It’s easy to count your available cash, but remember that all of these cash savings cannot be used as your down payment. The are last-minute costs such as taxes, legal fees, appraisal fees, moving expenses and house insurance to pay before you are finally in your new home. The time to budget for those “end” expenses is NOW! You must be prepared to pay most, and perhaps all, of the following closing costs:
Property Transfer Tax (PTT)
The British Columbia Provincial Government imposes a property transfer tax that must be paid before any property can be legally transferred to a new owner. The tax is 1% on the first $200,000.00 of the property value and 2% on any value over $200,000.00.
First-time buyers are exempt from the property transfer tax (PTT). To qualify, a buyer must not have owned an interest in a principal residence anywhere. The purchaser must be a Canadian Citizen or permanent resident and have resided in B.C. for a minimum of 12 months prior to the purchase or transfer. The exemption is subject to a maximum purchase price depending on location in the province (maximum purchase price is $475,000.00, partial exemption up to $500,000).
Goods and Services Tax (GST)
On April 1, 2013, the Harmonized Sales Tax (HST) was replaced by the federal Goods and Services Tax (GST) and the BC Provincial Sales Tax (PST). The 5% GST is payable on new construction homes or substantially renovated homes. Buyers may be eligible for a new housing rebate. For more information please contact Canada Revenue Agency.
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.
When the lending institution requires an appraisal of the property, it may be your responsibility to pay the appraiser’s fee.
The lending institution may also require that a survey certificate 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. Some financial institutions may waive the survey certificate and ask for Title Insurance instead.
Real Estate Fees
Generally speaking, the vendor (seller) pays the real estate fees as part of the transaction. There are some circumstances where the buyer pays the fees but there would be a Buyer’s Agency Agreement in place. Having formalized Buyer Agency Agreements are becoming more common practice. This is a similar type agreement a Seller has when listing his or her property called a Listing Agreement.
Fire and Liability Insurance
Mortgage lenders insist that you purchase an insurance policy, which guarantees that, in the event of a fire, the lender will receive the balance owing on the mortgage loan, before you receive any insurance proceeds.
The transfer of property ownership from the seller to the buyer must be recorded in the Land Titles Office 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.
Other Last Minute Costs
Set money aside for: