Buying a home is a milestone, whether it’s your first, third or fourth. In addition to the price of a home, there are some other costs you’ll incur. Some of these costs are one-time fixed payments, while others represent an ongoing monthly or yearly commitment. Not all costs apply to every sale or purchase. However, when you are aware of the following items you won’t be hit with any surprises on closing day.
Inspection fee
An inspection performed by a professional inspector is a sound investment. For $300 – $500, you’ll receive a written report on areas that are structurally sound and those where repairs are required and how soon they need to be done.
Appraisal fee
When you apply for a mortgage, your lending institution may ask for an appraisal of the property.
Property insurance
Insurance on your home covers the replacement value (structure and contents). To protect their investment on their loan, financial institutions require this coverage. Allow for $500 – $1,000.
Service charges
There will be an installation fee for utility services, including telephone, water, electricity, gas and cable. Hook up fees range from $50.00 – $175.00 depending upon the service.
Legal fees
A lawyer should review every real estate transaction. Fees are determined by the complexity of the issues involved. Shop around and ask for an estimate prior to hiring any lawyer. It should be around $700 – $1,000 at this time in Vancouver
Mortgage loan insurance fee
Depending upon the down payment, some lending institutions require mortgage loan insurance. Budget between 0.5% – 3.5% of the total amount of the mortgage.
Mortgage application fee
Some financial institutions charge a mortgage application fee to process your application. If your request for a mortgage is turned down, most will return the application fee to you. Each time you renew a mortgage some institutions also charge a fee.
Moving costs
Costs for professional movers range from $65.00 – $100/hour for a van and two movers. Prices may be higher during peak moving times.
Closing costs
With the purchase price of a resale home, the closing is always “subject to usual adjustments.” This means that any amount that the seller has already prepaid will be adjusted so that the home buyer pays the excess amount back to the seller, and vice versa. These adjustments can include: municipal property and school taxes, monthly condominium maintenance fees, first and last month’s rental for rental properties where renters may be in the home, and utilities such as hydro, water and fuel oil, including GST.
Interest adjustment costs
Most lenders expect the first mortgage payment one month after closing the purchase, however, if you close mid-month, some lenders expect the first payment at the beginning of the next month, two weeks before you would normally expect. Or they charge a pro-rated interest to make up the difference.
Property Purchase tax
British Columbia charges a one-time tax based on a percentage of the purchase price of the property. The PPT is 1% on the first $200,000 – 2% on the remainder.
I can advise you on which service provider would be the most cost efficient and give you the best service for your particular purchase situation. Or you could be eligible for the one time PPT exemption.
The exemption is satisfied if
- The Property price is less than $375,000
- Mortgage is 70% or greater
- Never owned a primary residence anywhere in the world
- Must be a Canadian Citizen or permanent resident for the past 12 months prior to the completion date.
- You must live in the home for a minimum of 1 year.
