Home Buying Closing Costs

Once you have figured out the home price range you can afford and the type of mortgage you qualify for, you will need to calculate all the associated home buying closing costs of the transaction to make sure you are financially ready. You will need to plan ahead to cover the many up-front closing costs of buying a home. Timing is important to help make sure things go smoothly.

Mortgage Loan Insurance Premium

If yours is a high-ratio mortgage (less than 20% down payment), your lender may need mortgage loan insurance. Your lender may add the mortgage insurance premium to your mortgage or ask you to pay it in full upon closing.
 

Down Payment

With mortgage loan insurance from CMHC you can own your home with as little as 5% down payment. At least 20% of the purchase price is usually required for a conventional mortgage.
 

Deposit

This is part of your down payment and must be paid when you make an Offer to Purchase. The deposit varies depending on the purchase price but is usually 5%of the purchase price. The deposit is applied to the purchase price on closing.
 

Strata Fees

These are monthly fees that typically cover the costs of building insurance, building maintenance, garbage removal, water, gas, recreation facilities, and concierge services. Fees vary depending on the level of services provided by the strata and are usually available on the listing detail sheet. These fees are generally paid via auto0debit directly from your bank account or via post-dated cheque.
 

Home Inspection Fee

If you choose to have an inspection, costs are typically $250-$750, depending on the size of the property and complexity of the inspection. It’s a very good idea to have an inspection done when buying detached housing and post-warranty condominiums. It’s less critical to have an inspection on a brand new condo under warranty. We will be pleased to advise you on the value of having a home inspection performed on you chosen property and we’ll be pleased to recommend good, registered inspectors.

Lawyer or Notary and Expenses

Lawyer or notary fees will vary depending on the complexity of the transaction and are often $600-$1500. Your legal representative will review your contracts, search the title, draft mortgage documents and facilitate the transfer and registration of title. Costs will vary depending on your requirements.
 

Property Insurance

The mortgage lender requires this because the home is security for the mortgage. This insurance covers the cost of replacing the structure of your home and its contents. Property insurance must be in place on closing day.
 

Survey or Certificate of Location Cost

Your lender may require a property appraisal at your expense. Costs vary $150-$300. (This is not typically done for condos)
 

Property Transfer Tax (different from property tax below)

Property Transfer Tax is an unavoidable provincial tax on the transfer of all real estate British Columbia. The tax is calculated as follow: 1% of the first $200,000, and 2% of the remainder of the purchase price. This tax is payable at the time of purchase/conveyance and is include on the Buyer’s statement of adjustments by the Buyer’s lawyer or notary.

The First Time Buyer Program provides a tax exemption from Property Transfer Tax for individuals buying their first home. Buyers who meet the following conditions will be eligible for the exemption.

You qualify for the exemption, if:

• You are a Canadian Citizen, or a permanent resident as determined by Immigration Canada
• You have lived in British Columbia for 12 consecutive months immediately before the date you register the property, or you have filed two income tax returns as a British Columbia resident during the 6 years before the date you register the property
• You have never owned an interest in a principal residence anywhere is the world at any time, and
• You have never received a first time home buyers’ exemption or refund.

The property will only be used as your principal residence.

Property Tax is levied annually. The difference between Property Tax and Property Transfer Taxis that PTT is a one-time provincial tax which is charged at the time of title transfer and Property Tax is paid annually to the local taxation authorities. It is determined by applying the value of the property as assessed by the provincial assessment authority to the current tax rates as stated by the local tax authority. The amount can differ each year generally Property Tax falls between 0.5-2.5% of the home’s market value.
 

HST (Harmonized Sales Tax) 

HST is 12% on new construction and substantially renovated properties. HST is sometimes included in the list price as an incentive to buyers. Buyers of new properties costing $525,000 or less can apply for a partial HST rebate as follows:

The rebate rate was set to ensure purchasers of eligible new homes up to the $525,000 threshold pay no more provincial HST on average than under the PST.

Rebate rate: (7% BC HST minus 2% embedded BC PST) / 7% BC HST

Rebate rate =5/7 = 71.43% of provincial portion of HST paid, to a maximum of $26,250.

For more details on HST, please visit Revenue Canada’s website.

Please note that figures are an estimate