Closing Costs
Deposit
Down Payment
Fire & Liability Insurance
Goods & Services Tax (GST)
Home Inspection Fee
Legal Fees
Life & Disability Mortgage Insurance
Mortgage Default Insurance
Property Transfer Tax
Survey or Certificate of Location Cost
Title Insurance
Water Quality Inspection
Closing Costs are costs in addition to the purchase price of the home, such as legal fees, transfer fees and disbursements, that are payable on the closing day. They range from 1.5% to 4% of a home’s selling price (excluding GST for new homes).
Your mortgage lender may require that the property be appraised at your expense. An appraisal is an estimate of the value of the home. The cost is usually between $200 and $350.
This is part of your down payment and must be paid when you make an Offer to Purchase. The cost varies depending on the area, but it may be up to 5% of the purchase price. If you wish to make a down payment of 5% and you give a deposit of 5%, then your down payment is considered to be made.
At least 5% of the purchase price is usually required for a high-ratio mortgage and at least 20% of the purchase price is usually required for a conventional mortgage.
The mortgage lender will insist that you purchase an insurance policy which guarantees that, in the event of fire, the lender will receive the balance owing on the mortgage loan before you receive any insurance proceeds.
If you purchase a newly constructed home, you may be subject to a 5% GST on the purchase price. However, if the home is under $350,000, and this is your principal residence, you may qualify for a rebate, which will reduce the net GST paid by 36%. If the price is over $350,000 the net GST to be paid increases gradually until it is a full 5% at amounts over $450,000, where no rebate is offered. There is no GST on resale housing unless there have been substantial renovations to the property.
Remember that this may be a condition of your Offer to Purchase. A home inspection is a report on the condition of the home and generally ranges around $200 to $500 or more, depending on the complexities of the inspection
Lawyers/Notaries fees for closing the sale range according to the complexity of the deal but they will approximately be $500 to $1200.
At your option, you may purchase insurance that will ensure that your outstanding mortgage balance is paid if you die or become disabled.
This type of insurance is required on all mortgage loans in excess of 80% of the appraised property value. The insurance premium is paid to the lender and ranges from 0.5% to 3.75% of the loan value; however, in most cases this premium is added to the loan amount, and paid for over the term of the loan.
This tax is 1% on the first $200,000 of the sale price and 2% on the remainder. First-time buyers may be exempt from paying this tax if they meet certain criteria. The main criteria are; 1) purchase price is less than $425,000; 2) borrower has never owned a principal residence anywhere; 3) purchaser is a Canadian citizen or permanent resident and residing in BC for a minimum of 12 months.
If the sellers have already paid the full year’s property taxes or utilities, you will have to reimburse them for your share of the year’s taxes.
The mortgage lender may ask for an up-to-date survey or certificate of location prior to finalizing the mortgage loan. If the seller does not have one or does not agree to get one, you will have to pay for it yourself. It can cost in the $1,000 to $2,000 range.
Your lender or lawyer/notary may suggest title insurance to cover loss caused by defects of title to the property.
If the home has a well, you will want to have the quality of the water tested to ensure that the water supply is adequate and the water is potable. You can negotiate these costs with the vendor and list them in your Offer to Purchase.
