Closing Costs
Its easy to count your available cash, but remember that all of these cash savings can not be used as your downpayment. There are last minutes costs such as taxes, legal fees, appraisal fees, moving expenses, and house insurance to pay before you are finally in your new home. The time to budget for those "end" expenses is now. You must be prepared to pay for most, and perhaps all, of the following closing costs.
Property Transfer Tax - The British Columbia Provincial Government imposes a property transfer tax which must be paid before any property can be legally transferred to a new owner. The tax is 1% on the first $200,000 of the property value and 2% on any value over $200,000. Some buyers may be exempt from this tax, so contact the Property Transfer Tax office in Victoria to be sure.
Goods & Services Tax - If you purchase a newly constructed home, you may be subjected to 5% GST on the purchase price. However, if the home is under $350,000, a rebate will reduce the GST paid to the of the purchase price. If the price is over $350,000, the net GST to be paid increases gradually unitl it is the full 5% at amounts over $450,000.
Property Tax - If the current owners have already paid the full year's property taxes to the municipality, you will have to reimburse them for your share of the year's taxes.
Appraisal Fee - When the lending institution requires an appraisal of the property before approving your loan, it may be your responsibility to pay the appraiser's fee.
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 the property. If the current owner cannot provide a recent survey certificate, it will be your responsibility to pay the surveyor's fee.
Mortagage Application Fee - Lending institutions may charge a mortgage application fee. This application fee may vary between lending institutions.
Mortgage Default Insurance - This type of insurance is required on all mortage loans in excess of 75% of the appraised property value. Its purpose is to ensure that the lender will not lose money if you can not make your mortgage payments and the value of your property is not sufficient to repay your mortgage debt. The insurance premium is paid to the lended and ranges from .5% to 3.75% of the loan value; however, in most cases this premium is added to the loan amount and paid over the term of the loan.
Life and Disability Mortgage Insurance - At your option, you may purchase insurance which will ensure that your outstanding mortagage balance is paid if you die or become disabled.
Fire and Liability Insurance - The mortage lender will insist that you purchase an insurance policy which guarantees that, in the event of fire, the lender will receive the balance owing on the mortage loan before you receive any insurance proceeds.
Legal Fees - The transfer of property ownership from the seller to the buyer must be recorded in the Land Title Office in order to protect the new owner's interests. You will probably want to engage a awyer or notary public toact on your behalf during the completion of your purchase. The lawyer or notary public will charge a fee for this service,plus dibursements,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.
Other last minute costs you shouldn't forget to set some money aside for:
- home inspection fees
- moving expenses
- deposits required by utility companies
- household goods: Kitchen appliances,garden equiptment, window coverings
- redecorating and renovations
Email