Re: Final Cost of Buying a Home
1. Down Payment: This is any amount greater than 5% of the purchase price of the home. Anything less than a 20% down payment and you will have to get mortgage loan insurance.
2. Deposit: This is due when a contract of Purchase and Sale is written and accepted. This deposit forms part of your down payment with the remainder of the down payment due at closing.
3. Mortgage/Application fee: There can be some fees involved with applications and or mortgage fees, but they are quite rare and will be explained to you before you move forward. And they are usually due to a tough situation where conventional lenders cannot help you.
4. Appraisal Fee: In order to complete a mortgage loan your lender may ask you to do an appraisal and this will usually run between $250-350 + tax, but it can vary according to the location and property type.
5. Mortgage Loan Insurance: If you make less than a 20% down payment, you have a high ratio mortgage. Mortgage insurance lets you buy a home with a minimum of 5% down. This insurance protects the lender by ensuring that they are paid out by the insurer if the borrower defaults. This amount is a % and based off the down payment and mortgage amounts. Expect to pay at least a few thousand dollars if you have a minimum down payment.
NOTE: This is not a fee that is charged up front, standard practice is to add it to the mortgage amount. And you only have to purchase it once for the life of your mortgage.
6. Home Inspection Fee: It is recommended that you have a property inspection for the property as a condition of your Offer to Purcahse. This cost is usually around $500 for a single family home and $350 for a strata condo unit. The inspection looks at all the components of the home and gives you an idea of the condition of the home.
7. Survey (certificate of location): This is done at the buyer’s expense and is sometimes needed as a condition to receive a mortgage. If the survey is more than five years old, you will need to have it updated. If the seller does not provide it the buyer will have to pay. The cost is anywhere from $1000 to $2000 for the survey.
8. Title Insurance: Your lawyer may suggest that you get title insurance. Title Insurance is an insurance policy for the benefit of the lender only, and it's bought at the solicitor at closing. It costs roughly $200-$300.
9. Property Transfer Tax: This tax is 1% on the first $200,000 and 2% on the balance. First time home buyers are exempt from this tax if the purchase price is less than $425,000. There is a partial exemption on amounts between $425,000 and $450,000, however at $450,000 or above the full tax is payable.
NOTE: PTT has to be paid in cash at closing - it can't be added into the mortgage unless you make a smaller down payment.
10. Water tests: The potability of the water should be tested if the home is on a well system. This will ensure that the quality and supply is adequate. This costs is usually between $50-$170 and can be negotiated into the Contract of Purchase and Sale.
11. Septic Tank: If the home has a septic tank, it should be professional inspected to make sure the components are in good working condition. The cost is usually $250-$350 and can be negotiated into the Contract to Purchase.
12. Status Certificate (Condo): This certificate outlines the financial and legal state of the strata corporation. The cost is up to $100.
13. Prepaid Property Taxes and/or Utility Bills: If the seller has paid the property taxes for the year or other costs (such as filling the oil tank), you will need to pay the seller back. This is done at closing time when adjustments take place.
14. Property Insurance: The lender will require that you have contents and property insurance to cover the cost of replacing the home in case of loss. Speak to a home insurance company for costs, they average around $400-$800 depending on the home, location, riders, etc… You will need to have this in place at 12:01am closing day to cover you for loss.
15. Legal fees: Vary depending on which lawyer/notary you use, as well as what work is required from them. Expect to pay at least $700+ for a home purchase (less for a mortgage renewal or refinance).
16. GST: This is the 5% provincial tax cost plus the 2% transitional tax, which is on the purchase price. There are refunds of the gst amount up to $350,000 on a new home. The rebate is 36% of the GST on any price up to $350,000 which equates to 1.8% of the purchase price, with a max rebate of $6300 at $350,000. Between $350,000 and $450,000 the rebate decreases to zero, (for every $10,000 increase in price, the rebate is $600 lower). Over $450,000 there is no rebate.
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