Don't Let Closing Costs Burst Your New Home Bubble
A common mistake when purchasing a home is underestimating closing costs that must paid at the end of the buying process. While budgeting, you’ll want to have an accurate picture of these additional costs so that you’re not surprised. Prospera is here to give you the ins and outs of the top 6 overlooked closing costs so that you can keep your financial plan on track.
Property Transfer Tax
When you purchase a home in BC, you need to pay a provincial Property Transfer Tax (PTT). This tax is charged at a rate of 1% on the first $200,000 of the purchase price and 2% on the remainder up to and including $2 million. The PTT is 3% on amounts greater than $2 million. If the property is residential, a further 2% PTT is payable on the portion greater than $3 million.
Qualifying first-time homebuyers may be exempt from paying the PTT if the purchase price of their home is priced up to $475,000-$500,000. There is a proportional exemption for homes priced between $500,000 and $525,000. Qualifying buyers of new homes may be eligible for further exemptions.
Mortgage lenders may ask for an appraisal as part of the mortgage approval process.
For a fee, an appraiser provides a professional opinion about the market value of the home you want to buy. This fee is generally between $250 and $350.
Title insurance can protect you against issues that could affect your ability to sell, lease or mortgage your property. These fees typically range from $150 to $350.
Most lenders require proof that the property is insured in case of fire and other damage. Insurance costs can vary depending on the coverage needed, but budget for at least $500 a year.
Home Inspection Fees
A home inspection is a report on the condition of the home and includes structural and moisture problems, as well as electrical, plumbing, roofing and insulation. The fees range and are typically $50 to $900 depending on the size of the home and the complexity of the inspection. Some inspectors also charge an additional fee for an older home or a home with a secondary suite, a crawlspace, or a laneway home.
A lawyer or notary will help protect your interests by reviewing your purchase agreement, searching the property title, and ensuring that all documents are completed properly. Basic legal fees start between $500 and $800, plus disbursements, with added services as needed.
Have questions about closing costs when purchasing a home?
Set up a meeting with a Mortgage Specialist today!