Budgeting for Closing Costs


Don't forget about closing costs! When buying a home, be sure to plan ahead when saving for that down payment and closing costs. Closing fees include things like including legal fees, Realtor fees, moving costs, disbursement fees, and utility fees. They are typically paid on the day your purchase closes. 

Other costs you will come across when purchasing a home are:

MORTGAGE INSURANCE
High-ratio mortgages with less than 20% down need to be insured against default. The costs ranges between .6% to 4.5% of the mortgage which is added to the mortgage principal. 

APPRAISAL FEES
Sometimes you will be required by your lender to have the property appraised. The fees can range from $300 to $450 plus GST. Some lenders will cover this cost, if not, you are responsible. 

LAND SURVEY FEES

Lenders may require a survey of the property. The fee is typically $500 plus GST.

GOODS AND SERVICE TAX (GST)

GST on a new home is 5% of the price. It is also payable in your service fees (inspections, legal, real estate commission-if applicable, moving costs). It is NOT charged on the purchase of re-sale property, ONLY new construction or substantially renovated homes, and sometimes (but NOT ALWAYS) included in the purchase price of new construction.

PROPERY TRANSFER TAX (PTT)

This tax is mandated by the PROVINCIAL GOVERNMENT, & is calculated as follows on the Purchase Price of the home:1% on the 1st $200,000 then 2% on the balance up to & incl. $2,000,000, then 3% on any remaining balance over $2,000,000. A further 2% on the portion of the fair market value greater than $3,000,000.The tax is payable on the purchase of all properties in BC with the following exemptions:You are a First-Time Home Buyer and Fulfill the following criteria: Have never owned an interest in a principal residence anywhere in the world at any time. Are a Citizen or Permanent Resident of Canada Have resided in B.C. for 12 consecutive months immediately before the date you become a registered owner, or you have filed two income tax returns as a B.C. within the prior 6 years of becoming the owner. Move into the property within ninety-two days after registration of the purchase of the property and reside in the property for at least one year. Only be used as your Principal Residence Fair Market Value of $500,000 or less Be 1.24 acres or smaller Partial exemption to $525,000

ADJUSTMENTS

Property Taxes: These are taxes levied by your local Municipal Government, calculated from the property's Assessed Value that is adjusted yearly. They can sometimes be combined with your mortgage payment, may be partially payable on Completion date and/or payable annually to your local government offices. 

Utility Bills: A buyer is typically required to reimburse the seller for any prepayments for municipal sewer and water fees if applicable. 
Rent and security deposits: If there is a secondary suite in the home and the tenant continues their tenancy, the seller gives the buyer the security deposit because the buyer is now 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
This insurance protects your home in the event of a fire or other damage. Mortgage lenders will require this coverage to be put into place before they forward mortgage funds on the date of completion.