Description of the Costs associated with the purchase of a home, in regards to the Buyer.
It’s easy to count your available cash but remember that all of these cash savings cannot be used as your down payment. There are last-minute costs such as taxes, legal fees, appraisal fees, moving expenses and house insurance to pay before you are fi nally in your new home. The time for you to budget for those “end” expenses is NOW. You must be prepared to pay most, and perhaps all, of the following closing costs.
Property Purchase Tax:
The British Columbia Provincial Government imposes a property purchase 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.
Goods & Services Tax:
If you purchase a newly constructed home, you may be subject to 6% GST on the purchase price. However, if the home is under $350,000, a rebate will reduce the GST paid to 4.48% of the purchase price. If the price is over $350,000 the net GST to be paid increases gradually until it is a full 6% 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 certifi cate 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. If the current owner cannot provide a recent survey certificate, it will be your responsibility to pay the surveyor’s fee.
Mortgage 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 mortgage loans in excess of 75% of the appraised property value. It’s purpose is to insure that the lender will not lose any money if you cannot 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 lender and ranges from 1/2% to 3% of the loan value; however, in most cases this premium is added to the loan amount, and paid for over the term of the loan.
Fire & Liability Insurance:
The mortgage lender will insist that you purchase an insurance policy which guarantees that, in the event of fi re, the lender will receive the balance owing on the mortgage 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 Offi ce in order to protect the new owner’s interests.You will probably want to engage a lawyer or notary public to act on your behalf during the completion of your purchase. The legal fees for this service will include payment of a registration fee. If you are financing your purchase with a new mortgage loan, there will be a further fee to prepare and register the mortgage documents.