Countdown to closing costs – here are fees you can expect to pay

Posted on April 10th, 2017

If you’re buying a home, it’s important that you understand all of the costs involved – in addition to the price you’re paying for the property.

Here’s our list.

Mortgage application
Lenders may charge a mortgage application fee, which will vary depending on the lending institution.

If you are borrowing part of your downpayment through the BC Home Owner Mortgage and Equity (HOME) Partnership, there will be additional fees.

Mortgage insurance
The federal government requires high-ratio mortgages with less than 20 per cent downpayment to be insured against default. The cost ranges between 0.60 to 3.85 per cent of the mortgage amount which is added to the mortgage principal.

As of February 15, 2016, the federal government requires a 10 per cent downpayment on homes valued between $500,000 and $1 million, that need mortgage insurance. Homes valued at $1 million+ require a minimum downpayment of 20 per cent. Mortgage insurance is not available for homes in this price range. Learn more.

Appraisal fees
Before your lender approves your mortgage, you may be required to have the property appraised. Sometimes your lender will cover this cost. If not, you’re responsible. The fee ranges from $300 to $450 plus GST.

Land survey fees
Lenders may require a survey of the property. The fee ranges and is typically $500 plus GST.

Title Insurance
Protects against losses associated with title fraud, and survey and title issues or defects.

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 vary and are typically $500-$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.

Legal or Notary Public fees
Buyers typically hire a lawyer or Notary Public to assist with drafting documents and ensuring the title of the home is properly transferred. Likely fees include a:

  • title search for a property, this costs up to $11
  • land title registration fee, which is about $75

For more information about land titles, visit the Land Title and Survey Authority of BC at www.ltsa.ca.

Mortgage broker fees
Your mortgage broker may charge a fee to find the best mortgage to suit your needs.

REALTOR® fees
Compensation is agreed to beforehand between you and your Realtor® and depends on services provided, which can vary depending on your needs and the business model employed by the Realtor®. Fees are typically paid to the real estate company by the lawyer or notary in the transaction from the sale proceeds on the completion date under the Contract of Purchase and Sale, or on the actual date the sale completes.

Goods and Services Tax (GST)
The GST on a new home is 5% of the price. A GST rebate equivalent to 36% of the GST paid is available for new homes priced up to $350,000 and a partial rebate on new homes priced up to $450,000.

Buyers also pay the GST on fees for services from appraisers, home inspectors, lawyers, notaries public and Realtors®.

Provincial Sales Tax
The PST is generally not payable on services except for legal and notary fees. Both the GST and PST are paid on legal and notary fees.

Property Transfer Tax
Home buyers in BC pay a provincial Property Transfer Tax (PTT) when they buy a home. The 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.

Qualifying first-time home buyers may get a PTT exemption if the home they buy is priced up to $500,000. There is a proportional exemption for homes priced between $500,000 and $525,000. At $525,000 and above the rebate is nil.

Qualifying buyers of new homes may be exempt if the home they buy is priced up to $750,000. There is a proportional exemption for homes priced between $750,000 and $800,000. At $800,000 and above there’s no rebate.

An additional PTT of 15% of the home price is charged to buyers in Metro Vancouver who are not Canadian citizens or permanent residents of Canada, and who don’t have work permits.

Adjustments (see details in your actual Contract of Purchase and Sale)  

Property taxes
Depending on the Contract of Purchase and Sale, a property buyer will likely be required to reimburse the seller for any prepaid property taxes. The lender may require the buyer to add property tax installments to monthly mortgage payments. See also Why do I have to pay property taxes on the house I’m buying.

Municipal Utility bills
A buyer is typically required to reimburse the seller for any prepayments for municipal utilities such as water, sewer, drainage, garbage and recycling.

Rent and security deposits
If there is a secondary suite or a laneway home rental and the tenancy continues, the buyer receives the security deposit from the seller with accrued interest because the buyer is responsible for reimbursement when the tenant leaves.

Mortgage life insurance
If the owner dies, this type of insurance will pay off the balance owing on their mortgage.

Fire and liability insurance
Most lenders require property buyers to carry fire, extended coverage and liability insurance.

Home owners insurance
Lenders typically require home buyers with a mortgage to buy home owners insurance. The insurance should be effective on the earlier of either the completion date or the date that the balance of funds is placed in trust.

Moving fees
Moving fees vary depending on the distance moved and whether professional movers do all of the packing. Rates vary.

Utility hook ups
There are fees for hydro, gas, water and sewer, cable, and phone connections.

Locks
New owners should always have door locks rekeyed. Costs depend on whether the locks are standard or electronic.

Strata maintenance fees
Typically paid on the first day of each month.

For information, contact your Royal Pacific Realty Group Realtor®

Sources
Real Estate Board of Greater Vancouver
BC Ministry of Finance
Department of Finance Canada