of BC at www.ltsa.ca.
Mortgage broker fees
Your mortgage broker may charge a fee to find you the best mortgage.
REALTOR® fees
Compensation is agreed to beforehand between you and your Realtor. Compensation can vary depending on your needs and the business model employed by the Realtor. Fees are typically paid to the real estate company, through the lawyer or notary, from the sale proceeds. Fees are paid on the completion date of the contract, or on the actual date the sale completes.
GST
The GST on a new home is five per cent of the price. A GST rebate equivalent to 36 per cent of the GST paid is available for new homes priced up to $350,000 and a partial rebate is available on new homes priced up to $450,000. Buyers also pay the GST on fees for services from appraisers, home inspectors, lawyers, notaries public and Realtors.
PST
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 B.C. pay a provincial property transfer tax (PTT) when they buy a home. The tax is charged at a rate of one per cent on the first $200,000 of the purchase price, two per cent on the remainder up to $2 million, and three per cent on amounts greater than $2 million.
Qualifying first-time homebuyers may get a PTT exemption if the home is priced up to $500,000. There is a proportional exemption for homes between $500,000 and $525,000. There is no rebate for homes priced at $525,000 and above.
Qualifying buyers of new homes may be exempt if the home is priced up to $750,000. There’s a proportional exemption for homes between $750,000 and $800,000. At $800,000 and
above, there is no rebate.
An additional 15 per cent PTT is charged on the purchase price to buyers in Metro Vancouver who are not Canadian citizens or permanent residents of Canada, and who don’t have work permits.
Here is a detailed fact sheet concerning Property Transfer Tax
Property taxes
Depending on the contract, a home buyer will likely be required to reimburse the seller for any prepaid property taxes. The lender may require the buyer to add property tax instalments to monthly mortgage payments.
Municipal utility bills
A buyer is typically required to reimburse the seller for any prepayments for municipal utilities such as water, sewer, drainage, garbage and recycling.
Rent and security deposits
If there’s a secondary suite or a laneway home rental and the tenancy continues, the buyer receives the security deposit from the seller with accrued interest. 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 the mortgage.
Fire and liability insurance
Most lenders require homebuyers to carry fire, extended coverage and liability insurance.
Homeowners’ insurance
Lenders typically require home buyers with a mortgage to buy home owners’ 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.
Moving fees
Moving fees vary depending on the distance moved and whether professional movers do the packing.
Utility hook-ups
There are fees for hydro, gas, water and sewer, cable and phone connections.
Locks
New owners should always have door locks rekeyed. Costs depend on whether the locks are standard or electronic.
Strata maintenance fees
These are typically paid on the first day of each month.
Source: Real Estate Board of Greater Vancouver
