Buying a home costs more
than the offer you make. There are numerous other expenses that
will add to the amount that you'll need to spend. This purchase
price checklist outlines all the costs you can expect. Please
note that they can vary by province and are subject to change.
 Purchase
Price
Lawyer's
Fees
Land
Transfer Tax
Registration
Fees
High
Ratio Insurance
Compliance
Letter
Tax
Certificate
Provincial "New
Home Warranty Program" premiums—New
Homes Only
Mortgage
Appraisal and Application Fees
Home
Inspection
Land
Survey
Title
Insurance
Connection
Charges
Property
Tax and Prepaid Utilities Adjustments
Interest
Adjustment (IA)
GST
Purchase Price
The starting point in your calculation... if you're
like most first-time home buyers, you'll need a mortgage for the
majority of this!
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Lawyer's Fees
Although fees vary across the nation, it can cost
between $800.00 -$2,000.00 depending upon whether you are re -mortgaging
your existing home or buying new. As prices do vary, please contact
our office and we will refer you to a lawyer for an accurate quote
on these fees. For a list of Lawyers / Notaries please visit
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Land Transfer Tax
A tax payable to the Provincial Government by
the purchaser upon the transfer of title from a seller. This amount
is usually not expected by most homeowners. It can be sizeable.
The amount varies from province to province and is generally a
percentage of your purchase price. In BC, the tax is 1% of the
first $200,000.00 of the properties fair market value and 2% of
the remaining fair marketing value. There are a number of exceptions
available to purchasers so that the tax is not payable. The most
common us the exemption for “First Time Home Buyers.” To qualify for an exemption
to the Property Purchase Tax as a First Time Home Buyer, the follow
criteria must be met:
- Purchaser must never have owned an interest
in a principal residence anywhere in the world at any time;
- Purchaser
must be a citizen of or a permanent resident of Canada and have
resided in BC for at least one year prior to the purchase or
have filed two income tax returns as British Columbia resident
within the last 6 years;
- To obtain full exemption, the purchase price
must not exceed $375,000.00 in the Greater Vancouver area. A
partial exemption is now available for homes between $375,000.00
and $400,000.00.
- Mortgage Financing must be at least 70% of the
fair market value of the property, and must have a term of at
least one year (special rules apply for mortgages that have a
term of less than one year and demand mortgages);
- Purchasers must 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;
- Pro rata exemption where property exceeds
.5 hectares or a portion of the property is not residential
(i.e. commercial lofts) – purchase price of entire property
must not exceed the price limitations.
For Full details, please visit: www.sbr.gov.bc.ca/Rpt/ptt/ptt-faq.htm
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Registration Fees
Fees paid to the provincial government for recording
a title transfer, mortgage registration or other instrument such
as an Assignment or Lien with the local authorities. The lawyer
will collect these fees as part of their overall legal fee package.
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High Ratio Insurance
Must be purchased if you are buying a home for
less than 25% down. A sliding fee scale applies, depending on the
percentage of the purchase price required in a first mortgage (some
minor exceptions). The fees can be added to the mortgage and are
as follows:
Up to 85% = 1.75%
Up to 90% = 2.00%
Up to 95% = 2.75%
Up to 100% = 3.10%
There are some special programs through the insurance
companies which charge a slightly higher premium, but these are
the standard fees fro purchases.
Canada Mortgage Housing Corporation (CMHC) http://www.cmhc-schl.gc.ca/en/
GE Capital – www.gemortgage.ca
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Compliance Letter
Obtained by your lawyer and required in many municipalities
throughout Canada before a property transfer can take place. This
is an acknowledgement from the building department that the property
either has, or is clear of outstanding work-orders. Work-orders
are specific clean-up or fix-up requirements that the owner is
legally required to do, and which must be completed before ownership
can be transferred.
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Tax Certificate
Obtained by your lawyer at the time of sale to
confirm that local taxes have been paid up to date. If they are
not up to date, the seller is required to pay them from the proceeds
of the sale. If there are insufficient proceeds, then you may be
legally required to pay the outstanding taxes. If, on the other
hand, taxes have been prepaid, you may have to compensate the seller
for them.
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Provincial "New Home Warranty Program" premiums — New
Homes Only!
A third party (provincial) warranty program between
a builder and a buyer. With the exception of Ontario and Quebec,
membership in such a program is voluntary for the builder. Through
these programs, your home is guaranteed against defects for at
least one year. All homes with a high-ratio insured mortgage (greater
than 80% loan to value) must be enrolled in such a program.
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Mortgage Appraisal and Application Fees
Appraisal fees generally range from $214.00-$500.00
depending on the property.
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Home Inspection
A report commissioned by a property owner or purchaser,
usually to verify the condition of a property prior to the "firming
up" of a purchase agreement. The scope and detail may vary,
but most reports outline any particular problems and associated
repair costs. Unfortunately, no licensing is required, and this
service is not specifically regulated other than by general consumer
protection legislation. The best safeguard against inadequate work
is to ask for the resume of the Inspector, or obtain a referral
from your mortgage broker or agent or go to www.cahpi.bc.ca for
a list of home inspectors.
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Land Survey
The legal written and/or mapped description of
the location and dimensions of your land. The survey should also
show the dimensions and placement on the lot of any structure,
including additions such as pools, sheds and fences. An up-to-date
survey is often required by a lender as part of the mortgage transaction.
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Title Insurance
New to Canadian consumers over the last few years
is the introduction of title insurance into the home buying process.
Title insurance can be purchased by home buyers to protect against
potential deficiencies in a number of areas, such as the land survey.
There are numerous benefits to this product, and you should consult
your lawyer with any questions in this product.
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Connection Charges
Some local utility companies (hydro, gas, oil)
charge a fee on closing to connect new buyers up to their service.
More common, however, is an extra charge on the first billing.
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Property Tax and Prepaid Utilities Adjustments
If the previous owner prepaid property taxes or
other utilities, they will be credited the prepaid portion on closing.
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Interest Adjustment (IA)
If you arrange to make your mortgage payments monthly
on the first day of the month, and your transaction closes after
the first day of the month, your lender will charge you interest
on closing to the next interest date, called the Interest Adjustment
Date (IAD), when your payment cycle will commence. This can be
a sizeable amount, but it is the correct interest you should pay.
For example, close on June 15th, pay 15 days interest on closing
and start payments on August 1st.
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GST
Please visit www.cra-arc.gc.ca/tax/business/topics/gst/construction/menu-e.html |
