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CLOSING COSTS WHEN PURCHASING A HOME


Blog by Shali Tark | November 29th, 2016


GST 

If you buy a newly constructed home or a substantially renovated home, you must pay the 5% GST. Depending on your purchase price, there will be a GST rebate. Calculate your rebate at http://www.bcrealestatelawyers.com/gst-calculator/

Property Transfer Tax (PTT) 

When a residence is purchased a Property Transfer Tax (PTT) is applied. The tax is calculated at 1% on the 1st $200,000 and 2% on the remainder until $2’000’000 in value. After $2’000’000, the PTT is 3%. There are certain exemption that may apply. For up to date information please visit: www.rev.gov.bc.ca 

Mortgage Loan Insurance and Application Fee 

If you get a high-ratio mortgage (a mortgage where you pay less than a 20% down payment) you will have to buy mortgage loan insurance from CMHC or a private company. This insurance can range from 3.60% to 1.8%. 

Mortgage Application Fee 

Some lenders may require borrowers to pay for an application fee. The mortgage application fee is also called an appraisal fee at other lenders. The Fee is generally $250. You will also have to pay an application fee. CMHC’s standard fee is $235. CMHC also offers a basic service for a $75 fee but it must be accompanied by an appraisal. 

Appraisal 

Before your lender approves your mortgage, you may be required to have an appraisal done. Sometimes your lender covers the cost otherwise you are responsible for covering the cost. The fee ranges from $150 to $350. 

Survey Fee and/or Title Insurance

Your lender may require an up-to-date survey of the property. If the seller did not provide you with one, you will have to pay to have one done. Surveys can cost up to $700. However, in recent years, lenders have required Title insurance instead of a survey. Title Insurance is generally much cheaper and costs between $100 - $250. 

Home Inspection Fee 

I recommend that you get a home inspection by a certified home inspector. This will give you peace of mind by removing the uncertainty when purchasing a home. It will cost you anywhere from $350 to $1000 depending on type and size of dwelling. 

Legal Fees 

Lawyers/Notary fees for closing the sale vary according to the complexity of the deal but they should range from $600 - $1500. Disbursements to Land Titles Office - These fees are approximately $300. 

Adjustments
You have to reimburse the Seller for prepaid costs such as property taxes, strata fees, and utility bills such as gas, hydro and water. These reimbursement can be as much as $2000 or more for a larger home and as low as $300 for condos.