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Buying Cost Guide

The following information is intended as an approximate guide only.  Effective July 1, 2010 all goods and services are subject to HST, Harmonized Service Tax, 12%.  All costs mentioned below are to be verifed by the reader by the respective authority.

• Deposit:  This is part of your down payment and must be paid when you make an Offer to Purchase; up to 5% of the asking price.
• Down Payment:   With mortgage loan insurance from CMHC you can own your home with a minimum down payment of 5%. At least 20% of the purchase price is usually required for a conventional mortgage.
• Harmonized Service Tax:   If you buy a newly constructed home, you must pay the 12% HST.  However, if your house is less than $525,000 you may be eligible for a rebate. There is no HST on resale housing unless there have been substantial renovations to the property.
• Property Transfer Tax:  This tax is 1% on the first $200,000 of the sale price and 2% on the remainder.  In addition to the First Time Home Buyers' Program, there are a number of exemptions that may apply to the transfer of property, exempting all or a portion of the transfer from Property Transfer Tax.
• Prepaid property taxes or utility bills:  You will have to reimburse the sellers for any prepaid property taxes or utilities at closing.
• Mortgage loan insurance and application fee:  Mortgage loan insurance is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price. Mortgage loan insurance helps protects lenders against mortgage default, and enables consumers to purchase homes with a minimum down payment of 5% — with interest rates comparable to those with a 20% down payment.  To obtain mortgage loan insurance, lenders pay an insurance premium. Typically, your lender will pass this cost on to you. The premium payable is based on a percentage of the home’s purchase price that is financed by a mortgage. The premium can be paid in a single lump sum or it can be added to your mortgage and included in your monthly payments.  Mortgage loan insurance is not to be confused with mortgage life insurance which guarantees that your remaining mortgage at the time of your death will not be a burden to your estate.
• Appraisal:  Before your lender approves your mortgage, you may be required to have an appraisal done. Sometimes your lender covers this cost otherwise you are responsible for covering this cost. The fee ranges from $250 to $350.
• Survey or Certificate of Location fee:   Your lender may require an up-to-date survey of the property. The fee ranges from $1,000 to $2,000.
• Home Inspection fee:  It will cost you from $425+ depending on property size.
• Water Testing fee:   If the property has a well, you will want to have the quality of the water tested to ensure that the water supply is adequate and the water is potable.
• Septic Tank Inspection fee:  If the property has a septic tank, it should be checked to make sure it is in good working order and cleaned out.
• Disbursements to Land Titles Office:  Your lawyer/notary will arrange this payment, however, confirm that it is included when discussing costs with Lawyers and/or Notary Publics.
• Property Tax Information Cost:  This cost is usually inclluded in with the Legal Fees and Disbursements, however, confirm that it is included when discussing costs with Lawyers and/or Notary Publics.
• Strata fee Adjustment:  This is the amount of the maintenance fee you will be responsible to pay in the month that you move in to the property
• Move-in fee:  Strata properties often charge a move-in fee to the purchaser to cover the cost of preparing the elevators for the move, etc. 
• Title Insurance:  Your lender or lawyer/notary may suggest title insurance to cover loss caused by defects of title to the property.  For example, policies under $500,000.00, the cost is $250.00. For evey $1,000.00 in value over $500,000.00, the price increases by $.90.  Unlike life or house insurance, this is a one time cost at the time of ordering the title insurance policy. There is no annual premium.
• Legal fees:  Lawyers/Notaries fees must be paid upon closing and costs vary according to the complexity of the transaction but they will probably be at least $700+ for a sale and for a $875+ for a purchase .  For a detailed quote contact info@bcrealestatelawyers.com or 310-HOME (4663).

Besides up-front costs, there are other expenses to consider when purchasing:

• Appliances.  Check to see what comes with the house, if anything.
• Gardening equipment.
• Snow-clearing equipment.
• Window treatments.  Check to see what comes with the house.
• Decorating materials.  Paint, wallpaper, flooring and tools for redecorating.
• Hand tools.  You may need some basic hand tools for your new home.
• Dehumidifier.  May be required to control moisture levels, especially in older homes.
• Renovations or Repairs.
• Insurance for your property and contents.
• Service hook-up fees.  Include the costs to hook-up hydro, telephone, cable, etc. for your new home.
• Moving expenses.  Include any other costs of the move, including the cost to rent a truck or moving van.  REMINDER:  rates are higher at the end of the month.

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