Closing Costs for Buyers
Costs associated with buying a home:
When most people set out to purchase home, they don’t always take into consideration the costs. Costs are not always the same for every purchaser; below I have outlined some basic costs and exemptions depending on individual circumstance.
Conveyance fees, paid to a lawyer of notary public can be about $800 and up depending on services required. Strata purchases usually run around $1,000. This cost is for transfer of title to your name and collection and dispersement of monies and various searches conducted.
Appraisal fee: a lender usually orders this, and not every lender or situation will require an appraisal. About $200.
Inspection service: A well spent $250-$400, cost depends on size, type of property. This will give you an idea of what needs to be done, and can give good insight into the condition of a house.
Insurance coverage (fire) incase home is destroyed/damaged, this is a must if you have a mortgage, a company will not mortgage a home if it is not properly covered.
Property Purchase Tax: 1% on first 200,000 dollars and then 2% on balance of purchase price. Exceptions can be obtained if you have never owned real property ever. But be careful, a down payment of 30% or more may void this exemption. See your mortgage specialist. Other exemptions may also apply.
Mortgage fees like CMHC. If you are borrowing 75% or more of the purchase you will require mortgage insurance. Could be 2%-3% approximately or more, see your lender for accurate figures.
GST if new home purchase. Yes 7% or purchase price, until July 1, 2006, then 6% when the new reduction comes into place. There are rebates, which are calculated using the purchase price, and you may be eligible.
Don’t forget about the deposit. Many people selling up, down or straight across, have built up equity, but may not have savings. A deposit is required in all real estate transactions and could be in the range of 5-10% of the purchase price. That is $5,000 to $10,000 for every $100,000 of home cost. This money should be available and will be required at time of Subject removal, by a certified cheque or bank draft. Many Real Estate Brokerages generally do not accept personal cheques today. This deposit will go towards the purchase price of the home and will be held “In Trust” by the Buyer’s Brokerage.
Adjustment costs, which usually are about property tax calculations and interest adjustments. Example, when you borrow money for completion before the start of a monthly payment, or taxes paid in July for the first and second half of the year, need to be adjusted to reflect the time of purchase. Adjustments are usually calculated on possession day.
Repairs or updates you are considering, don’t forget to budget for these costs if you are planning to make changes to the new home. Also, budget for anything that may have come up in the home inspection that you are willing to be responsible for.
Another cost that can be over looked is if you plan to over lap a purchase with a sale or rental. There for paying an extra months rent or mortgage on a previous home. And lastly moving expense.